Walmart Inc. (WMT) Earnings Call Transcript & Summary

Okay. Thank you very much, everyone. Thanks for your patience. Welcome to our retail media discussion with Walmart at the Piper Sandler Growth Frontiers Conference. My name is Peter Keith. I'm the senior research analyst covering consumer hardlines and broadlines and I'm joined by my colleague and friend, Tom Champion. He's a senior research analyst covering Internet companies in the technology space. Quick introductions for who we have on stage. I think two of the most knowledgeable people around retail media are with me. So we have Rich Lehrfeld, who is Senior Vice President and GM of Walmart Connect; and we have Mike O'Donnell, who is VP and Chief Revenue Officer of VIZIO. So thank you both for coming today.

Thanks for having us.

Thank you for having us.

I don't know that I'm online either. Oh, there we go.

Yes, we are good. Okay. So just as a quick introduction, many may know, but if you don't, Walmart did acquire VIZIO, officially closed in December of 2024. So this is very new. And I see potential they've created one of the most powerful retail media networks in the world. And I think there's a lot of opportunity long term, so we're going to dig into that. So why don't we just kick it off. We're going to give the first question to Rich, just help educate the audience. What do you see at a high level that retail media is today and exactly how it's evolving?

Yes. Thank you for having us. I appreciate the time. So I don't -- I know some people don't know retail media. So I'll just -- maybe if it's okay, I'll start with a little what retail media is, and I'll walk you through it and I'll try to do it as quick as possible. So cut me off at any point. So for those of you who don't know, retail media is really actionable performance-based media that is infused with first-party data. So strong first-party signals customer information about our customers. If you're okay, I'm going to kind of bring you back to bring you forward. I was a long-time media buyer, and I started in the days of traditional media. I was a buyer of TV and print and all the other areas. And back in the day, it was really a broad-based media. We would buy Seinfeld or Friends, and 30% of the country would see the ads, and we could see sales the next day because it was just a very broad-based media, but the world has changed. We all know. The world of media is fragmented down to interest levels down to how we view whether that is TV or social or digital, it's a very complicated and difficult for a media buyer or for marketers to really win the space or get people to buy their products. So with that, it makes it probably less -- and makes it less efficient to buy media, more expensive to buy media, very hard to find your customers. So the key is you need -- for a buyer, you need better targeting, you need more efficiency, you need more action to be able to sell the products and at scale. Well, Walmart or retail media allows you to have that, especially Walmart, which is we provide scale, we provide solutions, we provide signals. So retail media has moved into the space where traditionally has -- and I can do the full funnel next, I probably should have done that one first. But actually, let me go one page. Okay. So when I talk full funnel, I say funnel, traditional funnel in marketing is. It starts with awareness. It's a broad-based media consideration and then a customer will buy something and then the loop happens or maybe a loyalty loop around. Traditionally, advertising was, as I said, when you're buying, it's the awareness set. Retail Media traditionally has been in the conversion. So you go on to a site, so walmart.com or the app. And we show you search, you search for a laundry detergent, you get search, and we know that influences sales, but you can also get display. You can do lots of things, but where retail media is really starting to get to is a point where now you can reach customers. I'm Going to go back. Thank you, in online, you can get them in store or you can get them across the Internet. If you have been shopping on the internet, you're searching for shoes. You know, sometimes you'll see shoes. We can -- retail media can be first-party infused information and be able to reach customers wherever they are. So scale solutions and signals are really important. For Walmart, we have 150 million customers. So we have scale. Solutions. We have a broad array of solutions, as I just showed you right here. You can get them on the app. We can reach you in social media. We can get you in the stores. We can get you across the web and you pick up and delivery, you can reach with messages -- advertising messages. And these are very targeted messages. It's infused with first-party data to do better targeting, allows the advertiser to do optimization. So on a real-time basis, we can get signals and understand where sales are happening and then show that sales. So retail media and specifically Walmart allows for scale signals. So the data on 150 million customers on a weekly basis and then solutions, solutions to be able on-site, off-site or in-store. So it's a really powerful medium and retail media and Walmart allows you to be able to do that.

