The Spring Festival is the peak season for color TV consumption. The news that Wal Mart plans to purchase Vizio during the Spring Festival this year has put pressure on the color TV industry.
According to public information, Wal Mart, the global retail giant, plans to spend about 2 billion dollars (about 14.387 billion yuan) to buy Vizio, a television company. Vizio claims to have the third highest market share of its smart TV operating system in North America, after Roku and Amazon.
Vizio was founded in 2002 and specializes in low-cost television. According to data from Ovirovo, Vizio ranked ninth in the global color TV market with a shipment volume of 4.8 million units in 2023. In 2016, LeEco had planned to acquire Vizio for $2 billion, but was unable to do so due to financial difficulties.
Wal Mart is Vizio's largest sales channel. By acquiring Vizio, Wal Mart has the opportunity to control 20% to 30% of the U.S. color TV market and increase the advertising revenue of TV operations, which will help Wal Mart and e-commerce leader Amazon compete in advertising business.
In the opinion of an industry veteran, Wal Mart's acquisition has two purposes: first, to expand the size of Vizio and increase its sales, which may help it expand markets outside the United States, which will have an impact on the television industry. Second, Vizio does not design and manufacture TV hardware, but only defines products and develops software. It focuses on precision TV advertising business, which is its main source of profit. These advertising ideas and precision delivery are Wal Mart's dream. Giving play to synergies will be the top priority of M&A integration.
In recent years, Chinese color TV brands Hisense and TCL have made great strides in the North American market. The joint efforts of Wal Mart and Vizio will rewrite the competition pattern of the North American color TV market, not only threatening Samsung, which currently ranks first, but also bringing new challenges to Chinese brands.
According to Omdia's data, in the third quarter of 2023, Samsung's share in the North American color TV market was 22.5%, while Hisense (including Toshiba) and TCL's shares were 13.3% and 12.4%, respectively, ranking in the top three. Zhang Bing, research director of Omdia China, predicted that Vizio would have the opportunity to become the largest brand in the US color TV market and surpass Samsung in terms of sales volume through marriage with Wal Mart in the future. Vizio and Wal Mart's own color TV brand Onn both take the low price route, and they will be able to share the supply chain and form an additive effect. However, their products are close to the market positioning, and it is difficult for the two brands to form a real complement. Whether "1+1> 2" can be achieved remains to be seen.
The data of Ovirovo also shows that Wal Mart is the main sales channel of American TV, accounting for about 30% of the overall TV sales in the United States every year. In 2023, the sales volume of Wal Mart's own brand Onn TVs will be about 5 million, and there is still room for growth. If Vizio's annual sales volume of 4.8 million TVs is included, the sales volume of Wal Mart's own brand TVs will reach 10 million.
The acquisition of Vizio will help Wal Mart continue to expand the market share of its own TV brand and enhance the profitability of software services. Rong Chaoping, the research director of Ovirovo, predicted that after the acquisition of Vizio, Wal Mart would focus more channel resources on its own brands, which would inevitably crowd out the sales of other TV brands.
In the North American color TV market, the past and present are competition between color TV brands, and the future is competition between channel in house brands and third-party brands. Zhang Bing reminded that the concentration of channels in the United States is high, and the competitive pressure for TCL and Hisense in the North American market will increase. The improvement of supply chain efficiency and content operation capabilities has become more important for Hisense and TCL. Rong Chaoping also suggested that consumers in the North American market pay more attention to prices, and it is crucial for Hisense and TCL to further enhance their price competitiveness.
However, there are also opportunities in the challenges. Although the share of China's two leading color TV companies in the U.S. market has been rising in recent years, there is still a clear gap with Samsung. If we can take the opportunity of Wal Mart's acquisition of Vizio in North America to impact Samsung, it will be an opportunity to move up to the high-end market while stabilizing the cost-effective market.
The televisions of Vizio and Onn are all OEM products. In recent years, Chinese color TV and panel enterprises have continuously improved their TV supply chain and production capacity layout in Mexico and other American regions. Once Wal Mart has acquired Vizio, it is also an opportunity for Chinese enterprises to "eat" more TV OEM orders.
The color TV industry is difficult to develop and continues to do so year after year. For Chinese color TV enterprises, as the domestic TV market has entered the stage of stock competition, more space is still in the overseas market, and calm response can realize the vision of the the Year of the Loong in the global market.