Headset company Turtle Beach is expanding into gaming peripherals. The company announced yesterday that it has acquired mouse and keyboard manufacture Roccat. The deal gives Turtle Beach access to a market of hardware enthusiasts who spend a lot of money. Roccat makes the Vulcan keyboard, which features its own Titan mechanical switches.
The terms of the deal include $14.8 million in cash. It also involves $1 million in cash or stock and $3.4 million in earnings payouts. But that is relatively affordable for Turtle Beach.
Gaming headsets are a lucrative business for Turtle Beach, and the company has thrived recently. The popularity of battle royale shooters are driving adoption of its products. Worldwide the market for headsets, keyboards, and mice is worth $2.9 billion, according to intelligence firm NewZoo.
“This is a dynamic and strategically important deal for Turtle Beach,” chief executive Juergen Stark said. “We are adding a complementary portfolio of PC gaming mice and keyboards, a skilled PC accessories team, and a highly synergistic distribution footprint. The acquisition is also a key step in achieving our goal of building a $100 million PC gaming accessories business in the coming years.”
All about the margins
One of the keys to Turtle Beach’s business is that headsets have a relatively high profit margin. The keyboard and mice business is similar in that regard. And the audiences for those devices overlap with Turtle Beach’s current customer base.
So Turtle Beach can continue leveraging its current strategy but increase its revenues and profits at the same time.
“Roccat accelerates our expansion into the roughly $1.6 billion PC gaming headset market, as well as directly enables us to address the roughly $1.3 billion PC gaming keyboard and mice market,” said Stark. “We believe our combined product portfolio is one of the strongest in the industry, covering gaming headsets for consoles and PC’s, gaming keyboards and mice. Together we will have 48 core product models to pursue the total addressable market of over $4.7 billion in North America, Europe and Asia.”