Okay. Well, let's talk a little bit about VIZIO and the CTV opportunity. Obviously, a big acquisition for you guys last year. Maybe just level set, Rich, why did you make this acquisition?

Well, I'll let Mike answer first because he has probably a better history and can talk about -- why don't you start, Mike, and then I'll lean in.

Yes. Well kind of before I get into why did Walmart acquire us, I think it's important for this group maybe to give a little education around what it is VIZIO has and what it is -- or how we make money or how we're going to make money for Walmart. So most of you likely know us as a TV maker. We've been that for the past 23 years, making high-quality televisions at an affordable price. But as that business has declined both in price and margin, our core business is really around our operating system, right? And our operating system and a -- good job, Rich. You're able to flip to it. Our operating system is a key part of the flywheel and our flywheel in terms of how we make money is we need to sell a lot of televisions, we need to get our customers to activate those televisions. We need to get them spending a lot of time searching and discovering and using the content on our platforms. And ultimately, that's going to drive ARPU. And we drive ARPU in a couple of different ways, we do it through subscriptions or bounties we get from subscription partners we have on the platform. That could be a Disney, Netflix, et cetera. We do that through a data licensing business through our own first-party viewing data that we have. And the largest way we do it is through advertising. And we sell 2 different types of advertising to partners. One is -- and I'll kind of lean back here, you see Sonic 3. One is our display banners. That is our home screen. So when you turn on the television, the first thing you see is this home screen where today, we use that to partner with advertisers like a Disney or a MAX to be able to promote the TV shows they have, the movies they have or drive more subscriptions or engagement time within those apps. We also have a video business in which we have WatchFree+, which is an owned and operated app that we have on our platform. So you buy VIZIO television, take it out of the box, connect to the Internet and you automatically have 350 free channels and over 40,000 free ad-supported movies and TV shows. So that is the genesis, that's the business model we have. So why did Walmart acquire us? Walmart acquired us because they saw a same challenge, right? They are a large distributor of televisions in the marketplace. Our top customer is our top customer and was our top customer at VIZIO. And they've seen the erosion of hardware prices and the margins there and saw that a big opportunity for the business was in the back end, on the platform side. And so I think Rich actually just said it best in terms of scale solutions and signals. The opportunity that's in front of us is when you think of that flywheel with scale, Walmart sells a lot of television, Sam's Club sells a lot of televisions. We're able to generate a lot more volume in terms of building up the distribution of the operating system, getting it in front of more and more customers. In terms of solutions, we're able to connect the experience with the customers better. So when you think of Walmart and that experience of search and discovery, being able to connect a customer who's searching for a movie with their family to be able to say, not only here's the movie you want to watch, but also here's a pizza and a soda that you can get in the next hour delivered directly from Walmart. And from a signal perspective I think it unlocks the capability between Walmart Connect and VIZIO for advertisers. How do we create a better advertising experience if we can generate a lot more scale if we can have a very engaging experience, that's a great opportunity for advertisers to be able to leverage the signals to create more personalized advertising and ultimately be able to measure it on the back end, right? And Rich showed the funnel, but being able to look at top of the funnel, which VIZIO or video and TV really is, it's about brand awareness, it's about brand lift, it's about how do I drive reach, being able to connect that with those signals that we can gain from Walmart Connect to be able to say, not only did you see this ad or were you watching this content and saw this ad, but you also made a purchase in store.

