Mad Catz Future In Doubt; Secures Extra Funding to Publish Rock Band 4

By | 1 year ago 

Earlier this year, Rock Band 4 was announced to many fans’ delight. In a surprising turn, developer Harmonix also revealed that they would be making the game without the support of MTV or EA (who helped publish other games in the series) and would instead be partnering up with Mad Catz. The partnership was completely unexpected, as Mad Catz had previously worked with Harmonix by helping them manufacture Rock Band‘s plastic instruments. But with Rock Band 4, they would be making the peripherals as well as helping to co-publish the title, a deal which includes marketing and distribution duties.

On the whole, this was seen as a good thing. While previous Rock Band games had been good, there was the suggestion from Harmonix that they’d had to make certain decisions because of EA and MTV, rather than of their own volition. In one behind the scenes developer diary about the game, one Harmonix developer even refers to MTV as their “corporate overlords”. Furthermore, Mad Catz has said that the partnership lets it and Harmonix deliver a “seamless experience” and “focus on the needs of the gamer first and foremost”.

But as many people began to get excited for Rock Band 4 and this new publishing strategy, Mad Catz has revealed that is has some financial issues. In an audit opinion letter (a letter written by an auditor that goes alongside a financial assessment), it appears that the company is at risk of not being able to pay its “debt obligations” and that its future entirely hinges on the success of Rock Band 4.

Rock Band 4 E3 2015 Preview

In the letter, the auditor wrote “in the event that no alternative financing is available, the Company would be forced to drastically curtail operations, or dispose of assets, or cease operations altogether”, also stating that if Mad Catz can’t pay Wells Fargo (who deals with its debt funding), the company could be forced to pay all of its debt back.

While this would be worrying on its own, Mad Catz chief financial officer Karen McGinnis explained that “this language was added because our debt covenants are tied to our budget and, as we have stated, we are anticipating significant growth in sales and gross profit from Rock Band 4 this year”. It’s also important to note that since this letter was written, Mad Catz has indeed secured extra funding of $30 million. $10 million of that goes to Mad Catz Europe (a wholly-owned subsidiary) while the other $20 million will be increased to $35 between September and December so that the company can still publish Rock Band 4.

However, it is concerning that Mad Catz is entirely dependent on Rock Band 4. While it’s currently unclear how many people will buy the game’s new instruments (though Harmonix has said that instruments will be in short supply at launch due to demand), the game will be backwards compatible with older instruments (including Guitar Hero ones) meaning that a lot of longstanding fans won’t need to buy new ones, and so Mad Catz will miss out. There are also no keyboard or pro guitar instruments and it will be released in the same timeframe as Guitar Hero Live, another factor which could impact Rock Band 4’s sales and put Mad Catz’ future in danger even more.

Rock Band 4 will be released on October 6, 2015 on PS4 and Xbox One.

Source: Game Informer