Why it matters: Walmart is reportedly negotiating a deal to purchase smart television maker Vizio as part of a deal valued at more than $2 billion. Sources familiar with the matter told The Wall Street Journal that a deal has not yet been finalized, and negotiations could fall through. Should it come to fruition, however, it would give the big box retailer another place to sell ads and pitch goods to customers.
Vizio sells ads through its smart TV platform, which are typically shown when turning on the set and inside of some free, ad-supported video apps. Under Walmart ownership, the big box retailer would take over control of these lucrative ad spots, opening a new avenue for revenue that could be used to fund other areas of interest like speedier shipping to better compete with Amazon.
Walmart could take it a step further by running strategic ads to coincide with in-store sales, and even track sales from ads shown on Vizio TVs back to the purchase of goods in store. You can bet that this sort of data would be incredibly valuable to advertising partners, netting Walmart even more money.
Vizio and Walmart have maintained a successful business relationship for years. According to the Journal, Vizio is Walmart’s top television brand based on sales, and Walmart (including Sam’s Club) is Vizio’s largest customer.
Share value in Vizio shot up roughly 30 percent on the buyout rumor, pushing the company’s market cap to $1.89 billion. The company is set to share its latest earnings report at the end of the month. Walmart stock was largely unaffected by the news, hovering around $168 per share as of this writing.
Owning and operating an electronics brand would not be foreign to Walmart, as the company already runs the private-label brand Onn. But as mentioned, the allure here is not so much about the opportunity to sell affordable televisions as it is about the advertising channel and generating a new stream of revenue outside of its stores.
Image credit: Michael Steeber, Nicolas Leclercq