Three MadCatz executives jumped ship the day before the company’s latest financial report was due.
A press release confirmed the immediate replacement of President and CEO Darren Richardson, Senior Vice President of Business Affairs Whitney Peterson, and chairmember Thomas Brown; all three top executives resigned on Monday. In a statement, Karen McGinnis — Richardson’s replacement — expressed confidence in the new leadership team.
“We recognise the tremendous value that Thomas, Darren and Whitney have brought to Mad Catz during their tenure and thank them for their many contributions throughout the years,” said McGinnis. “Looking ahead, we are confident that we have a talented leadership team in place that will enable us to steer the Company on a steady course in its operations and financial performance as we look to grow our business and reward our shareholders.”
MadCatz’ investors don’t share her confidence. Following McGinnis’ announcement, the company’s share value dropped 25.63%. Financial concerns aren’t new to the company. They denied rumors of financial difficulty last June, confident of their future thanks to an investment in Rock Band 4. That confidence was unfortately misplaced.
The gaming peripheral company co-published Rock Band 4 along with developer Harmonix. In addition, MadCatz produced all of the instrument controllers for the game and took responsibility for the game’s promotion, distribution, and global sales.
But their investment in the music-simulation game didn’t go as well as expected. Despite positive reception from critics — myself included — the developers were met with problems both technical and regarding their own integrity. For far too long, DLC was unavailable in the UK, and some developers were caught in the act of reviewing their own game.
Poor support and breaches of consumer trust may well have contributed to Rock Band 4‘s performance. Although the company’s end of year sales were up by 114% due to peripheral sales, the game’s lackluster launch and holiday sales missed the mark.
That brings us back to the present day, when the top brass made a break for the exit the night before it was time to pay the piper. Announced alongside the financial report was a company restructuring, laying off 37% of its staff by April 2017 in an attempt to save $5 million over the next year.
Karen McGinnis made her statement with as much dignity as possible, as she faces the steep uphill battle she has suddenly been put in charge of: “Rock Band sell-through was lower than originally forecast resulting in higher inventory balances as well as lower margins due to increased promotional activity with retailers.”
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