In a move that marks a significant milestone in its continued expansion in the advertising landscape, retail giant Walmart is set to acquire smart TV manufacturer Vizio for a whopping $2.3 billion.
A Push into the Lucrative Realm of Advertising
Walmart’s robust acquisition is more than just a simple expansion – it’s a strategic leap into an enticing new frontier.
The deal will grant the mega retailer access to Vizio’s SmartCast operating system. The end game? Giving suppliers the coveted chance to display ads on streaming devices, and in doing so, compete directly with Amazon’s dominance in the sector.
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Rapid Growth of Retail Advertising
Amassing a vast customer base through its stability in the physical retail space, Walmart has recently pivoted into the digital advertising sphere through its ad-focused wing, Walmart Connect.
Consequently, the retail titan reported a stellar 28% growth to $3.4 billion in its ad business for the last fiscal year. Such growth reflects both the immense potential of retail advertising and Walmart’s plans to position itself as a central player within this burgeoning realm.
The Rise of SmartCast
This development emerges amidst the rapid growth of Vizio’s SmartCast system, which now boasts 18 million active accounts – a figure that has skyrocketed by 400% since 2018.
With over 500 direct advertisers and a gross profit primarily derived from ads, Vizio’s platform appears to offer just the resource Walmart needs to further its influence in the advertising marketplace.
Re-imagining Retail and Entertainment Intersection
The potential merger of these two businesses sparks a thrilling prospect, as pointed out by Seth Dallaire, Executive Vice President and Chief Revenue Officer for Walmart U.S. Dallaire emphasized, “We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment.”
Disruptions of this scale could well signal a significant shift in how businesses approach and utilize entertainment as a new frontier for retail expansion.
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The Consumer Factor
The industry’s evolution brings into question whether consumers would rather pay more for fewer ads than manage subscription fees for multiple services.
The rising displeasure over swelling cable TV bills led many viewers to cut cords in the past. The emergence of new practices, such as Walmart’s latest move, could likely influence consumer behavior and the broader digital streaming landscape.
Market Response
The announcement of the acquisition catalyzed significant movements in the stock market, with Vizio’s shares elevating nearly 15%, while Walmart also saw its shares rise by an impressive 3.1%.
However, the fall of Roku’s stocks, Vizio’s major competitor, by 6.4% lends credence to the potential market disruptions this acquisition could instigate.
In an era where convergence of technology and retail is evident, Walmart’s landmark move to acquire Vizio could significantly influence how consumers interact with retail brands and alter the trajectory of the global streaming, advertising, and retail market.
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Drew Blankenship is a cryptocurrency investor, family man, father and lifelong automotive enthusiast. He lives in North Carolina with his wife, daughter and their dog Enzo.
