Min-Liang Tan was a childhood gamer who made his hobby his business, founding Razer in 2005. Now part of a $130 billion industry, it is one of the gaming world’s largest companies — and it all started with a single computer mouse.

Ready player one

Singaporean entrepreneur Min-Liang Tan was supposed to be a lawyer. Coming from a “pretty traditional” Asian family, his parents mapped out their expectations for him.

“My mom would say, ‘You know, I think you guys can either be a doctor or a lawyer.’ And, I've got my sister who's a doctor, my other sister's a lawyer, my brother's a really well-respected clinician oncologist. He's super smart. And I did my law degree. So two doctors, two lawyers, go figure, right?” he told CNBC’s “The Brave Ones.”

Now Tan’s worth more than a billion dollars, according to Forbes, but not for practicing law. His gaming hardware company Razer was launched in 2005 on a single product, a computer mouse specifically for gamers. Last year, the San Francisco and Singapore-headquartered company made $517.9 million in revenue and it has a market value of 17.2 billion Hong Kong dollars ($2.2 billion).

“Gaming is now the biggest vertical within media. It's a $130 billion industry alone, growing double digits every single year for a 10-year basis.”

Neil Campling, analyst, Mirabaud Securities

And if you think gaming is just for geeks, consider that it’s now an industry that beats the global movie business — worth $88.4 billion in 2017 — for size. “Gaming is now the biggest vertical within media. It's a $130 billion industry alone, growing double digits every single year for a 10-year basis,” Mirabaud Securities analyst Neil Campling told CNBC’s “Squawk Box Europe” earlier this month.

Much of the industry is driven by gaming apps such as Pokemon Go, Candy Crush Saga and Angry Birds (games account for about half of the top 10 most popular apps on the Apple store), but it’s the hardware that U.S.-based Razer creates, “peripherals” such as computer mice and keyboards that it’s famous for.

Their precise function and distinctive black and rainbow lights design got Razer noticed among the gaming community and has helped it to become a leader in the esports industry, where people gather in arenas to watch gamers competing.

Razer: A short history

2005

Razer is founded by Min-Liang Tan and Robert Krakoff with headquarters in Singapore and San Diego, California, and the company launches the Diamondback gaming mouse.

2006

Razer launches the Habu gaming mouse and Reclusa keyboard in a Microsoft collaboration. It also sponsors esports team Fnatic.

2007

The company expands to Europe with an office in Hamburg, Germany.

2008

Team Razer esports athletes carry the Olympic torch at the 2008 Beijing Games. The company opens a research and development center in San Francisco.

2009

U.S. headquarters moves to San Francisco, California.

2010

Opens an office in Shanghai and sponsors Korean esports team WeMade Fox.

2011

Razer opens a technology center in Austin, Texas and a research and development center in Taipei, Taiwan. Sponsors Las Vegas esports league IGN Pro League 3.

2012

Launches Razer Synapse, a cloud-based storage system for game settings. Razer is now the sponsor of more than 50 esports teams from 35 countries.

2013

Wins “best of show” at the Consumer Electronics Show with its Razer Edge tablet. Razer's esports teams win $3.5 million in prize money.

2014

Co-founder Robert Krakoff steps down into an advisory role. Team Razer earns $4 million in esports prize money.

2015

Razer opens its first store in Taipei, Taiwan. Stores in Manila, Philippines and Bangkok, Thailand, follow.

2016

Opens stores in San Francisco, California and Shanghai, China. Launches venture fund with $30 million available for start-ups. Razer buys audio company THX.

2017

Launches digital gaming wallet zVault and digital currencies zGold and zSilver. Acquires smartphone maker Nextbit and launches Razer phone.

2018

Opens online store with Lazada Singapore, the site backed by Alibaba

Razer’s focus also got the attention of investors, including Hong Kong billionaire Li Ka-Shing and Credence Partners co-founder Koh Boon Hwee, who backed the company in 2008. “Initially, I wasn't particularly enthralled by the fact this was a hardware business making gaming (mice),” Hwee told CNBC’s “Managing Asia” last year, but a move into becoming an online platform for gamers was more attractive.

Razer’s 2017 initial public offering raised $528 million, and ahead of it, Tan said he’d spend the money on more products.

"We would love to have that war chest to allow us to invest in R&D (research and development). We are known to have disrupted many industries: we're the first in the gaming peripherals side of things; we were first when we invented the first true gaming laptop; we've gone on to provide one of the largest software platforms for gamers," Tan told “Managing Asia.”

Razer is not yet profitable, making a loss of $165.8 million in 2017, against $59.6 million on the previous year, but Robert Cavin, an analyst with Frost & Sullivan, points out that the company has large marketing expenses, and is still prioritizing growth like other companies such as Netflix and Tesla. “Amazon changed the expectation for corporate profits as long as you have a good story and path to profitability. That profitability time frame is more flexible than it used to be ... Razer is growing and has a good story,” he told CNBC in an email.

