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Pandemic Has Accelerated Growth of Gaming: Razer CEO

Nov.17 -- Min-Liang Tan, co-founder and chief executive officer at Razer Inc., discusses the growth in gaming due to the pandemic, data privacy for clients and his outlook for the company. He speaks exclusively on “Bloomberg Markets: Asia.”

Video Transcript

- So all this positive vaccine news, is this a game changer for your company? Are you expecting-- or, I should say, are you expecting that you're going to continue to see some positive results as people, you know, play at-- stay at home and play at home?

MIN-LIANG TAN: Well, I think it's great news for the world. I think definitely we're all looking forward to getting back to normal.

And I think what has happened really is that the pandemic has really accelerated the growth of gaming over the past couple of months. So prior to the whole pandemic situation, gaming was always-- you know, has always been growing on a double-digit path, and the pandemic pretty much accelerated everything.

And what we're seeing is that even for some of the markets that have opened up post, you know, the pandemic-- I wouldn't say post the pandemic-- or have opened up, we've actually seen activity on much higher levels anyway.

So what we do believe is that there's still going to be great growth. I mean, we've had some phenomenal growth in 2020, and we do expect it post a vaccine or otherwise.

- Can I ask you about data privacy for your clients though? Because there were reports that there was a data breach of around 100,000 client details.

MIN-LIANG TAN: Sure. Well, first up, it wasn't a data breach of sorts. I think there was some settings that were open, and we have had no indication that any data was actually leaked. But definitely data is-- protection is very important for us, I think, at Razer. We are one of the largest kind of gaming platforms in the world. We've got about 100 million gamers on our platform.

And, you know, today we've expanded our business to do services and fintech, et cetera, for the youth and millennials. So definitely it is important for us.

- And when we speak about fintech and some of the growth areas you're looking at, how is the consortium going in winning this digital full banking license here in Singapore?

MIN-LIANG TAN: Well, we're pretty much still waiting for the decision. I think for ourselves at Razer, we've actually built a really robust business for ourselves from a fintech perspective.

So a good example would be in the recent W11 Singles Day promotion, we actually helped e-commerce companies process digital payments. We process billions of dollars of digital payments every year. And W11 has been a great day for us. We've seen huge growth year on year, and it's been just fantastic for us.

And essentially, you know, fintech is one of the growth areas, and we're looking at it not just in Singapore but pretty much globally. So Razer as a brand, we're probably the leading lifestyle brand for gamers everywhere. There are 3 billion gamers in the world. We want to reach out to them. We want to provide fintech services to every single gamer out there.

- Min-Liang, tell me-- just going to your financials now, I mean, this year's probably been fantastic for you given the lockdown and people staying at home. But tell me, you know, what about profitability? What are your forecasts on that?

MIN-LIANG TAN: Sure. So I think for the first-half earnings, you know, we spoke about how our revenue had great growth. We grew 25% year on year for the first half of the year.

For ourselves, however, I think very recently a couple of weeks ago we issued a positive profit alert. We actually expect our group revenue to be up north of 30% year on year for the full year of 2020. And we've also issued the alert that we will actually record a adjusted profit before tax for the year 2020 as opposed to a loss of last year. So it's a great year for us.

- Yeah, so you're going to have net profits, are you? Is that right just on a net basis?

MIN-LIANG TAN: Yes. So essentially for ourselves, I think we look at things from EBITDA and an adjusted-profit basis, and we will have a net profit for this year.

- I want to get a sense of, you know, we've got the new PlayStation out, Xbox. They've been released. How it does Razer plan to actually play to the demand for these new consoles, which are meant to be just flying off the shelves when they hit them?

MIN-LIANG TAN: Well, it's an exciting time to be a gamer I would say, you know, anywhere in the world. I've spoken about how gaming, you know, prepandemic was growing double digits. It's just been growing, and it's not just, you know, a particular segment of gaming. We're just seeing gamers come from everywhere. The demographic has been growing. The gamers in different geographies have been growing.

So PC gaming, you know, for example, you know, the graphics cards, new graphics cards have been flying off the shelves, and that's just PC gaming. Mobile gaming, I'm sure you've heard about how, you know, lots of the top mobile games are just seeing so much more activity, so much more revenues. We're helping many of the top mobile-game companies out there monetize their games. So we're seeing great activity over there.

And, of course, console. You know, we're seeing the new refresh of consoles-- PlayStation 5, the new Xbox-- and they've been incredibly well received.

So we work in every single segment. We are probably one of the very few gaming companies that are in every single segment, PC, mobile, and console. And we're seeing our new console headsets do incredibly well.

So, you know, I think for the next couple of years, we're going to see gaming grow, and the pandemic has accelerated it. So it's a great time to be a gamer.

- Great time to be a gamer, but quickly, what about some areas of expansion outside of gaming? We did touch on the fintech licenses, but what else are you looking at?

MIN-LIANG TAN: Well, you know, I think the fintech area is one of the key areas that we're very focused on. It was actually born from our business of services.

So one thing about Razer is that we've got a complete ecosystem for gamers. We do hardware. We've got a software platform. We've got 100 million gamers on our software platform. And we actually, you know, monetize the gamers with our services. We've got a virtual credit, Razer Gold, where we work with all the top game companies in the world. 33,000 game titles are on the platform.

And, you know, what we built was like 4 million offline points anywhere in the world where gamers could come, you know, pay for the game credits. And because of that, we created our new business, Razer Fintech, that pretty much uses the channels that we have built with the youth and millennial, and we just added on that layer.

So today we process for all the e-commerce companies and things like that, and that already is a massive, massive new opportunity for us. We are 100% focused in terms of our gaming business, our fintech business, and that's where we are really focused, I think, from a business perspective.

Now over and above, something at Razer and something we are very proud of is we're also very focused on sustainability efforts over here at Razer. We're working with companies like-- or with organizations like Conservation International to ensure that, you know, things that we do are sustainable. We're planting trees throughout. We've got this, you know, little soft toy thing that we've actually shipped or we've just launched it. It's called Sneki Snek that we're working with Conservation International to really get the word out about the environment, the climate, and things like that out there. So that's definitely a push for us here at Razer.

- And what about the toaster, the April Fool's joke that is meant to be coming to fruition?

MIN-LIANG TAN: Well, we constantly have requests for new products all the time at Razer. Sneki Snek was one of them. You know, we had fans tattooing, you know, the Sneki Snek logo on themselves. We have an incredibly passionate fan base.

Our new products, I think, essentially have been very well received, right? And this is one of the reasons why the growth this year has been phenomenal. Like for example, I'm sitting right here on one of our new gaming chairs, and demand has been just through the roof for the Razer Iskur.

And, of course, home appliances, the toaster. I'm sure with that question you're going to get a lot of our fans just screenshotting this and saying even Bloomberg wants the toaster, right? Well, we are definitely looking at it. We've had a huge amount of people doing the toaster on themselves. So yes, we will get there at some point of time where we get to make the perfect toaster.