What Happened to Mad Catz?

Mad Catz was one of the most recognisable names in games peripherals. Its history stretched right back to 1989 and incorporated other well-known brands such as GameShark, Joytech, Saitek, and Tritton. It sold peripherals for practically every console, including every generation of PlayStation to date.

The company also made the popular Fightstick line of controllers with an official licence from Capcom for serious Street Fighter competitors, allowing it to enter the then nascent world of eSports. It sold guitar controllers in huge numbers for Rock Band 3 and even moved into developing games itself.

Then in 2016 it all started to come apart. Mad Catz reported huge losses, was delisted from the New York Stock Exchange in March 2017, and ceased operations soon after, filing for bankruptcy and preparing to liquidate its assets. It also looks unlikely that anyone will swoop in to save the brand, either.

So what went wrong at Mad Catz?

MEET THE TEAM

Chris Von Huben founded audio brand Tritton back in 2000: Tritton was one of the pioneers of gaming headsets for consoles, along with Turtle Beach,” he recalls. He moved to Mad Catz in 2010 when the peripherals manufacturer acquired the company.

Aaron Smith chips in: I met up with Chris Von Huben around 2007. Tritton had just entered the gaming headset market and he hired me as a product manager.” He kept this position at Mad Catz after Tritton’s acquisition.

Both have since moved on, co-founding LucidSound in 2014, with Von Huben as CEO and Smith as head of product. Neither of them are short of words when it comes to describing their former employers woes.

"Mad Catz did not have a product offering that could compete against
Turtle Beach or Tritton"

First we ask Von Huben why Mad Catz bought Tritton: They recognised the importance of the gaming audio market segment. Mad Catz did not have a product offering that could compete against Turtle Beach or Tritton. At the time of acquisition, Tritton was growing rapidly, faster than we could financially support. Mad Catz was to provide all the backend support, including financial and marketing support, worldwide distribution and product development. Shortly after the acquisition, Mad Catz’s strategy changed, leaving me with little to no influence.”

Smith recalls some positives, in that he was able to create the industry’s first fully wireless headset for the Xbox 360, but things didn’t feel right from the start: It’s an odd place in that it’s made up of a lot of great people but had an overall lack of company morale that was never addressed by upper management. You’d expect working for a gaming company to be fun and interesting, but it wasn’t,” he says.

LOLCATZ

Of course, Tritton was only one part of a large company, and one that was making good returns, says Von Huben. I think it was 2012 that Mad Catz posted one of, if not its highest earnings report. Stock price was at an all-time high.” But that didn’t last long, he claims: In my opinion, Mad Catz failed shortly after the acquisition of Tritton and the launch of Rock Band 3. After that point, the executive team led the company to certain disaster with a laundry list of ill-fated decisions.”

Von Huben’s list is extensive. The company attempted the distribution of a Jonah Lomu Rugby game in North America, a region with essentially no rugby following. It also developed and published a game called Damage Inc., which failed miserably.” It then expanded the company to create a new development group called Thunderhawk Studios, whose attempt to create an MMO flight sim game was also a complete failure,” says Von Huben.

Just to mix things up a bit, utter failure” is the label Von Huben applies to the launch of Mojo, an Android-based gaming system. It also failed to establish a standard universal compatibility technology for peripherals,” while mobile gaming accessories that were designed for the mobile market never caught traction.”

The company attempted the distribution of a Jonah Lomu Rugby game in North America, a region with essentially no rugby following

Understandably, the Tritton-leading Von Huben is also critical of the introduction of Mad Catz branded gaming headsets. Smith adds: Tritton was the best-selling brand, consistently making up more than 40 per cent of the revenue, but they continued to put their engineering efforts into the Mad Catz branded Freq line of headsets while killing off the higher-end Tritton headsets.”

Von Huben elaborates on the company’s problems: It wasn’t any one of these failures, but the combination of all of them. Mad Catz was quick to abandon its core business and starve Tritton to near death for high risk opportunities that all failed,” he claims.

Smith was confused by the strategy, too: Mad Catz had an identity crisis. The public perception was that they were the brand that sold the less expensive, lower quality controllers and memory cards. They desperately wanted to become a premium brand by releasing high end and expensive products with the Mad Catz branding on them, but it’s almost impossible to take a brand upmarket. It’s why Toyota created Lexus and Nissan created Infinity.”

Top that off with a huge bet on Rock Band 4 that didn’t pan out and you have the situation we see today,” says Smith. They tried to redirect focus back to the Tritton brand at the end, but it was too little too late.”

101 USES FOR A DEAD CATZ

So what are the chances of the Mad Catz brand being picked up by other firms? Saitek was purchased by Logitech just before Mad Catz closed,” Von Huben says. Outside of its fightstick business, I think the only other asset left in the Mad Catz portfolio that has any value is the Tritton brand – it still resonates with the gaming audio community. I put a lot of years into building it and would like to see it survive.

However, I suspect that all a buyer would be purchasing is the name and maybe some inventory. I would guess that several of the contract manufacturers that were building the headsets are owed a lot of money for engineering and tooling. If that’s the case, a buyer would have to start with all-new headsets or work out a deal with the factories to buy the tools and engineering separately.”

Von Huben is upbeat about the gaming peripherals market though, despite Mad Catz’s collapse. The market will continue onward and Mad Catz is not an indicator of a trend. 2016 was a lackluster year that might have put the final nail in Mad Catz. Similar to the stock market, I believe the gaming industry may have its peaks and valleys, but it will continue to grow.”

Smith agrees: Mad Catz had a unique situation and the company made a lot of bad decisions. Look at the rise during that same time period of companies such as LucidSound and HyperX in the gaming audio space alone.”

Indeed, Von Huben says the gaming audio sector has seen a lot of expansion recently: Gaming audio has quickly become one of the largest third party accessory categories,” he states. But over the past few years, the gaming category has quickly become saturated with competitors offering very little in terms of new technology other than gimmicky RGB lighting.”

"The market will continue onward and Mad Catz is not
an indicator of a trend"

Smith concurs, but warns that new consoles such as the PS4 Pro and Project Scorpio