Eight big questions re: Walmart + Vizio:
1) Why is Walmart acquiring Vizio?
2) Will this deal impact the TV measurement industry?
3) Is the deal more about competing with Roku or Amazon?
4) What share of smart TV sales does Walmart account for?
5) What share of the smart TV operating system (TVOS) does Vizio account for?
6) How does Vizio make money?
7) How many accounts does Vizio have?
8) How much money does Vizio make from each subscriber?
Setting the table: Walmart is acquiring Vizio for $2.3B.
Wow: The price paid for Vizio is ≈ 8X the enterprise value of Gannett, a 118-year-old company that owns hundreds of publications, including USA Today.
Big question #1: Why is Walmart acquiring Vizio?
Quick answer: Walmart wants to grow profit faster than revenue, and advertising (especially streaming TV) can help.
Profit margin by industry according to CNBC:
1) Advertising – 65%
2) Retail – 4%
Quote from Elizabeth Parks – President @Parks Associates:
“Walmart isn’t buying a TV hardware company, it’s buying a platform.”
Quote from Corey Tarlowe – Retail Analyst @ Jefferies:
“It’s not really about the televisions. It’s about advertising.”
Big question #2: Will this deal impact the TV measurement industry?
Quick answer: Unclear. Vizio generates $100M+ per year in data revenue. Most companies challenging Nielsen for convergent TV measurement rely on this data.
Quote from Adam Townsend – Chief Financial Officer @ Vizio:
“Our data is becoming the cornerstone of the CTV measurement market through some of our licensing partners,” Townsend said, pointing to iSpot, Comscore, VideoAmp, 605, TVSquared and Nielsen. “[They] all rely on our data to fuel their ad currency products.”
Zoom out: Nobody would benefit more from Walmart pulling this data from the measurement market than Nielsen.
Big question #3: Is the deal more about competing with Roku or Amazon?
Mr. Screens’ Crystal Ball: Walmart is focused more on Amazon than Roku.
U.S. advertising market size (Walmart/Vizio share):
1) Retail media – $59.6B (7.5%)
2) Streaming TV – $28.8B (1.7%)
3) Total – $88.4B (5.5%)
Annual advertising revenue:
1) Amazon – $49.9B
2) Walmart – $3.5B
Why Walmart + Vizio is more powerful than Amazon Fire TV + Whole Foods, according to Ari Paparo:
1) Fire TV has less reach
2) Amazon doesn’t have access to ACR outside of Fire TV programming
3) Walmart carries more products (SKUs) than Whole Foods
4) Whole Foods SKUs are not mainstream CPG brands that advertise on TV
5) Whole Foods customers are not representative of the United States
Big question #4: What share of smart TV sales does Walmart account for?
Quick answer: 37% of all TVs in the U.S. are sold by Walmart.
Big question #5: What share of the smart TV operating system (TVOS) does Vizio account for?
Quick answer: 7% (21M) of all U.S. smart TV devices (325M) use Vizio’s operating system.
Share of U.S. smart TV operating systems according to Kagan:
1) Roku OS (Roku) – 26%
2) Fire TV (Amazon) – 17%
3) Tizen Smart Hub (Samsung) – 14%
4) Android TV (Alphabet) – 12%
5) WebOS (LG) – 8%
6) SmartCast (Vizio) – 7%
7) Apple tvOS (Apple) – 4%
8) Pre-Tizen Smart Hub (Samsung) – 2%
9) Chromecast (Alphabet) – 1%
10) Others – 9%
Vizio’s share of U.S. smart TV operating systems:
1) 2019-Q3 – 4%
2) 2020-Q3 – 5%
3) 2021-Q3 – 6%
4) 2022-Q3 – 6%
5) 2023-Q3 – 7%
Big question #6: How does Vizio make money?
Quick answer: Platform+ (80% advertising + 20% data) accounts for 36% of total revenue and 100% of gross profit.
Vizio Platform+ revenue (YoY growth):
1) 2018 – $36M
2) 2019 – $63M (↑ 74%)
3) 2020 – $147M (↑ 133%)
4) 2021 – $309M (↑ 110%)
5) 2022 – $478M (↑ 55%)
6) 2023 – $598M (↑ 25%)
Vizio gross profit breakdown (% of total):
1) Platform+ – $365M (100%)
2) Hardware – –$9M (0%)
3) Total – $356M
Vizio share of gross profit from platform+:
1) 2019 – 24%
2) 2020 – 38%
3) 2021 – 65%
4) 2022 – 95%
5) 2023 – 100%
Vizio profit margin by product type:
1) Platform+ – 61%
2) Hardware – -0.8%
Big question #7: How many accounts does Vizio have?
Vizio Smartcast accounts (YoY growth):
1) 2018 – 3.6M
2) 2019 – 7.6M (↑ 111%)
3) 2020 – 12.2M (↑ 61%)
4) 2021 – 15.1M (↑ 24%)
5) 2022 – 17.4M (↑ 15%)
6) 2023 – 18.5M (↑ 6%)
Vizio Smartcast hours (YoY growth):
1) 2019 – 4.5B
2) 2020 – 12.3B (↑ 173%)
3) 2021 – 14.6B (↑ 18%)
4) 2022 – 17.4B (↑ 19%)
5) 2023 – 20.5B (↑ 18%)
Big question #8: How much money does Vizio make from each subscriber?
Vizio annual revenue per user (ARPU)(YoY growth):
1) 2019 – $7.31
2) 2020 – $12.99 (↑ 78%)
3) 2021 – $21.68 (↑ 67%)
4) 2022 – $28.30 (↑ 31%)
5) 2023 – $32.48 (↑ 15%)
More #1: A Streaming TV Prizefight: Walmart Tries Muscling in on Amazon
