Gaming peripheral designers and producers Mad Catz, have been suffering financial difficulty over the past few years, during which time there have been mass lay-offs, switching creditors, close calls and filing for various forms of bankruptcy, but have continued to push forward attempting to pull themselves back from the brink. Sadly, those attempts failed this week, as Mad Catz filed for a Chapter 7 bankruptcy, declaring that they are going into liquidation, and all their assets sold off.
This is finally the end for this struggling hardware company.
Back in June of 2015, following an audit, a Form 10-K filed with the US SEC, was made public stating that the company was at that time reliant on creditors, Wells Fargo Capital Finance, and were concerned about the companies ability to pay back it’s debts. Mad Catz were putting all their eggs in one basket, and relying heavily on the success of the then upcoming Rock Band 4 which they co-produced along side developer Harmonix Music Systems, as well as producing the hardware. The Form 10-K states:
The Company depends upon the availability of capital under the Credit Facility to finance operations. Compliance with the Adjusted EBITDA covenants in fiscal 2016, which are tied closely to our internal forecasts and include significant contributions from anticipated sales of products related to the Rock Band 4 video game, depends on the Company’s ability to increase net sales and gross profit considerably.
Rock Band 4 was released to high review scores, with some criticism about lack of features, but still sold very well.
In February of 2015, Mad Catz revealed that while their profits for the winter quarter were up by 114%, their over all profits were down, by 10% and that the company was to be restructured to mitigate future losses, resulting in the redundancy of 37% of their workforce and the resignation of then CEO Darren Richardson, being replaced by Karen McGinnis. As McGinnis took the reigns one of her first statements concerning the restructuring of the company, she stated that there was a “long-term vision” to improve the company to make it more profitable, and become capable of future growth. A part of that growth was the “multi-year product” Rock Band 4. However, by March of 2016, just a month later, Harmonix announced that they were severing ties with Mad Catz, quoting an inability to live up to the production needs of the game. Steve Janiak, CEO of Harmonix stated in a release:
“As we look to fully achieve our goal of creating this console generation’s category-defining music gaming platform, we need to partner with a truly world-class manufacturer that can operate at the scale that Rock Band requires”
This was the death knell for Mad Catz.
In September of 2016, Mad Catz sold off their PC simulation controllers and joystick branch, Saitek to PC peripheral developer and producer Logitech. In January the New York Stock Exchange stated that if Mad Catz were unable to improve the value of their stock, which was at the time trading for $0.15, they would be delisted. By March the stock prices had reduced to $0.02 and it was over for them. Mad Catz declined to appeal their delisting, and here we are today, with the news of Mad Catz Capter 7 and impending liquidation.
The memory of Mad Catz will be mixed.
They have been a staple company in gaming for the past twenty years. While owners of their cheap and easily worn out controllers do not look favourably on the company, to those who enjoy the Rock Band franchise and their incredible range of professional quality fight sticks, they will be sorely missed. Personally, I’ve only ever had a few of their products, mostly controllers, but it’s always hard when someone is forced to leave this industry we love so very much. However, that’s the way the business world works. You get good or you get gone. Sadly, due to the string of missteps and numerous less than stellar products the company is no more.
I wish everyone at Mad Catz all the best in their future endevours, I hope you all find your feet pretty quickly.
Peace and High Scores!