Man of the fans

Gaming has always been Tan’s passion. “Like any other gamer child, I was difficult. I was always on the computer. I would always be … playing computer games at any chance I got. My parents would be yelling at me: ‘Stop playing… so much.’ But I'm glad some things don't change. I'm still playing computer games all the time,” he said.

Tan and his brother Min-Han Tan would duke it out, playing 1980s games such as “Prince of Persia” and “Castle Wolfenstein,” both developed for the Apple II series. They’d also use glasses of iced water to cool down their PCs to avoid their parents’ disapproval.

The entrepreneur’s money-making talents showed up early. “Even in high school, during Valentine's Day, the school brought in a flower vendor. I think the night before, he brought in a ton of roses, and sold those during Valentine’s Day, then he bought the vendor's flowers at a cheaper price, and sold everything back to the school all over again,” brother Min-Han Tan said.

“He hosts his own social network pages. He does his own personal outreach in events and trade shows. And he's very much a common man to the gamer.”

Edwin Chan, chief financial officer, Razer

Tan’s parents were so keen for him to stick with his law degree that he didn’t tell them when he’d switched to making gaming a career. “You know, I'm just going to start Razer first and we’ll figure it out as it comes along. By the time they realized it, it was a little too late … I think they were still very supportive nonetheless. But I kind of realized that they might not be too happy when I changed my career,” Tan said.

But the family is close: when Tan goes to Singapore on business, he still stays with his folks. “Some of my American colleagues give me grief, I think, for staying still at home. But I think it's great, you know. I get to do exactly what I do, play computer games all day long.”

Still being a gamer is what appeals to fans, says Edwin Chan, Tan’s childhood friend and Razer’s chief financial officer. “He hosts his own social network pages. He does his own personal outreach in events and trade shows. And he's very much a common man to the gamer,” he told “The Brave Ones.”

“If you're not authentic, this young audience, they are ravenous. They will sniff you out and they understand fully who is here for the right reasons and who is not.”

Matthew Haag, former professional esports gamer

Tan is there every time the company opens a store, and Razer has shops in Hong Kong, Taipei, San Francisco and Shanghai, among others. At the Manila launch in 2015, Tan handed out pizzas for fans in line. “It was awesome. So we've still got these, what we like to call Razer AFKs, or Away From Keyboards, (so I get) to meet up with the gamers and chat with them,” he said.

Being genuinely interested in the fans is what makes Tan stand out, says Matthew Haag, a former professional esports gamer who now runs his own team, 100 Thieves. “That authenticity, you just can't ignore it. It's infatuating. I mean, you just want be a part of it because the leader of the entire company truly loves the products that he's creating,” he told “The Brave Ones.”

“If you're not authentic, this young audience, they are ravenous. They will sniff you out and they understand fully who is here for the right reasons and who is not.”

Targeting serious gamers over a wider audience was also a clever strategy, according to Ed Fries, a former Microsoft executive who launched the Xbox. “We had this problem at Microsoft, you know, who thinks of Microsoft and games, right? That was this huge challenge we had to overcome with the Xbox,” he said.

“And so we really had to focus on authenticity and reaching to the core. But, you know, Min had a better idea than we did, you know, he was, like, go for esports.”

Some people love the brand and its founder so much they have tattoos of Razer’s snake logo. One of them is Apple, about 20 years ago, and there’s us now. We've got thousands of fans out there that tattoo the triple-headed snake logos on themselves,” Tan said. One even went as far as to tattoo the founder’s face on his leg in return for a free Razer smartphone.

Form and function

Tan started Razer on a hunch. “We never had any … proper market reports or studies, because this entire industry has always been born out from the grassroots, from the community ... From the moment we are founded, you know, I would hear people saying, ‘Isn't gaming a niche?’” he told “The Brave Ones.”

“For gamers, by gamers,” is Razer’s motto. “We’ve built this massive ecosystem of hardware, software, and services that revolves around just one person, ourselves, the gamer.”

Non-gamers might question why such products are so important. But as with any sport, the precise functions of equipment can make all the difference. “As a gamer, we're always looking for that competitive edge. It's like positioning your monitor properly; making sure that feels good,” he explained.

“It’s a product that we know is going to destroy the competition.”

Min-Liang Tan

“One of the most important weapons in a gamer's arsenal is the mouse, something as banal or as humble as the gaming mouse ... How could we build a better mouse? Or in this case, the first gaming mouse in the world ... We wanted something more precise. We wanted something more accurate.”

So he sent out a bunch of mice to friends and contacts and worked out a way to stand out. “It’s a product that we know is going to destroy the competition,” he told “The Brave Ones.” “And we said, ‘What kind of name would it be that would … eat up all the competition?’ I said: ‘What eats mice? Snakes,’ so boom, we started from there.” Mice have names such as Diamondback, Copperhead and Mamba, while keyboards are named after spiders such as Black Widow and Death Stalker.

Having such a focus on form and function is what initially helped Razer get known, business author Scott Steinberg told “The Brave Ones.” “In many ways, Razer is to gaming what Apple is to the telecom industry because what it’s done very successfully is apply design thinking to completely reimagine the shape of both figuratively and literally some common gaming items, peripherals and accessories,” he said.

