The brand unceremoniously
thrust upon younger siblings
and Player Twos the world over.
Often derided for subpar
controllers that felt just as cheap
as much as they looked absurd.
But before that, Mad Catz had a history
going back almost 30 years,
with them being responsible for all
sorts of award-winning flight sticks,
and even their own microconsole.
One quarter of the entire
game console aftermarket
was claimed by Mad Catz alone in 2006.
And yet, it obviously didn’t end well for them
since the company declared Chapter 7
bankruptcy on March 30, 2017.
This is LGR Tech Tales,
where we take a look at noteworthy
stories of technological inspiration,
failure and everything in between.
This episode tells the tale of Mad Catz:
the Prolific Purveyors of Plastic Peripherals.
The year is 1987
and the video game market is exploding!
Devices like Nintendo’s Entertainment System
were leading the charge of
the video game industry’s
40% annual growth rate that year,
and it showed no signs of slowing down.
This caught the attention of a
small group of engineers in Hong Kong
who saw this rapid growth as
a great investment opportunity.
Games were growing at such a rapid rate
that third-party manufacturers
could easily swoop in and lay claim
to underserved gamers with niche product ideas.
So these engineers decided, hey,
why not latch on to some of that success
using their skills and connections in Hong Kong,
China, and the USA?
They spent the next two years laying the groundwork
for design, manufacturing,
packaging and distribution
culminating in 1989 with
the founding of Mad Catz, Inc.
There’s seemingly no stated
reason behind that name,
but their goal was to provide third-party
products for video game consoles
at a low cost to both them and consumers,
and they accomplished this by
outsourcing 60% of the work.
Manufacturing was handled
by a firm in Shenzhen, China,
and the design and marketing
was handled by a satellite office
in Southern California, near San Diego.
This not only ensured they could manufacture
the required electronics for a crazy low price,
but the American side of the business
ensured they had an ear to the ground
of their largest target markets,
the U.S. and Canada,
eventually leading to the company
being headquartered in San Diego.
Mad Catz’s first product is
tough to pin down precisely,
but two of them were these turbo controllers
for the NES and Sega Genesis.
These were sold under the
High Frequency label at first,
which was the in-house brand for the
Toys “R” Us retail chain in North America.
The way this worked is that the
product and marketing were conceived
by Mad Catz’s office in California,
and the design was sent to
their contracted facility in China
to be manufactured and shipped out
as an Original Equipment
Manufacturer, or OEM, product.
This method meant that Mad Catz
could develop their own designs in-house
and then sell it themselves
under their own brand
or as a generic item to whoever
paid to stick their own logo on it.
And while this didn’t make
them a fortune immediately,
it was enough to continue to grow
the company throughout the 1990s.
They made game pads,
the list goes on and on.
Sure they were cheap, but they worked…
And their product line was so pervasive
that it was hard to ignore them
when you went to a game store
looking for a new accessory on a budget.
By the latter part of the ’90s,
Mad Catz had grown to over 100 employees
while partnering with over 12,000 retailers worldwide.
And with the onslaught of new game consoles
set to release across the next few
years on into the new millennium,
investors were eyeing Mad Catz
with piles of cash in hand.
It was the Ontario, Canada-based GTR Group,
formerly known as Games Trader, Inc.,
who completed the acquisition of
Mad Catz on August 31, 1999
for $33.3 million.
Mad Catz remained
headquartered in San Diego, however,
and work quickly began on several new projects.
One of these was the BioForce,
a device that sent 16 milliamps of electric current
to shock and temporarily immobilize players’ fingers
when they got hit in-game.
Apparently, the press members that got to try it
had fun with it at trade
shows but suffice to say,
a device that electrocutes kids…
never made it to market.
A more successful new product for them was
the MC2 and Mario Andretti racing wheels,
both of which earned several
from industry magazines and websites.
Mad Catz also ended up releasing a
dozen licensed controllers and peripherals
to coincide with the launch
of the Sega Dreamcast in 2000,
which led to a perceived increase
in the brand’s value to consumers.
So GTR Group decided to rebrand themselves
as Mad Catz Interactive in 2001,
closing down the other
parts of their business
to focus on new console
launches in North America,
like the PlayStation 2,
and the Xbox.
Another slew of new products came flooding in,
from wireless controllers
to third-party dance pads
to higher-capacity memory cards.
Then in 2003, Mad Catz paid
$5 million to acquire GameShark,
a company that made
plug-in devices and software
that allowed players to
cheat their way through games.
