Mad Catz.
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,
steering wheels,
gaming mice,
instrument peripherals,
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.
What happened?
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,
screen magnifiers,
steering wheels,
dust covers,
joypads,
power adapters,
flight sticks,
memory cards,
light guns,
carrying cases,
hardware abominations...
the list goes on and on.
Sure they were cheap, but they worked...
mostly.
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 best-in-category awards
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,
the Gamecube
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:
license deals.
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...
good!
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.