I'll just add, we -- I talked about this funnel from a Walmart Connect or an advertising perspective, I'm going back. But okay, it's that funnel, awareness, consideration and then purchase. We have a fast-growing advertising business and alternative revenue for Walmart, but really it's about the customer. We announced last year about $4.4 billion last quarter for Walmart Connect growing at 31%, that's not even including the VIZIO globally at 47%, including VIZIO, in the U.S., 60% with VIZIO. So it's a fast-growing business, but the revenue is important, but it's really about our customers. It starts with our customers. And from a Walmart Connect perspective, everything we do is customer-centric. So we try to use information and data to be able to add more value to that customer experience. So I'm rich and let's say, this water, we know have that signal about you, how do you provide that water, but also give you assortment and diversity because we know that's part of the shopping experience. But traditionally, we have played at that lower part of the funnel, that demand side. You search, we know have that intent. We have -- we understand you as a customer, what you do, what you like. But traditionally, we've gone to that like mid-funnel like maybe consideration as the world and the aperture is opening with us. And we've started this journey of going into connected TV and social and using information and data to better engage with customers across the Internet. You might see like if you're shopping for shoes, you might see that across -- we can do that through our DSP and better targeting, but we know that's where the world is going. Moving from linear to connected TV, moving to full funnel experiences are suppliers and our sellers are coming to us and saying, it's great that you have the on-site stuff. It's great in performance, but we have so many other business challenges and marketing challenges and we need your help. How do we reach a broad-based customer? We have new products that no one knows about. And that's where the world is moving towards, and that's why the partnership is so important because now we can collapse the funnel or the upper funnel to the lower funnel and deliver more experiences for our customers and more value to our customers and then more value to suppliers and sellers who are looking to advertise in different ways.

Great. So the data that Walmart has with your customers is remarkable. So maybe just talk about how you guys can provide some of that first-party large-scale data to your marketing partners to allow for more targeted marketing to customers?

Yes. So everything we try to do make sure we don't lose trust of our customers. It's all safe the way we manage it. We don't turn it over. We manage it and we make sure that advertisers come into our platforms in a secure way to be able to use it as targeting, whether that's on site, whether that is in select in-store, right, if you're coming into the store, we have in-store mode through our digital experiences or off-site and really, it's about understanding what is the objective they're trying to have. So if it's an upper funnel, like I have a broad-based message, and I need to reach new customers or all the way down to, I just need to drive velocity or drive that shelf and understanding what those business -- those needs are, and then we can better target through understanding the customers and what they're trying to do in their journey, whether that is a -- you know what, I'm coming in from my daily grocery, I need to get in and out, how do we provide the things that we know they buy on a regular basis versus I'm in a shopping mode or I'm in a discovery mode that we can maybe open the aperture a little more and deliver products or services. We look also -- we represent -- so traditionally, we looked at our business from a supply-demand and performance perspective. From a supply perspective, that's like all the stuff I showed you on the experiences that we can provide. From a demand perspective, we also have advertisers or suppliers and sellers of all sizes, the largest CPGs all the way down to the smallest marketplace sellers. They might have different needs at the marketplace level. They might just need a transaction or they have a product, but think about advertising in a way where in the past, maybe median stores where a marketplace seller couldn't launch -- didn't have access to product digitally in the digital shelf now, they have that opportunity. They can come on, they can get to the search in grid if someone, let's say, it's water, it's -- which is water, they can now be delivered to that customer because we know it's relevant. And what we find in the marketplace need that boost even more. What we find is like 6 to 7x the amount of propensity of sales happen for sellers that advertise with us versus not advertising with us. So it really opens the aperture for everybody to compete at scale on the platform.

Okay. And are there strategic advantages then with VIZIO who brings its own set of video data with your own customer data, how do you integrate that?

