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Skullcandy Goes for Epic Win

"Gaming has a lot of overlap with audio," he says. "It's a growing marketplace. It's a relatively new category and it's really grown in the last three or four years, [yet] a dominant single brand owns over 50% of the market on the console side. Mobile gaming and PC gaming is an opportunity where we see a resurgence" of increased demand.

"A lot of gamers aren't using headsets yet," Andrus says.

But the brand is up against some strong competitors in the headphone space, including Harman (HAR - Get Report), Sony (SNE - Get Report), Bose, Beats by Dre and -- specific to the gaming space -- Turtle Beach .

Andrus doesn't seem deterred. "We built an in-house design team that is critical to our ongoing strategy of all of our brands," he says. "Product is huge ... we will win with great product."

Astro Gaming is the company's "high-end, premium gaming headset. It's very well-respected" among professional gamers, Andrus says.

When Skullcandy acquired the company in 2011, Astro Gaming was sold exclusively online. Skullcandy remade the product with better margins for the retail space. It began rolling out the new line this past fall, Andrus says.

The company wants to push internationally. Skullcandy was originally using a third-party distribution model in its international markets, but Andrus says there are disadvantages. The company plans to increase market share abroad, specifically in Europe, "by being in those markets, by having operations on the ground where we are grassroots marketing to the consumer," he says.

The company acquired distribution rights for Europe in 2011 and opened an office in Zurich.

"We're not simply developing technology for technology's sake," Andrus says. "We believe that ultimately we win when there is a convergence between great brand and great product."

Shares of Skullcandy rose 0.8% to $7 on Wednesday.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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