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Mad Catz lays off 37% following reports of underperforming Rock Band 4 [Update]

Mad Catz is in a strange place, as its seen its sales increase since last year, but because it produced too much Rock Band 4 hardware, the company is now finding itself with tremendous losses.

Ozzie Mejia

February 9, 2016 2:01 PM

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Update: The layoff figure was originally posted at 63 percent. However, the language of the earnings report ("The plan consists of a reduction in the number of positions across the organization equal to approximately 37% of the total workforce and includes changes at the executive level.") indicates that the reduction figure is actually 37 percent. The headline has been updated to reflect this.

Original story: After most of its executive board abruptly resigned yesterday, the gaming world braced itself for the worst from game publisher/hardware manufacturer Mad Catz. And as expected, the news coming out of today's third quarter earnings report was not good. So the hammer has fallen on a large chunk of the company, with reports coming in that 63 percent of its workforce has been laid off.

Gamasutra has issued the report on Mad Catz's mass layoffs, citing that the company is aiming for a massive restructuring plan. Mad Catz is currently in the midst of a big hardware push, as it prepares to release new arcade sticks for next week's Street Fighter V.

However, the massive losses undergone in Q3 can largely be attributed to underperforming sales from Rock Band 4, which the company took a chance on publishing late last year. The company's sales have actually improved 114 percent year-on-year, but there's a big problem in regards to the overmanufacturing of both the software and the substantially expensive hardware. Because RB4 sold relatively poorly, retailers have been desperate to get rid of the excess inventory that's eating up precious real estate on sales floors. That has led to substantial discounts and, as a result, has eaten away at any profits, taking Mad Catz deep into the red.

The low Q3 numbers are also being attributed to low demand for audio and PC hardware in both European and Asian markets.

Ozzie Mejia

Senior Editor

Ozzie has been playing video games since picking up his first NES controller at age 5. He has been into games ever since, only briefly stepping away during his college years. But he was pulled back in after spending years in QA circles for both THQ and Activision, mostly spending time helping to push forward the Guitar Hero series at its peak. Ozzie has become a big fan of platformers, puzzle games, shooters, and RPGs, just to name a few genres, but he’s also a huge sucker for anything with a good, compelling narrative behind it. Because what are video games if you can't enjoy a good story with a fresh Cherry Coke?