Mad Catz recently announced their latest financial quarter results. Sales and profits were down, and the finger is being pointed at Rock Band 3. Has the rhythm gaming genre “softened” over the last few years? Without a doubt. But I’m going to highlight a number of facts that Mad Catz is presenting in their latest quarterly financial statement, and before I put together the pieces as to why their explanation doesn’t sit well with me, see if you can first figure out why this doesn’t make sense.

Revenues for the latest quarter ended September 30, 2011 were reported at $25.8 million, a 31 percent decrease from the $37.4 million reported during the same period one year ago.

Profits decreased 29 percent during the period, from $10.5 million to $7.4 million.

Mad Catz claimed that “In the United States, the decrease in net sales is primarily attributable to sales of our Rock Band 3 products in the second fiscal quarter of 2011, which was released in September 2010.“

They also claimed that “The decrease in games as a percentage of total gross sales primarily related to lower sales of bundled products of the Rock Band 3 game. The decrease in controllers was primarily related to products compatible with the Wii and PlayStation 3.“

Finally, in their press release, they noted that “Although we improved sales of our increasingly important audio and PC products, these gains were more than offset by weakness in our video game products, as the revenue from Rock Band 3 product sales fell sharply.“

First, the bad news. This doesn’t bode well for the re-release of Rock Band 3 this year, but does help to explain why the re-release is only planned for the Xbox 360. They note that Wii and PS3 players aren’t buying instruments at the same rate as the Xbox 360. This is corroborated by unofficial and anecdotal figures we have seen on DLC sales between the three consoles, and doesn’t necessarily come as a surprise.

What puzzles me is that based on what I’ve seen and heard here, the forums, and on social media, demand for Rock Band 3 peripherals appeared to be higher than supply. Even now, it’s extremely difficult to get your hands on many different Rock Band 3 peripherals, so I’m somewhat confused as to why demand isn’t being satisfied when claims that “sales are down” are being listed as excuse. As an outsider, it seems like Mad Catz is being reluctant to commit to the franchise at the risk of generating excess supply which, to be fair, is a legitimate business reason, but may not paint them in the best light in terms of the fans.

But that’s not what bothers me. What I’m about to illuminate some will write off as “spin,” but there are some facts here that definitely need to be highlighted. Mad Catz’s financial statement for the quarter ended September 30, 2011 was compared against the same quarter last year, ended September 30, 2010. Mad Catz specifically lists that Rock Band 3 was released in September 2010, when it was actually released on October 26, 2010, a full month AFTER the comparative quarter ended. This presents a serious issue in the validity of their variance analysis.

Excuse me while I get technical for a moment, but generally accepted accounting principals state that revenue is recognized when the following four conditions are met: 1. Persuasive evidence of an arrangement exists. 2. Delivery has occurred or services have been rendered, 3. The seller’s price to the buyer is fixed or determinable and, 4. Collectibility is reasonably assured. While I don’t doubt that three of these are easily met, I’m questioning whether delivery has occurred in quantities large enough for Mad Catz to justify on their own financials that Rock Band 3 “was released in September 2010.” While Mad Catz was releasing some peripherals prior to Rock Band 3’s release date, I find it hard to believe that the majority of peripheral sales occurred prior to the release of Rock Band 3. In fact, it doesn’t make sense at all, as they specifically reference “lower sales of bundled products of the Rock Band 3 game,” which could NOT have happened prior to October 26, 2010 (with a few lucky exceptions).

What do you think? Is Mad Catz throwing Rock Band 3 under the bus unfairly? Or is there something bigger that I’m missing?

[Found via Gamasutra]