Walmart Is Eyeing The Streaming Business With a Potential $2 Billion Acquisition

Walmart may be making its foray into the streaming and connected TV business. The retail giant is in talks to acquire smart TV maker Vizio in a deal worth more than $2 billion, the Wall Street Journal first reported yesterday (Feb. 13). Though neither company confirmed the report, the news sent Vizio’s stock to surge more than 3o percent in yesterday’s afternoon trading, boosting its market cap to above $1.9 billion.

Vizio, founded and led by Taiwanese American entrepreneur William Wang, sells a line of affordable smart TVs (some priced under $250) that include a free, ad-supported streaming service. It’s a director competitor to Roku, which owns about half of the U.S.’s connected TV (CTV) and over-the-top (OTT) streaming market. Other major players in this market include Apple TV, Amazon’s fireTV and Google’s chromecast. Vizio also competes with traditional TV makers like TCL or Hisense.

Walmart’s reported interest in acquiring Vizio sent Roku’s stock down nearly 9 percent yesterday. It’s still significantly larger than Vizio, with a market cap of nearly $13 billion.

Both Vizio and Roku devices are available in Walmart stores. Walmart also sells its own line of connected TVs called Onn TV, which is powered by Roku’s operating system. Roku said in its 2022 annual report that Walmart and Amazon combined accounted for nearly 60 percent of its devices revenue, so the prospect of Walmart acquiring a Roku competitor signals threat to the smart TV leader.

Connected TVs are a lucrative ad revenue channel for streaming companies, because many of these devices come with built-in ad-supported streaming services like Netflix and Disney+. The potential deal “underscores the massive opportunity for the CTV industry to drive ad dollars away from traditional linear television to CTV,” Alicia Reese, an analyst with Wedbush Securities, wrote in a research note today cited by Variety.

Reese remains optimistic that Roku will be able to keep its leading position in the CTV market because it also builds the operating system for many CTVs. “As Roku continues to expand its market share (Roku has 25 percent market share of CTV operating systems), it will become an important partner for many e-commerce partners, particularly those that do not want to advertise on competitor platforms such as Walmart’s, Amazon’s, or Google’s,” the analyst wrote in her note.

Last year, Vizio launched a branded content studio as part of its expansion into streaming. Over the past 12 month, viewing hours on Vizio’s WatchFree+ streaming service has more than doubled, the company said. Last week, Vizio expanded WatchFree+ to include more than 300 channels and 15,000 titles. It has also announced plans to deepen content partnerships with Warner Bros. Discovery, Electric Entertainment, Sony and Lionsgate.