Walmart has entered into an agreement to acquire TV maker Vizio Holding for approximately $2.3 billion.

The company said the acquisition would enable it to connect with and serve its customers in new ways such as innovative television and in-home entertainment.

It will also boost Walmart Connect – Walmart’s media business in the US – by combining its reach and capabilities with Vizio’s advertising solutions business.

“We believe Vizio’s customer-centric operating system provides great viewing experiences at attractive price points,” said Seth Dallaire, EVP and chief revenue officer of Walmart US. “We also believe it enables a profitable advertising business that is rapidly scaling.”

As the core retail business will likely be under more pressure, Walmart has decided to accelerate its Walmart Connect division, which grew 30 per cent last year, GlobalData MD Neil Saunders said. The acquisition of Vizio plays an important role in this strategy.

“As much as Vizio is known for the televisions it sells, it also has an advertising solution via its SmartCast Operating System which streams content on its devices,” Saunders elaborated.

He added the deal will turn Walmart Connect from an advertising provider through stores and websites into one that can penetrate consumers’ homes via television.

“This multichannel approach gives Walmart a lot more power and reach in the world of advertising and puts it on a more level playing field with the likes of Amazon.”

Vizio becoming a Walmart owned-brand may also help to increase the company’s margins, given Walmart is Vizio’s best-selling retail channel, the analyst added.

“At a broader level, the deal underlines that retail is becoming a much more diversified business than it used to be. There are linear linkages from retail into other industries, like advertising and fulfillment, that retailers are looking to capitalize on,” he concluded.

Further reading: Walmart finishes off strong year with holiday quarter sales uplift