Mad Catz Sees Second-Half Lift From 3D Gaming, Kinect, Move

"Economic and sector challenges remain,” but videogame accessories maker Mad Catz Interactive is optimistic about the back half of this year thanks to a strong product lineup from it and other companies, CEO Darren Richardson said in a Thursday earnings call. The planned fall introductions of Kinect for Xbox 360 and PlayStation Move for the PS3, “the emergence of 3D videogame products,” and the coming release of games Call of Duty: Black Ops from Activision Blizzard and Rock Band 3 from MTV Games, Harmonix and Electronic Arts stand to provide a lift for Mad Catz and the overall game industry, he said.

Mad Catz sales for Q1 ended June 30 fell 11 percent from Q1 last year to $19.9 million, mainly due to “a difficult comparison” to Q1 last year when the company had success with its line of Street Fighter IV accessories, Richardson said. Also hurting Mad Catz was a decline in sales of products for the PC and handheld platforms, said Chief Financial Officer Stewart Halpern. On the handheld side, there was no major sales “catalyst” in Q1 this year as there was a year ago with Nintendo’s launch of the DSi, he said. The declines were only partially offset by one month of contribution from the sale of Tritton Technologies audio products and strong sales of third-party products via distribution, Mad Catz said. Mad Catz bought Tritton on May 28.

North American sales fell 23.5 percent from Q1 last year to $10.8 million, accounting for 54.2 percent of Mad Catz total sales. Of those sales, $10.4 million came from the U.S., with the rest coming from Canada. European sales rose 14.9 percent to $8.3 million, or 41.9 percent of sales. Sales to other countries grew 17.7 percent to $766,000, or 3.8 percent of sales.

Mad Catz products for the Xbox 360 accounted for 31 percent of its gross sales in Q1, down from 32 percent in Q1 last year. The PS3 represented 24 percent of sales, up from 19 percent, while Wii product sales grew to 10 percent of sales from 8 percent, PC product sales fell to 17 percent of sales from 22 percent, handheld product sales fell to 3 percent of sales from 7 percent, and sales of other products for other platforms increased to 15 percent of sales from 12 percent. Audio products soared to 33 percent of Mad Catz total gross sales from only 10 percent, while specialty controllers fell to 22 percent of sales from 40 percent, controllers grew to 22 percent of sales from 16 percent, other accessory sales fell to 16 percent of sales from 24 percent, PC device sales dipped to 6 percent of sales from 8 percent, and game sales fell to only 1 percent of sales from 2 percent.

The company still believes it can “achieve or exceed” its previously stated goal of “high single-digit percent year-over-year organic revenue growth” for fiscal 2011, Richardson said. It is still “focused on diversifying our product offerings, continuing to expand our growth outside of North America,” he said.

While the company used to be known mainly as a maker of value-priced third-party accessories that cost less than similar products from the first-party console makers, it now sells a significant amount of products such as its premium-priced musical instrument game peripherals, Richardson said. But value products are still “an important piece of business” for Mad Catz -- “we have a lot of placement in that business” at retail, and “we're definitely not walking away from it,” he said.