MOUNTAIN VIEW, California – Walmart has officially announced a $2.3 billion deal to acquire TV maker Vizio in an effort to bolster its digital advertising business. As a result, shares of competitor Roku have begun to trade lower this week. Despite this, analysts believe that the market’s response may be an overreaction and could actually work in favor of Roku.
Laura Martin, a Senior Media & Internet Analyst at Needham & Co., explains that the acquisition of Vizio by Walmart could potentially benefit Roku. With Vizio now owned by Walmart, decision-making and market reactions may slow down due to Walmart’s more refined processes, leaving Roku as the only company solely focused on streaming and with the agility to make quick decisions.
Additionally, with the rise of connected TV ads and their direct link to e-commerce platforms, Walmart’s acquisition of Vizio and its $500 million in ad sales could open up new opportunities for Roku in the advertising market. By tying ads to consumer purchases, Walmart and Vizio’s new focus potentially leaves Roku as the dominant player in the advertising marketplace.
The potential shift in the advertising landscape could mean significant gains for Roku’s market share and revenue, with the $500 million in ad revenue from Vizio translating to around a 30% increase in Roku’s ad revenue, should it all shift to the platform.
Analysts also point out that as the only company solely focused on streaming, Roku is in the position to benefit from the rapid changes in the industry, while also gaining a share of the revenue from various streaming platforms. This unique position could allow Roku to maintain its market share and overall competitiveness as the industry continues to evolve.