Speaking of Razer, I believe the vast majority of players have heard of this name, and this game equipment brand, nicknamed "Light Factory", has also been an important player in the game industry in the past two decades. However, when millennials and Generation E have become the backbone of society, and the game industry, especially e-sports, is booming, Razer is about to delist.
Recently, Razer decided to delist from the Hong Kong Stock Exchange for HK$2.82 and will pay up to HK$10.788 billion to achieve privatization. Razer, which was listed in Hong Kong in 2017, should be said to have ridden the wave of this round of global e-sports industry, but the company with the "first share of Hong Kong e-sports" finally chose to privatize five years later.
The reason why Razer chose to delist is actually not responsible, because its stock price has been depressed for a long time and its trading liquidity is weak. According to the 2021 interim report released by Razer, the company turned a profit for the first time, with revenue of $752 million, a year-on-year increase of 68%, and net profit attributable to the mother increased by 95% year-on-year to $33.979 million, of which hardware business accounted for 90%, and the overall hardware revenue was $680 million, an increase of 77% year-on-year. This performance is reflected in the capital market, which usually involves a rise in stock prices, but in the past six months, its stock price has been as high as HK$3.05, and it has not even exceeded the issue price of HK$3.88.
Not only that, but data from Newzoo shows that Razer had an 11% market share in the global gaming peripherals industry last year, second only to Logitech's 16%. Such an excellent market share and solid medium-term financial reports have not been able to save the stock price from the long-term downturn, which may be the reason for Razer's discouraged choice to leave. However, capital does not empty a company for no reason, and Razer itself actually has many problems.
On Razer's official website, they describe themselves as a game life brand that mainly provides players with an integrated ecosystem of hardware, software and services. And at the beginning of its birth, Razer used the legendary Razer Boomslang mouse. It has established its position as a manufacturer of high-end game equipment, and the high premium has always been the label of players for Razer products.
In order to consolidate consumers' high-end image perception of Razer, Razer adopts a model of heavy marketing and light research and development. In the 2021 interim report, its research and development expenses were 198 million yuan, but this figure has remained unchanged for many years, and correspondingly, marketing expenses reached 554 million yuan, an increase of 42.8% year-on-year. You know, gamers can be said to be a very picky group, and the result of product failure is often to directly switch to other manufacturers.
For example, in the mobile esports that is considered to be the future by the industry, Razer's presence is very thin, and Logitech, which is also a peripheral brand, has embarked on a diversified path, from games to office fields. Therefore, the Razer who "went to the black" on the road of the game could not avoid some concerns, although it opened up the battlefield of the game phone with the Razer Phone, but it became the first out of the game.
For Razer, the bigger problem may also lie in the singularity of the revenue structure, the proportion of its hardware revenue is too large, and the diversified business performance of many years has been shouted. The Razer game store, which had previously tried to distribute digital games, was suspended after less than 1 year of operation, and the Razer Pay service, which tested the game payment business in the Southeast Asian market, had to be finally shut down because it failed to obtain a digital banking license in Singapore. It can be said that after years of hard work, Razer's software business still has not improved much, and players are more familiar with this brand, or gaming mice, mechanical keyboards, laptops and other hardware products.
The development of the software business is not smooth, which not only means that Razer's second growth point has not appeared, but also means that from the perspective of the capital market, Razer, which is mainly based on hardware, is more likely to be regarded by investors as belonging to the category of the real economy, rather than Internet manufacturers. This has led investors to disapprove of Razer's "burning money for market" model of increasing marketing fees, after all, burning money and running a staking ground is exclusive to the Internet industry.
Of course, in the eyes of some people in the e-sports industry, Razer's choice to delist now is more likely to be the "Spring River Plumbing Duck Prophet". Don't look at EDG won the League of Legends S11 Finals in Reykjavik, Iceland last November, and even related events have been screened on the internet for several days, but the e-sports industry as a whole has actually been in decline in recent years. At this point, we know from the relevant e-sports media, event execution, and even the operation of e-sports teams that all parties in the industrial chain are pessimistic about the future.
The "first year of esports" in the hearts of "League of Legends" players is 2018, when the LPL's first S title brought a carnival atmosphere to the esports circle, bringing back to life the "League of Legends" that was challenged by PUBG at that time. However, all this seems to be just a false boom, in the past three years, the news and related amount of financing in the e-sports circle is actually getting less and less, and the strategic investment of Internet companies has almost replaced the financial investment of VCs.
The e-sports industry is ultimately a derivative of the game industry, and the birth of e-sports projects, aside from projects such as "DOTA", which is purely incubated by the player community, is basically the product of game companies to promote games. This phenomenon has led to the e-sports industry's high dependence on game blood transfusions, and the e-sports industry's hematopoietic ability is not strong, and the e-sports industry has only had live broadcasting, endorsement, e-commerce, copyright, this traffic becomes the right way to become a modern table, and the crooked road represented by gambling.
Looking at the global esports industry, except for the top events around League of Legends, DOTA2, CS:GO, and Fortnite, almost all other esports projects can only be described as surviving. If the esports industry is about to start a downward cycle, then as an extension of this industry, how good can the days of equipment providers such as Razer be?