When you think of some of the top players in the streaming and entertainment industry, you might think of Netflix (NFLX) , Apple (AAPL) , Disney (DIS) , and Amazon (AMZN) .
Altogether, Disney holds a total of around 150 million Disney+ subscribers worldwide. And Amazon, which offers its own smart TV and offers Prime Video streaming, boasts over 200 million subscribers. And Roku (ROKU) streaming devices are present in approximately 33% of all smart televisions in North America.
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The digital entertainment and streaming space is fiercely competitive with constant consolidation. Parent companies routinely battling for acquisitions, and smaller brands are slowly gobbled up by ever-larger companies.
For better or worse, this results in just a handful of massive conglomerates that control most of what we watch. Warner Bros Discover (WBD) , which owns HBO, Food Network, DC Comics, CNN, Cinemax, HGTV, and Discovery (to name a few) is a perfect example of this.
Walmart makes a surprising acquisition
Streaming and entertainment hardware doesn't exactly seem like the prettiest space to be in, so one might be surprised to learn that Walmart (WMT) is tossing its hat in the ring.
The world's largest superstore on Feb. 21 shared it was acquiring television maker Vizio (VZIO) for $2.3 billion, the equivalent of about $11.50 per share in cash.
The 22-year-old Irvine, CA-based entertainment system brand primarily makes entertainment hardware, including televisions and soundbars. But Vizio is likely an attractive opportunity for Walmart because it also holds access to advertising and viewer data; as of 2024 its SmartCast Operating System has 18 million active accounts, which are ostensibly ripe for advertising.
“There is a lot to be excited about with this acquisition,” said Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S. “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. Our media business, Walmart Connect, is helping brands create meaningful connections with the millions of customers who shop with us each week. We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”
Walmart Connect, the retailer's advertising and media arm, has grown by 30% in fiscal year 2024. This acquisition is no doubt intended to add fuel to the fire and take on large incumbents at the intersection of streaming and advertising, namely Roku and Amazon.
And Vizio seems to be a compelling opportunity. It has:
- 18 million active SmartCast accounts
- Grown 400% since 2018
- Over 500 direct advertising relationships
- Options for customers to stream for free by watching ads
- An already-embedded Vizio Platform+ business, fueled mostly by advertising, which accounts for a majority of Vizio's profit
“We believe this is the ideal next chapter in VIZIO’s history. By bringing our capabilities and resources together, we’ll drive innovation and create even more value for our customers,” said William Wang, chief executive officer of VIZIO. “Walmart’s approach is aligned with VIZIO’s mission and vision, and our technology will help bring a scaled, connected TV advertising platform to Walmart Connect."
