Walmart, Vizio, Amazon, and Experience Stacks
Walmart, Vizio, Amazon, and Experience Stacks
This week, WSJ reported that the grocery giant is in talks to acquire a TV manufacturer: why is this a good idea, and how does it help Walmart compete with Amazon? (Issue #106)
Before we get to today's main topic, some miscellaneous goodies…
• I'm dedicating this issue to my friend Phillip Lomax of MediaScience; thank you, Phillip, for sharing the data I refer to below within minutes of my asking.
• Thank you Brendan D. Moore for having me as a guest on your podcast, The Black Futurist, to talk about our experiences at CES.
• Ian Bogost has a worthwhile Atlantic ($) piece about a crisis in the overhead luggage compartments in airplanes. Personally, I've always felt it unjust that the people (like me) who shell out $30 to check a bag get last access to the overhead bins. Shouldn't it be the other way around? That would let me park my backpack and stretch out.
• The Economist ($) links the Taylor Swift / Travis Kelce Super Bowl story to Daniel Boorstin's notion of pseudo-events, which prompted me to pick up the 50th anniversary edition of The Image.
• Apple is doing just fine. Sure, some folks are returning their Apple Vision Pro headsets, but Apple is in the Heads Up Display (HUD) game for the long haul, even if it takes a decade plus.
• Robbie Williams and Jonathan Wilkes singing "Me and My Shadow" reminded me of my late grandfather, Martin Berens. It was one of his favorite songs.
• As I was listening to this fascinating episode of the NPR podcast The Pulse, about "The Mysteries of Attraction," I thought, "My friend Ben Karney should hear this." Seconds later, the podcast interviewed Ben!
• The Athletic's ($) 2023 piece about Marvin Gaye singing his unique version of the National Anthem before the 1983 NBA All-Star Game is just delicious—and don't miss listening to the performance.
• Will I have time to visit any of these bookstores surfaced by The New Yorker ($) on my next visit to the Big Apple? I sure hope so...
• Please follow me on Bluesky, Instagram, LinkedIn, Post and Threads (but not X) for between-issue insights and updates.
On to our top story...
Walmart, Vizio, Amazon, and Experience Stacks
Attentive readers will remember my earlier explorations of Experience Stacks, which are the idiosyncratic collection of prior experiences somebody brings to bear on later ones. Cultivating customers' Experience Stacks can help a business distinguish itself versus competitors, or help an artist deepen audience members' pleasure.
It's often easier to talk about Experience Stacks around narratives (e.g., all the different MCU or Star Wars movies), but the idea applies to non-narrative products as well. This week, a good, non-narrative example presented itself.
On Tuesday, The Wall Street Journal broke the story that Walmart is in talks to acquire Vizio, the TV manufacturer that also has a built-in, Roku-like SmartTV platform called SmartCast. Walmart is already Vizio's biggest customer. The cost would be almost $2 billion.
This acquisition has two sides: advertiser and customer.
Why advertisers will like it
As the Journal pointed out, "For Walmart the logic of a potential deal is about growing advertising revenue, not selling more low-price TVs." More and more, big retailers are turning into advertising data businesses that happen to sell stuff on the side because the profit margins on the data are bigger than the profit margins on retail. This is part of Retail Media, the fastest growing part of advertising. Walmart's version of Retail Media is "Walmart Connect."
If Walmart controls SmartCast, then it gets two big benefits.
First, it has a new place to put its own ads (promotion) and its partner ads: the big screen on the living room wall, either with the ads shown when the TV first comes on or via SmartCast's many partner streaming services. On top of simply more ad inventory, this is different inventory. Viewers are generally more receptive to ads when leaning back on the couch versus swiping on smartphones, as this data from Comcast and Media Science suggests.
Second, and more importantly, it gets access to all the juicy data about what people watch in the living room, which Walmart can then fuse with its other customer data: what they buy in store, what they buy online, and the many things customers can do on the mobile app. A new tranche of SmartCast data would make the profile that Walmart has on each of its households more detailed, which then allows them to serve more personalized (and therefore more effective) ads.
As my friend Tim Hanlon, CEO of The Vertere Group, noted on Marketplace, this is really about Walmart's acute case of "Amazon envy."
Moving into media could help expand Walmart’s brand, along with its access to proprietary data that’s pulled from commercials that lead to purchases. “They want to be able to tell marketers and advertisers that a dollar invested in a particular form of advertising is going to net out into three or four times that amount in a sale,” he said. “That’s a very alluring proposition to a marketer who is under increasing pressure to prove that their marketing dollars are actually working.”
Over the last few years, Amazon's data-fueled ad business has grown by orders of magnitude, turning what used to be a digital ad duopoly (Google and Facebook) into a triopoly, with a quadropoly (Apple) coming soon. Adding SmartCast's data to Walmart Connect is an important catchup step.
The Customer side
At first, it looks like there is no customer side to this acquisition, but I suspect that Walmart's eventual plan will be to give Vizio TV sets away to Walmart+ customers who commit to three years of the service.
If Walmart does this, then it will be stealing a page from the Telly playbook. (H/T Tim Hanlon for telling me about Telly last month at CES.) Telly provides 55-inch, 4K television sets at no charge, so long as viewers agree to have a second screen with ads running below and let Telly track their data. (One recent ZDNET reviewer enjoyed the experience, to his mild surprise.)
Walmart+ is the company's riposte to Amazon Prime, as this CNBC head-to-head comparison shows. Walmart+ is cheaper and more focused on the in-store shopping experience. However, it significantly lacks a big streaming service like Amazon Prime Video, which is one reason I've been suggesting for years that Walmart should buy Paramount. (I still believe this; today, Paramount Global's market cap is $8 billion, a bargain, while Walmart's is $459 billion, both per Yahoo! Finance.)
Providing a TV as part of Walmart+ would make its offering distinct from—and harder to compare with—Prime. As I've discussed elsewhere, being incomparable is a powerful moat around any business.
After three years of enjoying the no-additional-charge TV that comes with Walmart+, renewing your membership would be a no brainer, just like renewing Amazon Prime has been a no brainer, although that's now slightly in doubt because of the recent addition of ads to Prime Video.
How this connects to Experience Stacks
My most recent piece about Experience Stacks explored how they are non-linear, unlike how watching the eighth Harry Potter movie won't make much sense if you haven't seen the previous seven.
This time, what Walmart's possible Vizio acquisition makes clear is that Experience Stacks are not primarily future focused; they are not about a Unique Selling Proposition (USP) that helps a business acquire a customer.
Instead, Experience Stacks are present focused: they are about creating a complicated, robust, and difficult-to-compare experience that helps a business keep a customer.
We all live in the present, but it's hard to talk about the present because each present moment instantly vanishes into the past. The Greek philosopher Heraclitus observed that you can't step into the same river twice because both you and the river are different each time.
Walmart's longtime slogan is "everyday low prices." If Walmart creates a beachhead in the living rooms of its customers, then it will weave itself inextricably into their moment-to-moment lives, creating everyday connected experiences from the gas pump, to the checkout line, to the living room couch, and everywhere in between.
That's worth $2 billion.
Thanks for reading. See you next Sunday.