Friday, 17 May 2024

[Update] Harmonix and Mad Catz Dispute Rock Band 4 Hardware Demand

Update 2: Mad Catz responds to Harmonix’s claim that they were unable to meet hardware demand during the holiday season. Although there is disagreement on who terminated the relationship, both companies recognize the excess inventory issue.

In response to our inquiry, Mad Catz CEO Karen McGinnis explains that their company had to discount hardware during the holiday months. She states, “As we have publicly disclosed, it was Harmonix who terminated the agreement, under their rights to do so. While we acknowledge the importance of maintaining correct inventory levels for Rock Band 4, it is evident that consumer demand did not meet expectations. This resulted in excess inventory not only for Mad Catz but also for our retail partners, leading to discounting in retail prices during and after the holiday season. Moving forward, we remain committed to the success of Rock Band 4.”

The conflicting perspectives between Harmonix and Mad Catz make it difficult to determine the complete picture without concrete sales figures. Harmonix claims Mad Catz couldn’t meet demand, while Mad Catz suggests that both they and retailers were inundated with excess inventory, necessitating discounts.

Update 1 (June 3, 2016 @ 10:18 a.m. Central): Harmonix offers a differing account of their relationship with Mad Catz. Harmonix CEO Steve Janiak states, “Rock Band did well for us, selling within our anticipated range. In fact, many of our retail partners struggled to keep up with demand during the holiday season. With a product like Rock Band that involves hardware, it is crucial to have accurate inventory levels, with most available at retail in time for the holiday selling season.”

While there were shortages of Xbox One adapters at launch, the implication here is that Mad Catz had difficulty meeting demand during the busy holiday period. The $8.3 million inventory they currently hold may have arrived after the holiday season when demand declined.

We have reached out to Mad Catz for further comment, as they plan to heavily discount their stock before the September 6 deadline. Additionally, we have contacted PDP, Harmonix’s new hardware partner, who will likely sell their peripherals at full price once Mad Catz clears their remaining stock through a fire sale.

Original Story (June 3, 2016 @ 9:00 a.m. Central): Yesterday, Mad Catz announced an $11.6 million loss for the full year, primarily attributable to their investment in Harmonix’s Rock Band 4. Mad Catz has ended its relationship with Harmonix due to a refusal to invest in additional designs as requested by Harmonix.

With $8.3 million worth of inventory sitting in their warehouses (including a $6.8 million write-down), Harmonix has turned to new partner PDP for future peripheral releases.

Harmonix also announced that they have extended their deal with Fender until 2027. Furthermore, they released a teaser video suggesting the arrival of new Fender-style plastic instruments.

Rock Band 4 will receive new features in the fall, including synchronous online multiplayer and additional content.

For more information about Rock Band 4, please read our review.

Our Take: Rock Band instruments have caused significant difficulties for Mad Catz, including the departure of three top executives and an overall financial loss for the company. It remains to be seen whether PDP’s deal is more strategic, avoiding overproduction of these instruments. Considering the uncertain market demand for new Rock Band peripherals, this move seems somewhat puzzling.


FAQs

Q: Who terminated the agreement between Harmonix and Mad Catz?
A: Harmonix claims that they terminated the agreement, while Mad Catz insists it was Harmonix who ended the relationship.

Q: What caused the excess inventory issue?
A: Mad Catz explains that both consumer demand and excessive inventory affected them and their retail partners, leading to discounting during and after the holiday season.

Q: Will PDP sell their peripherals at full price after Mad Catz clears out their stock?
A: It is likely that PDP will sell their peripherals at full price once Mad Catz completes their fire sale to remove remaining stock.


Conclusion

The dispute between Harmonix and Mad Catz regarding Rock Band 4 hardware demand remains unresolved. While Harmonix claims they had strong sales and struggled to meet demand, Mad Catz suggests excess inventory and discounted prices during and after the holiday season. As both companies navigate their futures, it will be interesting to see how PDP’s involvement affects the availability and pricing of Rock Band peripherals.