Razer deepens its incision into online gaming via Esports Mogul

Australian eSports pioneer Esports Mogul (ASX: ESH) and one of the world’s leading gaming hardware manufacturers have extended their close relationship with the news that Razer will become a significant shareholder in Esports Mogul after leading an oversubscribed placement that raised A$4.41 million.

The company went into a trading halt on Tuesday to emerge this morning declaring that Razer led the investment round with both companies vowing to “further strengthen their strategic partnership by bringing esports innovation to gamers”.

Both Esports Mogul and Razer have confirmed that the proceeds from the capital raising will be aimed at “accelerating the development of Mogul Arena on mobile and supporting an aggressive user acquisition, activity and monetisation strategy.”

The duo also plans to “chart new initiatives to accelerate the proliferation of electronic payments” and further extend the reach of Razer’s proprietary zSilver virtual currency initiative among gamers.

Razer’s founder and chief executive officer Gernot Abl said “Esports Mogul and Razer share a common vision to bring phenomenal gaming experiences to gamers” and that the two companies “look forward to working together to increase their growth trajectory.”

Speaking with Small Caps about the deal with Razer, Mr Abl added, “to have the financial support of a company the size of Razer is unbelievable and makes this a monumental day for eSports Mogul. We cant wait to apply these funds to hasten product development and user acquisition.”

Another cornerstone investor to join Esports Mogul’s shareholder register will be Cloud Alliance, a growing name in gaming that provides payment solutions, game localisation, marketing and advertising services to game developers.

Cloud Alliance is currently developing an app store to enable game developers worldwide to access more than 100 million gamers in Southeast Asia – and Esports Mogul hopes to capitalise on this future harvest.

“Cloud Alliance is committed to bringing the very best payment systems to gamers across the globe. We’re eager to co-invest in Esports Mogul together with Razer at such a crucial time of their acquisition and monetisation strategy,” said Cloud Alliance co-founder and chairman Roland Ong.

Cutting a piece of gaming and eSports

Today’s news effectively means Esports Mogul has not only secured A$4.41 million in additional investment funding but has entrenched its relationship with Razer, one of the world’s most highly-renowned hardware manufacturers and a growing powerhouse in Asia – a region Esports Mogul has been working to commercialise since its ASX listing.

The investment is likely to make Razer the largest shareholder in Esports Mogul thereby raising the chances that the multibillion-dollar giant, who in itself has in excess of 50 million users globally, will make a significant contribution to its future development over the coming years.

As an industry, eSports remains in relative infancy but is growing rapidly year-on-year as gaming continues to assume greater dominance within the broader entertainment industry.

Gaming has grown into a market that now eclipses all other entertainment niches and has dragged other players into commercial success; more specifically, PC equipment and peripherals manufacturers, game distributors, mobile gaming developers and online e-commerce hubs that offer a range of services for gamers of all ages.

Razer is a US-based gaming hardware manufacturing company established in 2005 by Singaporean entrepreneur Min-Liang Tan and Robert Krakoff. The company’s birth and consequent growth since 2005 have coincided in one of the greatest growth spurts seen in any market niche.

Games have taken the world by storm and now rake in more revenues than box-office blockbuster Hollywood movies, music album sales with ‘eSports tournaments’ offering prize purses in excess of US$20 million every year.

Melbourne will host such a tournament later this year.

Levelling up

Razer listed on the Hong Kong Stock Exchange in November 2017 and is currently capped at around A$3 billion.

As part of its intention to bloom out of the hardware sector and into the potentially more bountiful software market, Razer is targeting a range of expansion avenues including a blossoming gaming niche in Australia that’s welcoming more developers, gaming companies and most importantly, attracting a significant addressable market that’s estimated to be around 560,000, according to a statement put out by the Victorian government.

To highlight its gaming prowess, Razer launched one of the leading gaming laptops last month – the Razer Blade – and manufactures a whole swathe of gamer-focused products including headphones, smartwatches, keyboards and screens.

In a bid to keep up with the likes of Amazon, Apple and Google, Razer launched its online digital store earlier this year offering thousands of titles via Steam or Uplay along with exclusive offers and vouchers.

One of its prime innovations has been to create its own ecosystem and introduce its proprietary zSilver currency which allows gamers to buy hardware peripherals and other gaming swag directly.

Esports Mogul has already made moves to introduce Razer’s zSilver to its own flagship service, Mogul Arena and will likely benefit further from Razer’s growing influence as a significant shareholder.

According to the US gaming giant it has built the largest global gamer ecosystem of hardware and software and services which Esports Mogul could potentially monetise in Australia over the coming years as the gaming niche blooms.

“We are absolutely thrilled with the level and quality of investor interest in this placement. This is a clear recognition of our business model, go to market strategy and the standard of our online esports tournament platform – Mogul Arena,” added Mr Abl.