It's a great question. We do -- we try to do it in the right way, again, making sure that we protect our customers through this partnership and making sure now that we can take that information and data and better deliver messages that are more relevant to that consumer or that customer. So it eliminates a lot of waste. It eliminates wrong messages. So we want to deliver more value. Again, customers first deliver more value to that customer and make their experience better, give them things either they love or they didn't even know they love that they wanted to see all the way down to now get them to consider, there's lots of experiences we can build now through the VIZIO at that level. And then all the way down, what we can do now is see on a daily basis when someone saw an ad, what happened in that conversion. One that also helps us make the customer experience better, right, because we know it's going to be more relevant because we want to deliver that, but also for the advertiser or the supplier a seller or now even non-endemics, non-endemic for us being someone that doesn't sell on Walmart insurance companies, car companies, giving them a better signal to be able to target. And then if they are endemic, what actually happened, if they're non-endemic, we're using third parties to tell them what happened.

I think that's an important point. I think in terms of being able to open up the customer base, when you look at connected television, it has a broad swath of advertisers that are there. Rich referenced, insurance, automotive, media and entertainment, shared earlier, I'm getting used to the term endemic at Walmart because endemic for us had always been media and entertainment, right? This is point of sale, this was the best way for media and entertainment companies to drive people into their app experiences. But when you look at bringing them down the funnel or leveraging those signals, this gives the opportunity for somebody who an automotive advertiser to maybe understand, look, yes, they're not going to buy a car at Walmart, but there's a lot of automotive-related products that are being sold at Walmart, right? How can I leverage those signals to be smarter about the advertising I'm making, the environment I'm making within a video or a brand awareness environment, and how can I ultimately help look at that to help drive sales on the back end?

Okay. So that was a lot of great detail on Walmart. And I think some of the questions around strategic rationale. And I'm wondering if you could just zoom out to 40,000 feet and just talk about the industry and what you've observed in retail media overall over the last 1 to 2 years, what are kind of the mega trends that you've observed?

Yes. It's a great question. So first off, retail media was nonexistent 10 years ago, it started to build up. But the notion of a strong first-party signal has always been powerful. It's just been hard to get to that to link the actual sale to a media channel. So the TAM, they say for retail media over the next couple of years $100 billion, Digital Media is hundreds of billions of dollars and then add in traditional media gets even larger. The notion of first-party data infused is going to be infused into media. Retail media is going to be retail and retail media is going to be media. So this notion of better signals are really important. But there's a couple of trends that we're seeing. And Mike and I -- Mike can probably build, which is because retail media and then traditional media kind of like our blending together. For us, we see -- and retail media -- and I'll let Mike do the broader one. For retail media, we've seen a couple of things: One is full funnel, as I talked about, things are moving from this performance base to upper funnel because clients or advertisers are asking us to solve different questions and solutions and marketing problems. And the -- and I said scale signals and solutions, this notion of scale, advertisers, they can't go to 100 places, thousands of places they do, but trying to limit the amount of where the resources are to get to the largest group of customers, it's going to be really important. So this notion of full funnel. They're going to probably focus on a couple of big players in the marketplace. And then the second one is marketplace, which is this notion of has been so strong from an advertising perspective, but 3P and the notion of tens of thousands, hundreds of thousands, millions of smaller sellers on platforms like Walmart are starting to explode. So we have to build solutions that meet the needs of all of those clients or advertisers or sellers or suppliers. So full funnel is happening, marketplace is really key. Mike, I don't know if you want to kind of go to the [indiscernible] -- Yes, connected TV.

Connected TV. Well, Connected TV in general, just at a 40,000-foot level. I mean I think it's -- it's well known that Connected TV is overtaking traditional or linear television. I think the expectation is by 2027, more dollars will be spent in Connected TV than in traditional television. And in traditional television, the majority of that is really still tied to sports, right? So we're seeing this massive shift. And to what Rich was talking about, we were recently just at [ Cannes ]. And when we talk to every major CMO and every executive at advertising agencies, the core themes or investments that they were looking to make are around retail media, and connected TV, right? Those were the 2 biggest topic -- well and AI, of course. The 3 biggest topics that were on their minds. How can they get better positioned within those different investment areas. And I think what that ultimately brings to, and I think Rich touched on it, when you have that full funnel solution through signals solutions and scale. They're now thinking of us not necessarily just as a retailer, but they're thinking of Walmart as a media company.

