Virtual reality set to give Razer a cutting edge

Gaming device provider Razer is eyeing a huge slice of the growing virtual reality (VR) market in China and will launch several new products to tap growth seams, a top company official said.

The company will also release new VR products developed jointly with its Chinese partners next month in China, according to Chief Executive Min-Liang Tan.

The California-based company designs gaming mouses and keyboards and recently expanded to high-performance laptops and a VR platform called Open Source Virtual Reality, or OSVR.

“We are going to make OSVR the de facto platform in China for virtual reality,” Tan said in an interview with the South China Morning Post.

VR devices bring images closer to users’ eyes, creating the illusion that they are in a different environment. OSVR is a set of open hardware and software designs co-developed by Razer and its partners that facilitate VR functions.

Razer said it will announce its VR product line-up at the ChinaJoy expo next month. Tan, however, did not provide any details such on product specifications or prices. However, the company currently sells OSVR goggles for US$300 in the US.

“China and Asia will be huge growth drivers for us,” Tan said.

The number of users for VR devices will exceed 1.4 million this year, according to data provided by Chinese research company iResearch. It expects the number to more than double next year and reach 25 million by 2020.

Razer is also tapping into the Chinese market by forming partnerships with domestic companies. It received a US$75 million investment from Hangzhou Lianluo Interactive Information Technology in February. Funding from this Chinese electronic entertainment company raised the valuation of Razer to US$1.5 billion.

The investment from Lianluo will mainly be used to fund Razer’s VR’s business and help it develop internet of things (IoT) devices, according to an announcement from Lianluo.

Tan said the US$75 million investment is a part of the company’s bigger series C funding. He said the new investment will fund the development of its own new mobile products and VR content companies that create products on the OSVR platform.

Analysts said they expect Razer to face challenges in the Chinese market.

“Razer has missed the sweet spot to enter China as investment in this sector has tapered and many companies have already launched their own VR products or services,” Neo Zheng, an analyst from research firm IDC, said.

Chinese communications giant and rising consumer product company Huawei released its own VR headset in April while internet entertainment portal LeEco announced its second generation headset during the same month.

Although positive about the long-term prospects of VR, Zheng said sales of high-end VR products will grow relatively slowly in China in the near future.

“High cost, lack of content and expectations of future products from Sony have prompted consumers to go slow on virtual reality headset purchases in the current market,” he said.

Sony is expected to release a VR headset compatible with its popular PlayStation gaming console in October.