Job cuts hit Mad Catz following low sales of Rock Band 4

Even though the world celebrated the glorious return of the Rock Band franchise, sales weren’t quite as good as co-publisher Mad Catz had expected. This shortfall has contributed to a looming “corporate restructuring”, which will see nearly 40% of the company’s workforce laid off.

The restructuring will cost the company around US$3m, but save more than US$5m a year starting April 1, 2016 (first quarter of fiscal 2017). And it doesn’t just hit the lower-level employees. CEO Darren Richardson, chairman of the board Thomas Brown, and Whitney Peterson, senior vice president of business affairs all resigned this week, with Mad Catz now focussing on “lowering operating costs, increasing efficiencies and better aligning its workforce with the needs of the business”.

While we normally hear news about job cuts like this through the Chinese whispers structure of the jobless, this one is straight from the source, revealed in the company’s quarterly earnings report.

A year ago, the net loss for the first nine months of the fiscal year stood at a relatively acceptable US$809,000. This year – presumably due to bigger spending over Rock Band 4 – that number’s jumped to US$4.36 million.

In the third quarter of its 2015-16 fiscal year (which ran October-December 2015), Mad Catz recorded its second-highest net sales figure ever – US$65 million. Unfortunately, while the company noted “strong” sales of Rock Band 4, new CEO Karen McGinnis explained they were “lower than originally forecast”. And it’s a double-edged sword. Poor sales of the guitar-based game (particularly after Thanksgiving) meant there was more stock left on store shelves. Retailers started discounting prices to move copies, which means that even when the game did sell, less money ended up in Mad Catz’ pockets.

With Harmonix continuing to release new songs for Rock Band 4, Mad Catz is still optimistic about the future. It’s not a one-trick pony either: Street Fighter 5 launches this month and the company has produced a selection of officially licensed peripherals to go with it, hoping that fans prefer them to the standard console controllers.

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