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Welcome to Lowpass! This week: The flip side of Walmart’s Vizio acquisition, and The Void’s new tracking tech.

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The flip side of Walmart’s Vizio acquisition

Tuesday’s news that Walmart is acquiring Vizio for $2.3 billion has the potential to significantly alter the smart TV business in the United States (if it is getting approved by regulators, that is).

I wrote a story about the logic behind the deal – and the lifeline it extends to Vizio – for Fast Company Tuesday. For this week’s newsletter, I decided to take a look at the flip side of that coin: Who is going to be worse off as a result of America’s biggest retailer acquiring one of the country’s biggest TV brands?

To get to the bottom of this, I pinged some industry insiders for their input, and dug through a bunch of data. Turns out that this deal could have some less-than-obvious consequences.

People don’t like Roku’s odds. Roku’s stock has been getting hammered over the past week or two. In mid-February, the company’s shares traded for close to $100. Now, they’re hovering around $65. The sell-off erased more than $3 billion of Roku’s market cap.

• Not all of this can be attributed to Walmart acquiring Vizio. While Roku ended 2023 on a high note – 80 million active accounts, and nearly $1 billion in revenue for the quarter – its executives also warned of challenging times ahead for media and entertainment, which happens to be a good chunk of Roku’s bread and butter.

• In simple terms: As streaming services like Disney+ and Discovery+ stop throwing tons of money around to become the next Netflix, Roku’s ad revenue is bound to suffer.

• However, news that Walmart was looking to acquire Vizio clearly also didn’t help Roku. Share prices declined notably following the Wall Street Journal’s report about a possible deal last week, and fell again when the deal was announced Tuesday.

• Much of that seemed to be due to the fear that Walmart may shut out Roku once it has its own TV brand. Walmart has been one of Roku’s biggest retail partners, with the two companies regularly launching dedicated Roku models just for Walmart customers.

• Roku’s software also powers some of Walmart’s existing Onn smart TVs, and Walmart was the launch partner for Roku’s shoppable advertising initiative.

• Roku CEO Anthony Wood tried to calm investor fears about an at that time still-unconfirmed Vizio-Walmart match-up during last week’s earnings call, saying: “We have a great relationship with Walmart.”

• Personally, I don’t think Walmart would stop selling one of the most popular brands for smart TVs and streaming devices. But I also wouldn’t expect future Onn TVs to run Roku’s OS. Walmart may also shift some of its promotions to Vizio TVs, all of which could hurt Roku.

But Roku is far from alone. When I asked an industry insider this week about the biggest losers in this new world of big-box streaming, I got this answer: “Anyone who has a ton riding on (connected TV) and ads. Walmart is going to be a tough story to compete against.”

• The insider went on to mention a who-is-who of smart TV advertising including Xumo, LG Ads and Roku – all companies that will have to convince brands that their platforms are still worth spending ad dollars on, despite lacking the level of insights Walmart has on its customers.

• “It is really the data they have on the household and the relationship they have with advertisers,” the insider added.

• It’s a sentiment I’ve heard more than once this week, and that veteran Hollywood marketing executive Joe Epstein summed up well on LinkedIn: “What should be interesting is when Walmart connects its OS ad serving stack to its retail media network, Walmart Connect, which already reaches 140M people in the US across thousands of stores,” Epstein wrote.

• “Not only should they sell more stuff, but combining what people watch directly with what people buy at this massive scale makes Walmart the purveyor of some of the most valuable ad space in all of media land,” he added.

The wildcard that is data. There’s another part to this deal that hasn’t gotten a lot of attention: Vizio’s data business, and how it may change once Walmart takes ownership of the company.

• After a bit of a rocky start (remember that smart TV spying lawsuit?), Vizio built a successful data business on the back of its smart TVs. Basically, Vizio TVs keep an eye on the things you’re watching, and then sell that data to a bunch of different vendors.

• Vizio does this with help of its Inscape subsidiary, which boasts that it has real-time data on more than 700 linear TV networks as well over 100 streaming apps, which it gathers from more than 23 million devices.

• The data is being licensed to “ad tech companies, advertising agencies and networks [...] to inform their ad buying decisions,” as Vizio put it in its S-1 in 2021. 

• Among the companies licensing this type of data is Nielsen, which relies on it to measure TV consumption in the age of streaming. Other customers include iSpot, Warner Bros. Discovery and MarketCast, according to Inscape’s website.