Interesting. As you talked a little bit about smaller retailers and CTV and maybe CTV being a better fit for brand and for larger businesses, how are you seeing the opportunity there and the ability to bring small businesses into CTV.

Well, I think being able to -- I think Rich used the example, -- was it Rich's water? Yes, that's great. In terms of Rich's water, when you have the ability to have these strong signals, right, it enables us to open up the environment to new types of advertisers because they can get more personalized, more specific and they can ultimately measure on the back end. So if you have Rich's water competing with a much larger brand, they know that they can come to VIZIO, right, or they can come to our platform or our operating system, and they're going to be able to get more value out of the brand that they're putting in than necessarily they would by making a broad-based reach by that historically has been very expensive or you need to invest a lot of dollars against.

This is an interesting sort of phenomenon that's happening because of technology, AI, automation, like so our business -- of course, we service the largest CPG and advertisers, we have team set up for that. But this business is moving to a more automated, self-serve sort of system that agencies and buyers across all marketers are really utilizing on themselves. And traditionally, we have said, well, the large advertisers, you have to spend $100 million or whatever the number is, but smaller sellers or advertisers because of the precision and elimination of waste they can buy one ad. Like in our system, they can spend a couple of hundred dollars if they want. Before it's not -- you don't have to be the biggest advertiser and that just opens up the aperture for so many marketers like Rich's water or whoever to advertise on performance-based media like retail media, but also as we start to integrate into an automated performance-based auction. Now they can come in and just buy 1 ad, 2 ads, 3 ads and make it really precision in the market or the demo or the geography that you want. It changes the game. It opens up for everybody on a playing field that is so different than it was in the past.

Maybe if I could bring that to life. I was thinking of -- I'll be the Chief Marketing Officer of Rich's Water. And I'm selling to Walmart and I'm engaged with the merchants. Give me the sales pitch because I'm doing a little bit of advertising somewhere else already. Why am I going to now move some of my ad dollars over to Walmart Connect?

Yes. So the first thing I would say, which is we keep the -- some people have asked us about trade and -- first of all the negotiation with the merchant on price or whatever you're doing like end cap promotion or whatever. That's with the merchant. You do that. And then separately, we will come in and have a demand sort of driving growth conversation. And so the conversation with the merchant is the merchant, it's about, again, trying to get the best price for our customer and ultimately, for us, for -- it depends on what your business objective. What I always say to clients is, give me a brief. They always like, well, we just want to do business, this is like if you can give me just like 2 words. I don't need like a long brief, I just need like a couple of words. Are you -- do you have a new product? Are you launching that new product in a completely different way? Is it in a specific geography? Is it a limited time offer. Is it an existing product, you're just trying to build some share. So is it -- are you losing share? Are you going after? So there's so many permutations. So the sale is, let me help you solve your business challenges and marketing challenges and get to the right customers. And if we can get to the right customers and add value to their experience we'll move fine on the money, right? We'll get the advertising dollars, but let's solve the customer challenge first. That's the pitch. And it's -- I would say it's working because it's about growth. And who doesn't want growth. It's not a -- we can give you the efficiency metrics and we can give you all the stuff. But really, the message is how do we help you grow in new and different ways or creative ways, that's the pitch.

Maybe for both of you on kind of a retail media side and CTV, what are the major pain points by customer type? What are maybe the technology features we need to look out for in the next year or 2 that can kind of stimulate the next leg of growth?

Are you saying customer being the advertiser or customer being the ...

The customer being the advertiser, yes.

