Billion-Dollar Unicorns: Razer Leads The Gaming Accessory Market

| About: Razer (RAZR)

Summary

Razer was set up to create products to meet the growing needs of gamers who need precision gaming tools.

Razer prides itself on being a company dedicated to gamers and providing "gaming innovations that are truly made for gamers, by gamers."

The company has been largely venture funded with $125 million.

According to Newzoo, global gaming industry revenues were estimated to grow 9.4% to $91.5 billion in 2015. The industry is expected to be worth $107 billion in 2017 driven by gaming on tablets and smartphones. Little wonder then that gaming accessory and platform developer Razer (Private:RAZR) is a member of the Billion-Dollar Unicorn club.

Razer's Offerings

San Diego, California,-based Razer was founded in 2005 by its current CEO Min-Liang Tan and Robert Krakoff. While it was founded in 2005, the wheels for the company were set in motion as far back as 1998 when Robert Krakoff, GM of kärna, acquired a mechanical high-speed tracking technology and wanted to explore the use of that technology in various industries. At that time, Robert met hardcore gamer Min-Liang Tan, who suggested to him that kärna could use that technology to make a gaming mouse. By leveraging Min-Liang's expertise, kärna released the Razer Boomslang, the first version of a gaming mouse. But by 2000, the dot-com bust caused kärna to shut down shop.

Five years later, Robert and Min-Liang still had not given up on the idea of working in the gaming industry. The two decided to revive their business by launching the Razer brand in San Diego. Its first product released in 2005 was the Razer Diamondback, a gaming mouse that soon became the top selling gaming product of all time.

The company was set up to create products to meet the growing needs of gamers who need precision gaming tools. Its innovative platform is able to connect devices and software using advanced technology and by integrating inputs from leading online Sports athletes. Razer prides itself on being a company dedicated to gamers and providing "gaming innovations that are truly made for gamers, by gamers."

Since its founding, Razer has launched several successful products. It sells dedicated gaming systems, accessories such as gaming mice, keyboards, audio tools and controllers, wearable devices such as watches, activity bands, Virtual Reality glasses and software offerings for the gaming industry. Analysts estimate that the company's products account for nearly 30% of the global video game mouse and keyboard business.

Razer's users include an active user base of more than 3.7 million gamers who use its gaming laptops, accessories and other products. It has sold over 13.5 million connected devices and has over 11.5 million registered users across its software platform and it adds nearly 20,000 new gamers daily to its portfolio.

It is expanding its reach by entering into tie-ups with vendors like Forge TV to build a micro-console that will allow gamers to stream PC games directly to the TV and to play mobile games on a large screen.

Razer's Financials

Razer does not disclose its detailed financials. Analysts estimate that the company would have recorded revenues in the range of $250 million-$300 million back in 2014. The company has been largely venture funded with $125 million in investments from Accel, IDG Capital Partners, Intel Capital and LianLuo. Its last round of funding was held in February 2016 when it raised $75 million from LianLuo at an undisclosed valuation. Razer was already valued at over $1 billion in 2015.

Razer may not be alone in the gaming accessory market. It faces competition from companies such as Logitech (NASDAQ:LOGI), Mad Catz, Corsair and SteelSeries. But it has carved a niche for itself by operating like a platform company instead of just a product manufacturer. It has become the global leader in gaming mice, gaming keyboards and the gaming headphones market. Its attractive offering also makes Razer a lucrative acquisition target for companies like Sony (NYSE:SNE) and Electronic Arts (NASDAQ:EA) that may want to expand their dominance in the gaming market.