This week, PC hardware giant Corsair announced it signed an agreement to purchase Fanatec, the innovative though embattled sim racing gear maker that announced bankruptcy two months ago. On the face of it, this would seem to be the best possible outcome for users, particularly those disappointed with Fanatec’s spotty customer service track record. I had the privilege of chatting with Andy Paul, Corsair’s founder and CEO, about what the transition to Corsair’s leadership will look like, as well as the company’s aspirations for this long-running brand.
Our first topic of discussion was Fanatec’s operation in the near term. Paul made it clear in an email to all Fanatec customers that Corsair is aware of how “some of the community are not happy about the current state of Customer Service,” and that the brand’s new owners “are committed to improving this.” I asked if, in the interest of making the transitions behind the scenes as smooth as possible, everything would appear “business as usual” to end users. Refreshingly, Paul was forthright in recognizing that the status quo simply wasn’t good enough, and the process of addressing that is already underway.
“Well, I’d say it’s certainly not going to be business as usual,” Paul said, “because business at the moment is not as we’d like it.” The CEO noted that one of the root causes of Fanatec “getting itself into financial issues,” as he put it, was that business exploded coming out of the early days of the pandemic, and the firm simply didn’t have the infrastructure in place to keep up with the boom.
“They were selling products on their web store that weren’t in fact in stock, and then they couldn’t keep track of who they’d sold them to. And so people called and said ‘Where’s my direct drive unit?’ You know, they had a tough time. So it was really quite messy.”
The first thing the company must do, Paul told me, is address those systems- and infrastructure-related deficiencies, so that those situations never happen again. Fanatec had the sort of customer support line expected of a small operation, accessible for about eight hours out of the day—but that doesn’t really work for a company serving a global audience. Paul said 24/7 support should be up and running “within a few months,” and figures to be a major boon to issues like RMAs and warranty claims.
That’s reassuring. But the sim racing community is likely also wondering about Corsair’s own appreciation for this niche, one the company has historically not dabbled much in. Paul said that Corsair identified sim racing as an area of growth years ago, and, by his own admission, he’d been trying to buy Fanatec for five years. He grew up in the U.K. working on cars, telling me about how he and his friends installed an Austin-Healey 1275 Sprite engine in his first ride, an Austin A30.
Paul is an enthusiast, and while it’s clear Corsair looks to court the do-it-yourself spirit that makes this hobby so enjoyable for so many of us, he also recognizes that more people want to go sim racing than know how to craft the right rig. Fortunately, Corsair’s business selling so many components and accessories that comprise the PC gaming experience means it has the unique opportunity to build end-to-end sim racing setups, for private and corporate clients alike.
“We realized, ‘hang on a second—if we buy Fanatec, we’ve got a really good [sim racing seat] chassis that we just developed, we make the gaming PCs, we can make an entire solution.’ So now we’ve got the ability to not only support someone with components, but we can also offer a total solution.” Paul said. “Nobody else in this space makes every bit of the gear.”
For the DIY-ers shopping for wheel bases, pedals, and the like, however, one big question is how Fanatec’s value proposition could shift under Corsair. There’s no question that Fanatec offered competitive, innovative products—so long as they worked, anyway. But some recent promotions, particularly over Black Friday, put massive stress on the company to deliver, as competing products retailed for twice the price. These bargains inevitably led to some customers waiting up to five months for their orders, because Fanatec had “completely oversold” its stock, in Paul’s words. Couple those aggressive practices with global inflation and the rising costs of, well, everything, and I assumed Corsair was already looking at bumping prices. Thankfully, it seems I assumed wrong.
“It turns out the factories in China are not full, not busy, so [manufacturing] costs are actually in pretty good shape,” Paul said. The CEO noted how the sim racing business used to primarily be the domain of boutique operations, hand-milling stuff like drive units. For all its faults, Fanatec had the overseas production to achieve scale, even if things eventually spun out of hand.
“[Fanatec] did have pretty reasonable costs and the margins there were great,” Paul said. “Yes, maybe they could have charged more, but that’s really where we’re going to come in and help them because our business is obviously—we’re a $1.5 billion company. We move a lot of metal from China in various things, whether it’s power supplies, or cases, or fans. We have very large factories running that produce a lot of stuff. We’re going to be able to tune up the whole supply chain and maintain competitiveness.”
Corsair
Something else Corsair has that Fanatec never did: retail presence. Fanatec’s sales were always direct-to-consumer, which may work for the simdads shelling out four figures, but didn’t mean much to mainstream shoppers, browsing Amazon or strolling the aisles at Best Buy. Corsair is already in those channels, and it intends to make use of them.
“One of the things we’ll try and do is bring some of the costs down with our supply chain so we can actually run some of the lower-end products through retail,” Paul said. “The big advantage that Logitech has in terms of muscle in this area is that you can actually buy at retail products from them, whereas Fanatec is 100% direct-to-consumer. And I think for the high-end gear, you know, the sort of $1,000 [direct-drive] wheel and pedals, I think that’s going to either stay direct-to-consumer or [go to] very, very specialized retailers.”
When I first learned of Corsair scooping up Fanatec, I was somewhat conflicted. It’s difficult to be enthusiastic about mergers and acquisitions on the whole, as we’ve all observed the damage they’ve done across so many industries in recent years. Yet, in Fanatec was a company that, despite offering excellent products, obviously wasn’t working. And that’s putting it mildly for the folks who’ve waited months upon months for returns and replacements, to say nothing of the simplest orders. However the company got to this point, it wasn’t sustainable. Corsair now has an opportunity to get that same great equipment in front of people, with an efficiency that Fanatec could never achieve on its own. If it can manage that, the sim racing space will only benefit.
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