Corsair’s Strategy to Revive Fanatec: Overcoming the Setbacks of a Sim Racing Leader

This week, Corsair, a leader in PC hardware, revealed that it has reached an agreement to acquire Fanatec, a dynamic yet troubled manufacturer of sim racing equipment that filed for bankruptcy two months ago. At first glance, this acquisition seems like a positive turn for users, especially those frustrated by Fanatec’s inconsistent customer service. I had the opportunity to speak with Andy Paul, Corsair’s founder and CEO, about what the transition will involve and the company’s vision for this established brand.

Our conversation began with Fanatec’s immediate operations. Paul emphasized in an email to Fanatec customers that Corsair understands the dissatisfaction within the community regarding the current customer service situation and that the new management is committed to making improvements. I inquired whether operations would continue as normal for consumers during this transition, but Paul candidly acknowledged that the current situation is far from satisfactory, and steps are already being taken to rectify it.

“I’d say it’s certainly not going to be business as usual,” Paul stated, “because the way things are now isn’t up to our standards.” He highlighted that one factor contributing to Fanatec’s financial troubles was the spike in business it experienced at the start of the pandemic, which outpaced the company’s existing infrastructure.

“They were selling items on their website that weren’t actually in stock, leading to confusion over orders. Customers would be left wondering, ‘Where’s my direct drive unit?’ It was quite chaotic.”

The first priority, according to Paul, is to fix the operational and systemic shortcomings to prevent such issues from recurring. Fanatec’s customer support was limited to only about eight hours a day, which is inadequate for a globally serving company. Paul mentioned that 24/7 support should be implemented “within a few months,” which would significantly help with RMAs and warranty claims.

While this is encouraging, sim racing fans may be questioning Corsair’s genuine interest in this niche market, which the company has not historically focused on. Paul explained that Corsair recognized sim racing as a potential growth area several years ago and revealed that he had been attempting to acquire Fanatec for five years. He shared his background in the U.K., discussing how he had worked on vehicles, including installing an Austin-Healey 1275 Sprite engine in his first car, an Austin A30.

As an enthusiast, Paul noted that although Corsair aims to promote the do-it-yourself culture that makes sim racing enjoyable for many, he is aware that not everyone has the expertise to build the ideal setup. However, Corsair’s expertise in manufacturing various components and accessories for PC gaming positions it uniquely to create comprehensive sim racing setups for both individuals and corporate clients.

“We realized that if we acquire Fanatec, we have a great [sim racing seat] chassis that we developed, plus we create gaming PCs—we can provide a complete solution,” Paul said. “We have the ability to support customers with individual parts while also offering a complete setup.” He asserted, “No one else in this industry produces all the necessary gear.”

For DIY enthusiasts looking for wheel bases, pedals, and other equipment, one pressing concern is how Fanatec’s value proposition might change under Corsair’s ownership. There’s no doubt that Fanatec has provided competitive and innovative products—assuming they functioned as intended. However, some recent promotions, particularly during Black Friday, put considerable pressure on the company to fulfill orders, which led some customers to wait as long as five months due to extensive overselling, according to Paul. Combine these aggressive promotional tactics with global inflation and rising costs, and it seemed likely that Corsair would need to increase prices. Thankfully, it appears this assumption was incorrect.

“It turns out that factories in China aren’t overly busy right now, so [manufacturing] costs are in good shape,” Paul said. He noted that sim racing has typically been dominated by small, boutique manufacturers producing items manually, while Fanatec has benefited from overseas production, allowing it to scale, even amidst challenges.

“[Fanatec] had reasonable costs and strong margins,” Paul added. “Sure, they could have upped their prices, but that’s where we’ll step in to assist them because our company is substantial—we’re a $1.5 billion enterprise. We handle a large quantity of materials from China for various products, ranging from power supplies to cases and fans. Our extensive manufacturing capabilities will help optimize the entire supply chain and maintain competitive pricing.”

Another advantage Corsair holds that Fanatec lacked is a retail presence. Fanatec has always operated on a direct-to-consumer model, which may appeal to high-end buyers, but doesn’t engage mainstream customers browsing platforms like Amazon or walking through Best Buy. Corsair already has a foothold in these retail channels and plans to leverage them.

“One of our goals is to reduce costs through our supply chain, allowing us to offer some lower-end products in retail locations,” Paul explained. “Logitech currently benefits from this approach since customers can purchase from retailers, whereas Fanatec was entirely direct-to-consumer. High-end products, like the $1,000 [direct-drive] wheel and pedals, will likely remain direct-to-consumer or go to very specialized retailers.”

Initially, I had mixed feelings about Corsair’s acquisition of Fanatec. Mergers and acquisitions often raise concerns due to their potential negative impact across various industries. Yet, Fanatec undeniably needed assistance despite its excellent products, as evidenced by the long wait times for returns and replacements that many customers experienced. The company’s previous trajectory was unsustainable. Corsair now has the chance to present the same high-quality equipment to a broader audience with improved efficiency—something that Fanatec struggled to achieve on its own. If Corsair successfully accomplishes this, the sim racing community stands to gain significantly.