Key Points:
- Walmart is set to acquire a major competitor in the TV space for $2.3B
- With this acquisition, Walmart will be able to significantly increase their global position in the television market, but also sell TV’s in their competitors stores.
- The strategic play allows Walmart to gain a foothold in the OTT marketing industry based on an existing infrastructure that has proven successful.
If you’ve been to a Walmart at any point in the last 10+ years, you’ve probably seen the TV wall. You know, the wall of tv’s that are all the way in the back but somehow are visible from the entrance door, drawing you back to the technology section? Well, in a recent play to increase competition in the television market and advertising visibility, Walmart has finally stepped up in a move that would probably make Sam proud.
If you know anything about Walmart’s technology approach in the past, you’ll understand that the Onn brand was their sad attempt at creating competition with Vizio, Samsung and LG. The TVs were cheaply made and felt flimsy and have a horrible life expectancy. They came at a seemingly discounted rate, but they felt like the “fast fashion” of televisions. The worst part was that for less than 10% more you could upgrade to a significantly better option from the competitor, making those TV’s a tough sell.
After a $2.3 billion dollar acquisition, Walmart is acquiring Vizio on the backs of their first ever profitable year. Despite a year over year decline in revenue, the numbers for Vizio in Q4 were a strong indicator of what Walmart was acquiring which goes well beyond just a moving picture device. The move that drove Vizio’s profitability was their OTT (Over-The-Top) network, Vizio Platform Plus. Platform Plus, since being introduced in 2019, has grown into being responsible for more than 1/3 of their overall revenue and the entire amount of their profitability.
Having such an extensive OTT network under their umbrella would provide Walmart the opportunity to expand their advertising reach by a significant amount. TV companies recently have started to offer free streaming channels, eliminating the need for traditional cable or streaming services. It has created an opportunity for businesses to promote in a way that old style commercial used to, taking promotion off social media and bringing that back to the big screen once more.
The move for Walmart is truly a matter of influence. As Walmart has recently discussed, that they want to be “more than just a store.” In doing so, they are finding ways to fit well known brands into their strategic vision to create a customer experience. You’ve probably already noticed the changes when you walk through the door, but Walmart felt their technology department needed a major upgrade as well, hence how we ended up here.
The win for for Walmart is three-fold: get a better product to provide customers across multiple retailers, eliminate one of the largest competitors from the market by acquisition, and own an advertising powerhouse – showcasing both their own products and collecting revenue from other advertising as well. By acquiring this company, Walmart is showing a non-traditional approach (for them) to thinking outside the box and looking to leverage the success of others to become a real competitor in all areas. The real test will be once the acquisition is complete, can Walmart continue to the growth and continue to push Vizio profitability even higher? Only time will tell.