So I think Mike kind of talked about this notion of -- I'll give AI and I'll give like scale. Like I'll go back to the first one, which is they are dealing with so much complexity in the marketplace and finding customers is always challenging efficiently as I kind of opened up, and that's going to be an ongoing problem to try to -- how do I reach customers in the right way. And then the integration of AI is going to make it easier and harder in other ways because AI will infuse into every part of information and data that will make the signal even stronger and better at the same time. So that's really good for the -- ultimately for the customer. They're going to get -- it's going to be closer to what they're looking for, but it will open up also new opportunities for advertisers to get -- to eliminate waste in many ways and then also reach the customer. But I would just say the only thing I would add is that people ask me about AI and is it in search and what is it going to do? And I do think search will still be really viable, it will just be better, right? And people will pay for the right to ad relevancy products to that search mechanism. But as we -- really important with VIZIO is the viewing patterns are also be infused with knowing more about the customer and add more value into the experience of the content itself. So I don't ...

Yes. I mean, I think it's around -- I think you touched on it. It's around search and discovery, right? How can we leverage AI to create a better experience on the platform. I touched on it earlier on the flywheel, but the more engagement that we have on the platform, the more engagement that we can drive into what's a good value for our customers is ultimately going to help advertisers on the back end. So I think being able to leverage AI through the search and discovery process to be able to source or be able to help customers find what they want to watch. What is the right movie for Family Night that I want to see, how easy it is it for me to get there, right, within 1 click or 2 clicks. What's the right service for me to subscribe to, right? What's the right content that's available at all different price ranges across the platform? I think AI can continue to make that easier, more seamless and ultimately, a better experience that's more engagement is better for the advertiser.

And then as you think about even make it shoppable where you have moving night with the family, what do you need? You need popcorn, you need and -- one click and you can just get that all delivered to your house in half hour.

Yes. We think about it as a connected commerce experience. right? How do we bring more of a connected commerce experience to the platform understanding. I think 80% today, 80% of VIZIO customers are Walmart shoppers, right? We expect that or hope that continues to increase. That's the reason why Walmart -- one of the reasons Walmart acquired us, if I didn't touch on that, is to be able to get into more homes where there's Walmart shoppers are at, right? So if we can understand those Walmart shoppers, those needs, they're in that lean back experience or a different environment than maybe they are on walmart.com or on the app, we can showcase to them different things that -- or different products or opportunities that may fit what they want.

That is interesting when 80% VIZIOs are already Walmart. But so there's already some good customer overlap. You guys are now 10 months into the acquisition. How is the integration going so far? Are there any key highlights you'd like to flag for us?

The integration is going great. I wanted to ask you -- no, I think it was very -- the integration was very seamless for us because Walmart was already VIZIO's top customer, right? We've been working together for over 15 years on the hardware side. And we had already had these great meetings ahead of time. Really, I didn't use this example earlier in the acquisition, but part of the acquisition was formed around this kind of aha moment we had in the Dallas meeting. right, where we got together different parts of the business to talk about different strategic opportunities that we could have to serve the Walmart customer better on our platform. And in that, we were able to unlock a lot of different opportunities and ideas, right? There was one, obviously, how do we get more Walmart customers to have the operating system itself, how do we create that better customer experience that's more seamless? How do we integrate leveraging the signals we have? And then combined with that, how working together with Rich and the Walmart Connect team, can we leverage those signals, create a better advertising experience. So we kind of had the playbook already understood just because we've worked so closely together for so long. But it's made for a very seamless integration.

