Honestly I don't think online multiplayer is the reason it didn't sell well. I'm sure it didn't help, but there are a lot of other factors why RB4 isn't as big as hoped, such as a smaller budget, a relatively unknown set list, lack of many features, poor advertisement (if you weren't already a fan of the game you probably weren't going to find out about it), and just the simple fact that the rhythm game fad that mainly took off in 2007 with Guitar Hero 2 has died off in favor of shooters and MMOs.
Most of this is debatable for sure, but from what I've seen happening with the rhythm game industry, I'm not sure why Mad Catz placed as much faith on RB4's sales as they did. Guitar Hero Live fell short of expectations as well and I can guarantee you Guitar Hero Live got a significantly higher budget, too.
As far as Mad Catz goes, I personally think they're meh. Sometimes their stuff seems cheap, others seem very well-built, but since they're practically a monopoly when it comes to gaming peripherals (at least here in the US) they can get away with a lot of that. I personally wouldn't be devastated if they folded but it's definitely not looking as grim as it was right after the CEO resignation and layoffs.
That being said, Saitek is one of my favorite controller-making companies and they're owned by Mad Catz, so if they go under, I'm worried what'll happen to Saitek. I guess time will tell.