There are some opportunities for the company to tackle in streaming, but perhaps not as many as once hoped when Walmart acquired Vizio

Walmart's global ad business had $6.4 billion in sales through last year.

Over the past few years, Walmart has quietly become a multibillion-dollar media company due to big investments in its advertising business.

That raises questions over how much the company might collaborate or compete with legacy media and entertainment giants in a bid to grow its empire even further, BofA analysts said on Tuesday.

The analysts, led by Jessica Reif Ehrlich, said that no matter what path Walmart (WMT) takes - options include deeper advertising partnerships as well as building or buying a streaming service - its next moves could send ripples through the media ecosystem due to the company's size.

"Today, Walmart remains the most important physical retailer, is one of the largest digital-advertising platforms in the U.S. and the leading retail media network outside Amazon," the analysts said.

"Walmart's success in advertising is no longer in question," they later added. "The bigger question is how ambitious the company wants to be."

So far this decade, Walmart has built up its so-called retail media network, which charges brands for advertisements and sponsored searches on the retailer's websites and apps. Last year, the analysts said, that segment brought in $6.4 billion in sales, and has more than tripled in size over the past four years.

In 2024, Walmart bought connected-TV platform Vizio, a move analysts said could give it more ways to show more ads to more people. In August, Walmart bought Vibe.co, a streaming-ad platform geared toward smaller businesses. Walmart has also struck ad partnerships with media giants like Disney and NBCUniversal, and it offers perks like access to streaming services for some members.

Analysts have said that retail media gives retailers a higher-margin business as consumers struggle with inflation. The BofA analysts estimated that Walmart's advertising margins, a measure of profitability, stand at around 70%. They noted that around 150 million U.S. customers shop at the chain weekly, meaning it has no shortage of shopper data to draw from.

Walmart's ultimate media and advertising ambitions have been a source of analyst speculation, as retail rival Amazon (AMZN) rolls out original TV series and moves into live sports broadcasts. Amazon's ad services business raked in $68.6 billion in sales last year.

But Walmart might not share rival Amazon's streaming and entertainment ambitions, the BofA analysts suggested on Tuesday.

Those analysts said any effort by Walmart to create or acquire a streaming service would "represent a major strategic and cultural departure" for the company.

"A traditional streaming strategy would require significant investment and consumer marketing, while also introducing potential reputational risk from content produced under or associated with the Walmart brand name," they said.

The BofA analysts noted that the streaming industry is already sufficiently crowded, with companies that already have significant studio and production infrastructure. For some legacy media companies, the pivot to streaming has been challenging.

Vizio's reach into viewer households also remains small compared to other streaming and TV networks, the analysts said. Sports rights, they noted, require firm commitments and production costs.

Still, the analysts said, Walmart isn't completely without opportunities in streaming. They said Walmart could venture into shorter video content involving things like home renovations and gardening, made in collaboration with suppliers.

"Over time, successful formats could be expanded into a broader lifestyle content strategy that supports both Walmart Connect and product sales," the analysts said, referring to the name of Walmart's retail media segment.

The BofA analysts suggested Walmart has more in place to collaborate with other media companies rather than compete with them outright.

They said Walmart "already has the outline of a partnership-led media strategy." They noted that members of Walmart+, a service that offers perks to Walmart shoppers, have the option to stream content from Paramount+ Essential or Peacock Premium, with ads, for no extra charge. Walmart has also worked with ad-tech companies like Trade Desk (TTD).

The analysts also said Walmart could simply keep expanding its Walmart Connect business.

"This is likely the lowest risk option and still has meaningful runway, particularly as more dollars migrate into retail media networks and advertisers focus more on driving performance," the analysts said.

They also said Walmart could position itself as a large source for advertising data, potentially deepening its relationship with ad agencies and other connected TV platforms.

Shares of Walmart finished around 1% lower on Tuesday. The stock is down 4.8% so far this year.

-Bill Peters