OUYA is a proposed gaming console being funded by a KickStarter campaign. You can pledge $99 and your reward will be a console with one controller, delivered in March 2013.

OUYA is to be powered by an ARM processor and will run Android. As of this morning, almost $4 million has been pledged. It’s now KickStarter’s fastest funded past $1 million project (measured in hours) and is on track to be the largest funded project ever (if it’s not already). It sounds pretty cool.

I won’t be pledging. I think it’s going to fail.

It’s really hard to make a game console. Getting the hardware right on the first try is not easy. With a gaming console, changing the hardware after launch is almost impossible without causing incompatibilities (game designers love to do unexpected tricks because they know the hardware is stable). OUYA’s play mostly seems to be that they will offer fixed hardware, running Android, and a stable SDK that’s really cheap (it’s included with every one). GREAT! But it’s really hard to do this right.

Pricing the hardware appropriately to both make money and draw consumers is very difficult. Nothing is stopping Microsoft from dropping the Xbox down to $99 just before OUYA’s launch. Microsoft has a history of losing money on Xbox hardware sales, they seem to have no hesitation about doing it in order to gain market share. I don’t think they’d hesitate to do it again if OUYA is a real threat. Which console is going to sell well at Wal-Mart? The Xbox at $99 with hundreds of games and Kinect, or this new thing? It doesn’t even matter what the features of the new thing are, the Xbox is established and kids won’t be disappointed getting one. Until OUYA is established, it’s a risky purchase for parents wanting to get their kid something, Xbox isn’t.

OUYA is going to miss the holiday season for 2012. I’m not a game industry insider, but I bet over half of the game industry’s revenues come in the 4th quarter. Missing that will hurt them. Launching in March is bad timing. Launching in the first week of November would be awesome timing. They’ll delay millions of dollars in revenues by a full year, if OUYA could pull in their schedule by 5 months, I think they’d have a chance. If they don’t, Microsoft, Nintendo and Sony are going to eat their lunch.

Selling an SDK with the console price is stupid. Sell the console. Also sell the SDK, but price it reasonably. Apple gives away the SDK for iOS, but you have to pony up $100 in order to sell in their store. Fair. If OUYA doesn’t do this same type of agreement, they’re leaving $100+ per game developer on the table. $100 is reasonable, $1k wouldn’t be unreasonable in order to get into their store. Giving the SDK away for free is a good idea, though, just make sure to charge at some point in order to be a developer.

OUYA won’t have amazing graphics. That will hurt. Xbox 360 was launched in 2005! That’s 7 years ago. New games, coming out now, probably will have equal graphics on Xbox as they would on OUYA. It’ll take developers a year or two to really understand what can be done with OUYA. I can only assume Microsoft is working on the next gen Xbox. OUYA, if it’s really a threat, may push Microsoft’s schedule up a little bit.

OUYA is trying to disrupt the game industry. They will only be successful if one of the entrenched players doesn’t try to do the same thing. Nintendo, Sony, and Microsoft all have great brands in gaming. They are ripe for disruption, and it’s good that OUYA is bringing that fact to light. But if any one of those 3 entrenched companies realizes that they too could disrupt the industry the same way OUYA is trying to, OUYA will fail. I’m confident that all 3 entrenched companies will see what’s happening and try to perform their own disruption, they can’t afford not to, especially Microsoft, who’s going to need the revenue when Windows 8 sucks.

It’s awesome that OUYA is trying to do this. I think it’d be tons of fun to work there and be a part of making their console. But, they’re going to fail.


12 July 2012