• Vizio’s smart TV platform business generated $121 million with non-advertising revenue in 2022, most of which is coming from its Inscape data business. (Full-year 2023 numbers are scheduled to be released next week.) That’s still a good chunk of money, even for Walmart.

• However, Vizio’s data business has been growing significantly slower than its ad business, despite a choppy advertising market. Over the first nine months of 2023, ad revenue increased by 28%, while non-ad platform revenue only grew by 12%.

• The big question here is: Will Walmart bother to keep Inscape around, or just focus on Vizio’s advertising business?

• “Walmart doesn’t usually sell data,” another industry insider cautioned when I asked him this very question.

• I asked Walmart, Vizio and Nielsen about this, but the companies all declined to comment.

• The counterpoint is that Nielsen and others have multi-year licenses with Inscape. Even if Walmart were to change its tune on data, any outfall wouldn’t be immediate.

The long-term picture of this match-up is still murky. As I pointed out in my Fast Company story, Walmart doesn’t have the best track record running media businesses, and Vizio has been dealing with some growth issues for a while now. Still, the power of a huge retailer like Walmart should not be underestimated – and its ability to reshape the smart TV landscape could have significant consequences across the entire streaming world.

The Void is working on markerless tracking

Location-based virtual reality startup The Void has been working on a comeback since late 2021, and things are progressing, judging from a series of recent LinkedIn posts from The Void cofounder and Chief Creative Officer Curtis Hickman.

These include a first look at the tracking technology his team is working on as part of something Hickman called the Void Motion Lab: “We know that guests don't like wearing devices to track their movement - it should just happen... like magic,” he wrote this week. “So, our new system markerlessly tracks guests (and even objects) throughout the experience.”

The Void used to do some basic tracking, including hand tracking. However, while competitors made heavy use of body trackers to better estimate poses, The Void decided against it, with Hickman telling me a few years ago that they didn’t want “the experience get in the way of the guest having fun.”

The company’s new solution does away with trackers and markers altogether, and can be used with a variety of cameras and setups. Intriguingly, it can also track a bunch of people in the same space. “Our system shines when it comes to handling larger groups,” Hickman wrote. “Imagine seamlessly integrating dozens of guests into a virtual experience – that's the power of our technology.”

Hickman also posted a video of the technology in action, which is worth checking out – if only to get us more excited about an eventual return of the company’s experience centers.

What else

Fubo is suing ESPN, Fox and Warner over sports JV. Fubo, which started as a online pay TV operator for sports fans, is alleging that the three companies are engaging in anti-competitive behavior.

Amazon may sunset Freevee. The free, ad-supported streaming service, which was previously known as IMDb TV, may go away following Amazon’s decision to brings ads to Prime.

Meta wants to turn the Quest into an Airplay receiver. Don’t hold your breath for this one, is all I’m saying …

Microsoft wants to make every screen an Xbox. The Verge has Phil Spencer’s Xbox Everywhere memo.

Here’s another Vision Pro review worth reading. I know what you’re thinking. Another Vision Pro review? But Upload’s take on Apple’s headset is unique, because it pays close attention to the way the headset (and its main competitor, Meta’s Quest 3) handles pass-through, immersive media and more. Give it a read, you won’t regret it.

This AI wants to tell you what to watch. Cineverse is working on a conversational AI to recommend movies and shows.

Duetti raises $15 million in equity funding. The music licensing startup, which I first reported about in late 2022, also secured a $75 million line of credit.

Roblox game developers earned $741 million in 2023. That’s a lot of Robux!

That’s it

Don’t call it a redesign: When I soft-launched Lowpass last spring, I just started with the default newsletter template offered by Beehiiv, my email service provider. It looked perfectly fine to get started. It’s also something that I’ve been wanting to change ever since, but the notion of a big redesign has been holding me back. That will take weeks, I keep telling myself. Weeks I don’t have, I keep telling myself.

Over the past long weekend, I just started to tweak a thing here and there, so Lowpass may look a bit different today. And it may change even more in the coming weeks and months, as I find some more time for additional tweaks. Please let me know what you think, and especially alert me if something suddenly is illegible or ill-formatted. Just don’t call it redesign feedback — otherwise it may take me weeks to respond.

Thanks for reading, have a great weekend!

Images courtesy of Vizio, Walmart and The Void.