Pro-gamers are fans because of the products, said Haag, whose esports team is sponsored by Razer. “The obsession comes from the products that they've built, the aesthetic and the tone that you feel when you pick up something for the first time and open it up and you get it hooked up to your competitor and the beautiful lights and the glitz and the glamor,” he said.

“We can see the gaming industry closing in on movies, magazines, book publishing, TVs, almost every single year.”

Koh Boon Hwee, co-founder, Credence Partners

While having high-end equipment might be best for gamers, investors haven’t always loved the strategy because customers might only buy one-off products and not come back. For early investor Hwee, it is the community of gamers that will help the business grow.

“The people who get involved in the game can sometimes become extremely passionate about it. And when they are passionate about a game, they tend to want to talk about it to other people who are equally interested in the game. So it wasn't just a question of a player with a peripheral or a device that would help him to play better, it was the opportunity for a company like Razer to build a community of gamers that spans all kinds of geographical boundaries,” Hwee said.

It’s the software platform that is most important to Hwee. “He can build — let's be very frank — you can build a payment system based upon the community that you have.”

Around 4 million people were registered on Razer’s virtual credit system, zVault as of January 2018, and its digital currency zGold lets gamers buy virtual goods and items from more than 2,500 games. The business is transitioning towards being a hybrid hardware-software company, Hwee added. As of December 2017, it had 40 million users on its software platform and players can continue with the same game across multiple devices while Razer gets access to their playing habits.

In April, it launched the Razer Game Store and it is also betting on smartphones, having bought phone company Nextbit in January 2017 and launching a $700 smartphone in November that year.

Gaming goes mainstream

Far from being a niche, gaming is no longer the preserve of teenage boys. “It used to be the stereotype of the teenaged boy living in his parents' basement playing games all day, eating Cheetos and pretty much not taking care of ourselves,” Tan said. “But, you know, about half of the gamers out there today, they're female … We've got gamers getting older, we've got gamers getting younger. Because today, gaming is really the singular form of entertainment that is the most accessible to everyone … whether it's from a smartphone or a tablet on a PC.”

Data released by App Annie and IDC at the start of the year showed that consumer spending on mobile gaming in 2017 was 2.3 times as high as spending on computer gaming and 3.6 times as high as spending on consoles. So it is now a mainstream activity.

The rise of esports

Esports, or competitive multi-player video gaming watched by large audiences, are a growing industry, estimated to be worth more than $900 million in 2018, up 38 percent year-on-year, according to consultancy Newzoo.

Millions of people also watch esports via live platforms such as Twitch, a site bought by Amazon for $970 million in 2014.

“You don’t play the game. You watch other people play the game … Twitch is TV for gamers … Usually you watch the best in the world. And the best in the world are the esports players,” Xbox founder Ed Fries told “The Brave Ones.” Newzoo estimates the global esports audience to be 380 million.

For top players, vast sums are involved. Tyler “Ninja” Blevins has 14 million subscribers to his YouTube channel and makes $500,000 a month playing the game “Fortnite.”

“It wasn't obvious a decade ago how large this business would become,” Hwee told “The Brave Ones.” “But we all read statistics, so we can see the gap of the gaming industry closing in on movies, magazines, book publishing, TVs, almost every single year.”

Esports is also huge, with global revenues forecast to reach $1.4 billion by 2020, according to figures from research company Newzoo, and an estimated 60 million people watched the esports League of Legends Championship final in 2017.

But Hwee would like to see it go up a gear. “It is my hope that the amateurs will not be spending 24 hours a day (gaming), but it is also my hope that the professionals who are doing this will take it as seriously as the people who play soccer or football or anything else like that,” he said.

Gaming will continue to grow, he adds. “I think the growth will eventually slow but I think we're a long, long way from that. And the reason is because the gaming experience gets richer every single year. You know, you've got movies being made out of games, and vice versa.”

“You've got consoles and PC systems and mobiles all coming together. So you can now go from casual, five-minute games when you're riding the train system to work, to if you're really wrapped (up) and involved in it, to watching the esports that are going on around the world,” Hwee said.

The company is unlikely to start publishing its own titles, suggests Frost & Sullivan’s Cavin. “Games themselves can be hit and miss as any media and entertainment property, but focusing on gaming attributes and products is a more stable strategy,” he told CNBC by email.

It’s also well-placed to expand beyond a gaming audience, Cavin said. “As Razer focuses on the gaming community, ideally the attributes of that gaming focus — performance, precision, focus, a certain aesthetic — translate to a wider audience.”

Tan’s ambitions are considerable, too. “Now that we are one of the biggest brands in the world for gaming, can we be one of the biggest brands in the world for entertainment? What else is ahead of us? You know, that's really what it is for ourselves. I don't think it's bravery, but I think it's about this constant sense of adventure. And trying to do cool stuff.”

Credits

Writer: Lucy Handley
Design and code: Bryn Bache
Editor: Matt Clinch
Executive Producer, The Brave Ones: Betsy Alexander
Producers, The Brave Ones: Kelly Lin and Robin Sherman
Images: CNBC, Getty Images

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