Gaming hardware startup Razer has acquired THX, a theatre sound company founded by George Lucas, creator of the Star Wars franchise which is now owned by Disney. Financial terms of the deal are confidential.
The deal will reinforce Razer’s gaming capabilities and expand the scope of its product offerings into new entertainment domains (i.e. movies and music), reflecting the convergence that is occurring in the entertainment and media sector.
According to a report by The Business Times, the acquisition is not a white-knight buyout, with Razer acquiring the majority of the San Francisco company’s assets, which includes its employees and intellectual property (IP) assets.
THX was founded in 1983 as a Lucasfilm division, prior to being spun off in 2002, when it was majority-owned by Singapore-based Creative Technology (Creative Labs) which maintained a 60 per cent stake in it until 2012. Creative had initially bought its stake for $8 million at a reported valuation of $13 million for THX.
However, according to details in a TechCrunch report, this stake was pared down over the years, with an unnamed private equity firm being the majority owner at the time of the acquisition by Razer.
THX will reportedly become a portfolio company of zVentures, Razer’s recently-launched corporate ventures arm and manager of its $30 million fund. This move will see it enjoy access to capital, resources and follow-on investors, as well as serving to complement any related investments in the portfolio, with potential for follow-on funding.
THX will continue to be independently managed and operate as a distinct entity from the Razer. In an official statement, Ty Ahmad-Taylor, CEO of THX, explained: “Our focus has always been on ensuring that anyone can experience high quality entertainment, regardless of their medium of choice. With Razer, we can now continue to strengthen our core lines of business while delivering excellence for our customers’ ever-changing needs.”
He continues, “As a standalone company, THX will work with Razer but will primarily continue to service our partners in the industry in order to deliver great products to consumers.”
The deal comes at a time when when the cinema and film sector in China is seeing significant investment and growth and is credited with a period of renewal in the film industry. Currently, THX is collaborating with Chinese firms like the China Film Group, China Giant Screen, and The China Film Equipment Company to implement its audio specification standards in partner theaters.
Razer Co-Founder and CEO Min-Liang Tan said, “Razer has a vision for innovation at every level of entertainment, a vision which THX has championed since its inception more than 30 years ago. This acquisition will allow us to reinforce Razer’s leadership in gaming and extend the brand into broader areas of entertainment, while at the same time empowering THX to develop into a global powerhouse, independently.”
Given its competencies in audio technologies and fundamental IP in audiovisual, this makes THX a compelling acquisition for Razer, given Razer’s own core competencies in gaming and its push into the VR and AR space.
According to TechCrunch, Razer itself has disclosed at least $125 million raised in equity financing, with investors including China’s LianLuo (Beijing Digital Grid), Intel and Accel, with a reported valuation of $1.5 billion, putting it in unicorn territory.
However, Razer has never publicly disclosed its revenue figures or other metrics. The acquisition of THX follows the acquisition of Ouya in an all-cash deal in 2015.