Walmart tunes up smart TV play with $2.3B deal for Vizio

Walmart is getting deeper into the smart TV hardware and software platform game after announcing it will fork over $2.3 billion to acquire Vizio, a maker of large-screen TVs and the SmartCast operating system.

The deal – for $11.50 per share in cash – will expand Walmart's move in the smart TV arena, giving it access to Vizio's OS and attached advertising platform. Walmart said the deal will expand the reach and accelerate the growth of Walmart Connect, the retail giant's US media business.

"We believe VIZIO's customer-centric operating system provides great viewing experiences at attractive price points. We also believe it enables a profitable advertising business that is rapidly scaling," Seth Dallaire, EVP and chief revenue officer of Walmart US, said in a statement. "We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment."

Vizio ended Q3 2023 with 17.9 million active SmartCast accounts and nearly 300 free, ad-supported streaming television (FAST) channels via its "WatchFree+" lineup.

Vizio profiting from 'Platform+' business

Vizio's Platform+ business, which is comprised mainly of its ad business, now accounts for the bulk of Vizio's gross profit.

In Q3 2023, Vizio generated net revenues of $426.2 million: $270 million in device revenues and $156.2 million in Platform+ revenues. Vizio's Platform+ pulled in a Q3 gross profit of $99.8 million, up 22% versus the year-ago period.

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Vizio also posted Q3 SmartCast average revenue per user (ARPU) of $31.55, up 14% year-over-year. Its SmartCast platform also generated about 5.15 million hours of use, up 21%.

The proposed deal stands to shift some of the power in a competitive smart TV platform market that includes Amazon (Fire TV), Roku, Google (Google TV/Android TV), Samsung (Tizen), LG Electronics (webOS), TiVo (TiVo OS) and Xumo, the Comcast-Charter national streaming joint venture. Prior to the formation of Xumo, Comcast initially entered the smart TV game by selling a pair of smart TVs with its operating system via a national retail agreement with Walmart.

Of the smart TV platforms, Roku could be the most heavily impacted as Walmart already sells its own TVs under the "Onn" brand, including models that use the Roku operating system. Walmart also sells some Onn streaming media players that use Google's platform.

Roku shares were down more than 6% in midday trading Tuesday.

Vizio stockholders holding roughly 89% of the voting power of Vizio's outstanding common shares have approved the Walmart deal. No other stockholder approval is required to complete the transaction, the companies said.

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