Exclusive: Data Shows Razer is Struggling to Attract Pro eSports Players
Try as it might, Razer can’t seem to get the same amount of attention from professional eSports athletes as its rivals.
According to data sourced from ProSettings, a site that aggregates the peripheral configurations eSports athletes use, Razer lags behind its rivals Logitech and HyperX for a total share of the gaming peripherals used by eSports athletes. In this case, ‘gaming peripherals’ are defined as an average of the total Mouse, Mouse Pad, Keyboards, and Headsets used by pro eSports players.
According to the data, 11% of all eSports athletes professionally playing PUBG and Fortnite -- the two most popular games out today -- use Razer gaming peripherals. Razer is virtually tied with SteelSeries, while HyperX and Logitech are ahead with approximately 14.7% and 22.5% respectively. Corsair is next, with 6.6% followed by Zowie with 6.5%.
Breaking this down, as of July 2019 Razer holds about 7.4% of the pro eSports athlete Mouse market taking fourth place; approximately 5% of the Mouse Pad market coming in at sixth; 19% of the Keyboard market at second place; and less than 1% of the Headset market, coming in at 15th.
What should be concerning to Razer executives is that the company has lost market share this year to Logitech, Zowie, and Final Mouse in the mouse category. Analysis of the data from January of this year showed Razer with 13.7% of the mouse market, dropping to 7.4% by July. In contrast, Logitech increased its share from 41% to 53% while Zowie went from 16% to 17%. Final Mouse dropped its overall market share from 12% to 10%, but still managed to beat Razer.
In Keyboards, Razer did manage to increase its share from 16.7% to 19.2%. Both Corsair and HyperX gained market share as well at the expense of Logitech. Logitech dropped from a 20.7% share to 8.8%.
Why Does this All Matter?
To be sure, the data from ProSettings isn’t market share. Nor is it shipments. It’s something else: mindshare. Market share of this 'mindshare' market is incredibly important for Razer.
The strength of Razer, as a company, is its brand. Despite claims that Razer is “The Apple of the Gaming World” the reality of the company’s fortunes doesn’t quite add up to this moniker. One of the biggest growth stories for Razer is its branded payments app, not gaming gear. It’s notebooks and gaming smartphones ship in thin volumes: approximately 140,000 per year for notebooks and roughly 45,000 a year for smartphones. Granted, these are intended to be niche products though as Asus or MSI would ship double the number of gaming notebooks in a year. In short, Razer doesn't sell many things compared to some of its peers. That's not where its value is.
Which is why eSports is such an important market for Razer, and a big concern. eSports athletes, just like their ball-and-puck counterparts, use specific equipment for two reasons: sponsorship or the genuine quality of the gear. For companies, this is another channel for sales. Companies with bigger pockets eventually will be able to spend more to equip all the popular players with their own products and take more market share over time. Sponsorship occurs because it encourages a sales funnel -- if consumers see professionals using the gear they are likely to buy it. So, a bonus would be organic, non-sponsored use by an eSports athlete; this genuine endorsement would both help promote sales and be a testament to the quality of the product.
Per their earnings reports, Razer and Logitech have similar Marketing & Selling budgets so for that matchup it's not a battle of the budgets -- Logitech has the edge over Razer given its quality. SteelSeries and FinalMouse are privately held, while BenQ, Zowie’s parent company, doesn’t break out earnings data for that subsidiary.
That being said SteelSeries is objectively the smallest company in revenue of the lot. Thus, it’s adoption by eSports athletes is probably more organic rather than sponsored. BenQ, Zowie’s parent, is a technology giant with revenue that far surpasses Razer or Logitech. Zowie’s success no doubt comes from sponsorship.
If Razer’s share of the devices used by pro eSports players is slipping, that’s not an encouraging sign for the company. Razer is not necessarily outmatched by its rivals in spending ability, with the exception of Zowie. Its product lineup is simply getting stagnant; the success of FinalMouse is a perfect example of that. FinalMouse, with a scant marketing budget (it’s only sponsored a small number of influencers) ships in small batches. Usually, you require an invite code to access their store. But pro eSports athletes have voted with their wallet.
What Should Razer Do?
It’s time for Razer to innovate. Although it’s maintaining third place in the overall share of peripherals used by pro gamers, that market share is unstable and SteelSeries is close on its tail.
Now that its services business has been established, Razer needs to refocus its attention on the device that started it all: the mouse. Razer isn’t going to beat Logitech at this game, so instead Razer needs to set its sights on FinalMouse and Zowie. To beat FinalMouse Razer needs some sort of niche, high-end subbrand and engage in the same sort of constrained supply marketing tactics that gave FinalMouse its success. Next up, Razer needs to do an aggressive round of sponsorships to win back some share from Zowie and push down SteelSeries’ share too.
Of course, the temptation would be to diversify away from gaming. Watering down its hardcore gaming focus might be a good insurance policy if the eSports bubble pops. Logitech does this well, its “MX Mouse” and “K380 Multi-Device Keyboard” have an IT department-friendly ring to them. But ultimately, it’s the DeathAdder Elite that has the margins and there are already enough “Multi-Device Keyboards” in the world to go around.