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Creative Thinking Keeps Company On Edgy Side of Video Gaming

MAD CATZ INC.

CEO: Darren Richardson.

Revenue: $184 million in fiscal 2011; $119 million in fiscal 2010.

Net income: $10.9 million in fiscal 2011; $4.5 million in fiscal 2010.

No. of local employees: 65.

Stock symbol and exchange: MCZ on the American Stock Exchange and Toronto Stock Exchange.

Headquarters: Mission Valley.

Year founded: 1991.

What makes the company innovative: Produces products for the “passionate gamer,” including an optimized computer mouse.

Key factors for success: Understanding how a customer uses computer peripherals, putting new products on the market as its line ages.

A mouse is a mouse, some people might say, but Mad Catz Inc. doesn’t buy into that sort of thinking.

The Mission Valley company makes computer peripherals optimized for game play. And with products like mice that can easily cost $100, the firm needs to appeal to what CEO Darren Richardson calls the “passionate gamer.”

The precision mouse, marketed under the Cyborg brand, is called the R.A.T. and it was introduced last year. By now several versions are on the market.

“It’s the first fully ergonomic mouse,” Richardson said. A user can adjust its shape. The mouse also comes with weights that can be added and removed. It offers thumb and pinkie rests — to counter a phenomenon called “pinkie drag.” And it includes several programmable buttons.

Mad Catz has made a recent, $100 version even more sensitive, upgrading it from 5,400 dots per inch to 6,400 dpi. Move it and “the cursor will flip off the screen,” said Richardson. A wireless model was advertised for $149 last week at an online retailer.

Research has informed Mad Catz’s new breed of mice. Company officials talk to gamers about how they do things, but interviews only go so far. “Most people don’t really understand what they do when they use a product,” Richardson said. Mad Catz captures video to figure out how people use its peripherals. “It’s an observational process,” Richardson said.

Everyone Involved

In-house staff contributes to engineering. Richardson said Mad Catz employees have to be passionate about gaming — no matter what their specialty. Even accounting or finance people get called upon to consult with product issues.

The company has 265 employees, including 65 in San Diego, 85 in Europe, 75 in China and 25 in Hong Kong. It just established a Tokyo office.

Mad Catz makes other peripherals such as control pads, joysticks, steering wheels, aircraft rudder pedals, light guns, video cables, microphones and guitars.

Due out soon is a customizable, flexible game controller with the MLG brand. MLG refers to Major League Gaming, a New York City-based association that sponsors gaming tournaments.

Also coming to market is a headset line optimized for Microsoft’s Xbox 360 gaming console. Mad Catz bought the Tritton headset line in May 2010. More than 40 percent of Mad Catz’s sales are in high-end audio products, said Richardson.

A more recent buy was V Max Simulation Corp. in February.

Instruments Maker

Mad Catz makes instruments such as guitars and drum kits for the “Rock Band 3” video game. One $150 model has a button at every position on the fingerboard, up to the 17th fret. Mad Catz uses wood in its high-end replicas of Fender Musical Instruments Corp. electric guitars.

In another move to license a popular brand, Mad Catz plans to introduce a set of Cessna Aircraft Co.-branded aircraft controls, under its Saitek label, in 2012.

Also in 2012, it plans to publish a video game called “War Wings: Hell Catz.” Australia-based TrickStar Games is developing the aviation game, set in the Pacific theater during World War II.

One retailer, Texas-based GameStop, sells slightly more than one in four of Mad Catz products, according to its annual securities filing.

While Mad Catz reported growth in the last fiscal year — from $119 million in revenue to $184 million in revenue — it faces a demanding, even unforgiving market.

John Bright, an analyst with Avondale Partners LLC in Nashville, Tenn., noted that technology companies are constantly under pressure to introduce new products. Apple Inc. has to come out with a new version of the iPhone every six months to a year, Bright said, saying that sort of market demand applies to a player such as Mad Catz as well.

“The cycle is six months to a year max,” said Bright.

So Mad Catz can’t rest on its latest innovation. To survive and thrive, it needs to be on the path to the next one.

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