I'll just add to, just from -- we kind of talked about endemic, non-endemic for us, to remind you, like endemic is people that sell on Walmart, Non-endemic are companies or brands like cars or insurance or financial services that they don't really sell on Walmart. We traditionally have just been focused on the large CPGs or as I said, the marketplace sellers. We didn't reach out. The VIZIO team has somewhat reversed, right? So they have their endemic, the entertainment platforms. We sell like IP, like entertainment products. But for like the movie space and streaming space, we traditionally haven't had advertisers at that level. But our platform is so large, as I said, scale. It allows entertainment companies now to have access to be able to market in different ways, not just like on the VIZIO platform can bring it all the way through to the site to sell if it is a movie or it is streaming but also the IP, the products that they have and make it fully seamless integration of promotion. And then if there are also a car company insurance. We have rich data. We know we are one of the largest repair -- auto repair. So we have a rich set of data to be able to engage with customers and know a lot about customers -- they sell a lot to car companies and others. So we're looking at it in completely different ways now where we can fully integrate the platforms and the stacks to meet the needs of the advertisers. Like I said, each one has kind of a different challenge. A movie might say, like opening weekend is like the most critical sort of thing, how can we build a promotion around that opening week in a completely different way? Or if you're a car company or you're launching a new product or insurance or whatever, we can think holistically. We want to keep people on Walmart. But at the same time, we have lots of opportunities whether that's in-store or post checkout to add features. And even with our Walmart Connect, we have a lot of features that aren't specifically about the selling and the endemic sort of stuff. So it's opening up completely new avenues for us. And -- if I can -- for me, which is the -- probably 1 of the more exciting things is besides adding real value to their customers, it's looking at the business in a completely different way. Traditionally, I'm sure there's many people like, "oh, retail media, it's just retail" or they think of another company like meta or whatever, it's like an advertising company or a social media platform, it's all of these things now coming together in a completely different way, which one, I'm exciting as marketer or an ad sales, it opens up completely new opportunities for revenue. but allowing our customers to really engage in different ways. That's sort of exciting. And then I always love to solve -- always love to solve business challenges. I'm a marketer at heart. So when big CPGs or even the smaller companies come to us with these business challenges, I'm like, well, we can solve that. Before I would be like, I don't know maybe I have to partner with this. Now we can solve all these business problems. And to me, as a marketer, that is so exciting. That's very interesting.

Let's see, 1 part of the integration that I thought was interesting, too, is the announcement a month or 2 ago that you were going to make VIZIO now an in-house brand. So Tom and I worked on this. Walmart was the biggest video customer, but it was not -- there's still less than 50% of sales. So you're kind of leaving greater than 50% of your sales to now focus specifically on Walmart with the end goal of getting VIZIO TVs in as many living rooms as possible. So just talk about the strategic rationale of bringing VIZIO to become an in-house brand now.

Yes, I would say there were some market dynamics to that, right, in the sense that once we became owned by Walmart, there were some retailers that not necessarily wanted to work with us or give money to Walmart as expected. But when you look at how do you best serve the customer when you think of the on-brand and VIZIO, it's really about -- Walmart's always been about, from a merchant perspective, good, better, best, right? And how do you create great price points or great value. When you talk about how is the integration going, we shared a very similar culture. That culture has always been about giving high-quality right, at an affordable price, right? That's value or EDLP in my new world. So when you look at that, the opportunity for us to become a private label enables us to look at that good, better, best model and be able to create a better experience across that ecosystem, whether that's opening price point whether that's midrange or whether that's the higher end latest greatest technology out there in the marketplace. And I think when we look at -- you touched on some numbers, but Walmart sells a lot of television as the Sam's Club, I think between on and VIZIO combined already, we're about 50% of the televisions at Walmart. So it enables us to give the same operating system experience right, be able to leverage those same signals, to be able to give a great customer experience across both the on and VIZIO operating systems that are sold at Walmart.

And I think just to clarify, too, the video operating system will move on to the on-TV.

Yes. We made that announcement that at the end of this year, we'll start rolling out the VIZIO operating system on on-television.

Okay. Mike, I'm wondering, just as a technology analyst, I'm very curious your perspective. What's kind of your latest thought on the CTV market in the broadest sense? I'm wondering if you perceive like 2024 and that experience around the election is kind of like a seminal transition point for the industry.