In 2007, Joytech and Saitek
were two more major acquisitions
at a combined $34 million,
with Joytech being the gaming accessories
unit of Take-Two Interactive Software,
and Saitek being known mostly
for their PC gaming peripherals,
especially flight sticks.
And somewhere in the midst of all this,
they found time to start
publishing their own games,
such as Real World Golf.
Naturally, this was an excuse
to sell more controllers
and with this one, it was the
USB Gametrak golf club motion controller.
And while they dabbled with
motion controls for a couple years
with the popularity of the Nintendo Wii,
starting in 2008, Mad Catz dove
head first into a lucrative new activity:
Not with console manufacturers
but with game properties themselves.
Partnering with Capcom,
Mad Catz released a bunch
of Street Fighter IV controllers.
But the most notable of these was the Fightstick.
This arcade-style controller cost
$70 for the standard model
and $150 for the Tournament Edition.
This was not only more costly than
Mad Catz’s usual fare but it was actually…
The higher-end version used
the exact same Sanwa joystick
and 30 mm buttons as the
Street Fighter IV arcade machine,
leading to notoriety in the eSports world
and several eSports events and sponsorships
coming from Mad Catz over the following years.
The developer Harmonix was next on the agenda,
striking a deal with Mad Catz to release
a bunch of officially-licensed instruments
for Rock Band in late 2008.
These were arguably an improvement over the originals,
with a microphone that
included its own controller buttons,
a portable drum kit that was much more compact
and easy to move around than the full thing,
and a bass guitar that looked a
lot like an actual Fender Precision.
In 2010, Mad Catz then acquired
gaming audio company Tritton,
giving them an instant foothold into the
growing realm of microphones and headsets.
They continued to support
personal computers as well
with the release of the
Cyborg R.A.T. gaming mouse in 2010,
the Eclipse touch-sensitive keyboard
and gesture-controlled mouse,
and acquired the V Max Simulation
Corporation, a flight sim developer,
to help guide the development of future Saitek products.
Then in 2013, they decided to cash in on
the microconsole boom inspired by the Ouya,
which was at the time the second-highest funded
project on crowdfunding site Kickstarter.
Mad Catz’s response was the Mojo,
an Android-based console that cost $250.
It saw some success among
Android modding enthusiasts,
but projects like this and the Ouya
quickly faded from the limelight,
even after hefty price drops.
Making matters worse, it was not going
so well behind the scenes at Mad Catz.
They’d been in and out of debt since 2011,
and by June of 2015, they’d announced to investors
that they’d failed to meet their
credit lender’s monthly target
on a $20 million loan.
The bank decided to waive the violation, though,
since Mad Catz had what they
thought was an ace up their sleeve:
Rock Band 4.
Set to release in October, Mad Catz was
betting the farm on the game performing well,
not only manufacturing
the instruments for the game
but going so far as to take care of the marketing
and distribution worldwide as well.
But it was not nearly enough to keep up
with Mad Catz’s mad credit problems.
Even with a 55 percent uptick
in sales from the previous year,
they reported an $11.6 million loss.
This was largely due to the lower-
than-forecast Rock Band 4 sales,
along with $8.3 million of unsold instrument
inventory languishing in warehouses.
The writing was on the wall after
Harmonix dropped Mad Catz as distributor
and partnered with
Performance Digital Products instead.
Even with Mad Catz laying off 37% of their staff,
their CEO and chairman resigning,
and selling off the Saitek brand to Logitech,
their stock prices plummeted
down to an abysmal 4 cents a share.
The New York Stock Exchange delisted
them entirely on March 23, 2017,
and that… was that.
One week later, Mad Catz’s board of directors
voted to declare Chapter 7 bankruptcy,
meaning that everything they owned
would be liquidated to pay off their debts.
And just like that, a company with an
almost 30-year history vanished overnight.
Mad Catz was gone.
Will they be missed?
Probably not by very many.
While they did make a few
excellent products over the years,
there’s no shortage of other manufacturers
that continue to provide the same types of things
at a similar price point.
Mad Catz is more of a
cautionary tale than anything else,
showing just what can happen to
even the largest name in their category
when people lose sight of what made
the company succeed in the first place
and fail to recognize the interests
of a rapidly changing market.
And if you enjoyed this episode of LGR Tech Tales,
then awesome. I’ve got more for you.
And there’s new videos coming every
Monday and Friday here on this channel,
so stay tuned if you’d like.
And as always, thank you very much for watching.