Mad Catz needs to shift Rock Band inventory as losses rocket 470%

The Rock Band 4 gamble has not paid off for Mad Catz.

The company suffered a $11.6m loss in the financial year ending March 31st, with operating losses growing up 470 per cent.

CEO Karen McGinnis, who was put in place following an exodus of staff from the company, says that Mad Catz has 120 days to shift $8.3m worth of stock left over after its parting of ways with Harmonix.

In total the company’s global headcount has been reduced from 219 to 133, with both its US creative marketing and European distribution teams being merged into its UK operations. Drastic cuts have hit various elements of the business, such as marketing, where trade activity has been cut altogether in favour of direct to consumer communications.

We focused a substantial amount of our efforts across the organization this past year on executing the successful launch of Rock Band 4 in time for the 2015 holiday season, which negatively affected the development and launch timing of our other product lines. As a result, most of our other product categories experienced sales declines over the prior year,” McGinnis told investors, as transcribed by Seeking Alpha.

Following the 2015 holiday season, Harmonix decided to take a different approach to holiday 2016, which included making changes to the hardware. After careful consideration, we informed Harmonix that Mad Catz would not invest additional development resources and tooling to design new hardware.

As such, Harmonix decided to engage a new hardware partner, which they have the right to do based on the terms of our original contract. Our agreement with Harmonix has now been terminated.

Although the overall Rock Band 4 program was incredibly disappointing for us, exiting the relationship with Harmonix at this time allows us to focus our efforts on the development and execution of our other exciting and profitable product launches.”

McGinnis went on to argue that the company hopes” that most of the bad news is behind it, adding: All the data head shows that consumer demand for Rock Band 4 should have been much greater than it ended up being. But that was a disappointment. It was an incredible disappointment actually for Mad Catz and we ended up taking and some large write-offs in Q4 because of it.”

She also cited the elusive Star Citizen, with which the company has a partnership, as a big hope for the coming year, while assuring investors that relations with its lenders remains great, despite it falling short of its targets.