Inside Walmart’s Multibillion-Dollar Buyout Of A Major TV Manufacturer

News broke earlier this month about Walmart’s decision to drop $2.3 billion on the purchase of Vizio, a company many consumers know as a television brand. But the retail giant already has its own in-house electronics brands — so what’s Walmart’s motivation?

All about the ads

Even though Vizio’s name might be plastered on a bunch of flat-screen televisions, that’s not the only (or even the primary) business the company is in. Its TVs offer plug-and-play functionality that is not only convenient for buyers but lucrative for the company … and now its owner, Walmart.

Here’s how it works in a nutshell:

• You turn on the WiFi-connected TV and it offers you streaming service options.
• Those featured platforms then share either revenue or ad placement with Vizio.
• Walmart now gets access to the viewing habits of those customers.

You might have noticed that TVs have gotten pretty cheap in recent years, but Walmart might not care about its upfront profits on those sales as much now that it can continue making money for years after it sells a TV.

Worth the investment

On the surface, $2.3 billion sounds like a lot of money to pay for a TV brand. And compared to the value of traditional media companies, it truly is a massive sum.

For example, Gannett (the company that owns hundreds of newspapers including USA Today) is worth about one-eighth as much as Walmart was willing to pay for Vizio.

But while newspaper ads used to be the bread and butter of the marketing world, times have clearly changed.

Now, all it takes is a TV screen and some clever algorithms playing out behind the scenes to warrant a multibillion-dollar buyout from one of the planet’s biggest retailers.

Chris Agee February 27th, 2024

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