Strong `Call of Duty’ Accessories Sales Give Mad Catz Q3 Boost
Mad Catz Interactive was able to report improved results for Q3 ended Dec. 31 despite “a very challenging period for the videogame industry,” CEO Darren Richardson said on an earnings call. Revenue increased 19 percent from the year-ago quarter to $48.8 million due mainly to strong demand for the company’s Call of Duty: Modern Warfare 2 accessories, “continued growth of our European distribution network” and “new placements” of Mad Catz remotes for the Wii console, he said. The company had a $5.6 million profit, or 9 cents per share, vs. the $26.9 million loss, or 49 cents, in the year-ago period.
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Unlike some other companies in the game sector, Mad Catz saw more strength in Europe than in North America. “In Europe our Wii performance was very strong. In North America, we kind of fell off a fair bit on Wii,” Richardson said. Also challenging in North America was the loss of customers including Circuit City, he said. “The U.S. has been a little bit more patchy than what we're seeing in Europe.” Helping is the company’s growing distribution overseas. It recently opened an office in Barcelona and is now “going direct in the Spanish market where previously we were through a distributer” only, he said. “We're actually seeing the European market move well."
Q3 sales were “the second best of any quarter in the company’s history,” said Chief Financial Officer Stewart Halpern. North American sales of $24.6 million were about “in line with last year’s $24.7 million, with a small change mostly due to a negative” comparison on Wii accessories vs. a the year-ago quarter and “general softness in the market,” he said. Sales in Europe jumped 58 percent to a record $23 million. “For the first time in the company’s history, non-U.S. sales exceeded sales in the U.S.,” although revenue in “the rest-of-world markets declined” about $300,000, he said. Canadian revenue increased to $1.2 million from $787,000 and sales in other countries -- excluding the U.S. and Europe -- fell to $1.2 million from $1.5 million.
Mad Catz is optimistic about its new Cyborg and Eclipse branded PC game accessories. “I think you will see distribution on” the new Mad Catz PC peripherals “going through most of the major PC mass market channels,” including Best Buy in the U.S. and Dixons in the U.K., Richardson said. Amazon and other online retailers are “gaining a bigger presence in that space,” he said. Mad Catz is “pretty confident that we're going to be able to get some placement” for the new high-end PC game accessories it unveiled at CES last month, he said. He predicted the company’s new top-of-the-line backlit keyboard will be “placed at Best Buy and some other retailers.” Competition in the category will “come mainly from Logitech,” along with “a number of other players” that he didn’t name.
Xbox 360 products accounted for 31 percent of Mad Catz Q3 sales, up from 21 percent a year earlier, while PC products were 23 percent of sales vs. 27 percent, Wii was 14 percent of sales vs. 17 percent and the PS3 was 17 percent of sales vs. 5 percent. Standard controllers represented 26 percent of sales, little changed, while specialty controllers were 21 percent of sales vs. 11 percent, audio products were 10 percent of sales vs. 5 percent, PC input device products were 8 percent of sales vs. 11 percent and games accounted for 2 percent of sales, little changed . The company’s Modern Warfare 2 accessories include wireless and wired combat controllers, a voice communicator and headset, controller face plates, mice and keyboards.