I'm very bullish on the connected TV industry. No, we see that -- I mean if you look at all the trends, you'd look at just our television. So we have, as you know from covering us for years, we have viewing data. We have a technology built into the television that enables us to see what's happening on those TVs. So we understand what people are watching, whether that's linear television streaming, a sticker dongle plugged in or on a gaming console. We know what the viewing habits of the customer are. And we have seen as of recently, 66% of time spent when someone's on a television is spent streaming, right? Now less than 30% -- I think it's almost about, call it, less than 30% of time is spent in linear television environment, right? So in terms of just time spent, in terms of habits and shifts, the customers are moving to streaming -- or I shouldn't say are moving. They have moved to streaming. We saw in this last political election, more and more dollars being pumped into connected television. And that was for a couple of reasons, not specifically to talk about political, but as a overall of the market, you can leverage what the benefits of linear television are, sites on emotion, driving great brand awareness, great brand lift. But you can also layer on what's best about digital environment. You can layer on the personalization. You can layer on different measurement opportunities. You can help plan those campaigns and optimize those campaigns better. So I think I mentioned earlier, by 2027, we expect connected television to investment to outpace linear TV. And as we continue to work more closely with Walmart Connect as well as continue to build our base, continue to build out our owned and operated environments, we see a big opportunity in both video and display.

Okay. Great. Well, maybe just to wrap it up, provide a lot of good content. So just to summarize for each of you, we'll start with Rich, and we'll go to Mike. What are you most excited about looking forward now as a combined business to really drive the connect and advertising growth at Walmart.

Yes. If I'm repetitive, I apologize. To me, what I'm excited about is this notion of solving business challenges for our suppliers and sellers. It's adding more value to the customer experience. And when I look at retail media, it is growing. We said it's a $100 million TAM over the next couple of years. It will be infused into all digital. So when you talk about digital media, you're talking about hundreds of billions of dollars, I say millions -- billions of dollars. And then when you add in all media, you're talking about a large -- so the world is moving in this direction. What clients are asking us is that full funnel. I'm excited about allowing suppliers and sellers of all sizes to be able to benefit from the notion of Retail Media, launching new brands is pretty exciting, seeing all this growth happen at Walmart moving from like 6 years ago to the stores to this digital business, and we're growing that, again, because we're doing a lot of value for customers in that experience. And then you layer on top of that, this notion of retail media and adding value to the customer experience with providing more diversity of products and a more assortment for the customer and seeing all of that really benefit. And I would just say if I leave one thing, if you can leave you just like this notion of scale, signals and solutions, when you start to -- if you're going to do an analysis of retail media itself or media overall, it is going to be hard for supplier -- or advertisers to go everywhere because it's just going to be too fragmented. So scale is going to be really important for them to invest their dollars. The signals are really important. Does it -- what do you understand about the customer? And can I do better engagement with that customer and more relevancy for that customer. And to me, the solutions, right? So companies or platforms that have solutions that are interesting and engaging that can be very relevant and show the sale, right, not just the -- or the sale, but also the incrementality. The platforms that can do all that are going to succeed. It's a large marketplace. And Walmart is going to be one of those because we're trying to think about it the right way, customer first, then we'll make money, we're going to grow, but we focus with the customer. So I leave you with that scale, that signals and the solutions is really important as you do analysis of these.

Okay. That's a great answer. Mike, what are you excited about.

That's tough to follow. I'm excited because Rich is excited. Yes. I'm excited because Rich is excited. Now no, I think Rich touched on it, right? It's the opportunity to serve the customer better. And when I say that, it's multiple different customers. It's the Walmart customer. It's the viewers that we have on the operating system today. We can create a much better experience, right? I think we you know from our business, moving from VIZIO into a much larger organization, it gives us the opportunity to invest and drive more resources into creating that better customer experience, helping customers find what they want to watch better, helping advertisers on the back end, recognize who their customers are, how they can deliver them better advertiser or more relevant advertising and ultimately, how they can measure it on the back end. So I think we have a huge opportunity to continue to serve our customers better. And I think the opportunity will continue to accelerate.

Great. Thank you guys for being here. This was awesome.

Thank you for having us.

Thank you very much.

Yes. Thanks, everyone.