Ouya Console Game Over: Why did they fail after raising $33.6M?

Ouya, a video game console the size of a Rubik’s
cube wanted to achieve something from the moment it was created. They wanted to open the last closed
platform, television. It was also set to raise $950,000, in the
Kickstarter crowdfunding site and exceeded that goal without problems. In its first two
days of campaign, it raised two million dollars and finally obtained $8.5MM, for its development. The console arrived at the market with the
JellyBean version of Android as its operating system. Part of its appeal was that users
could root it at will without losing the warranty. The passion for video games of Julie Uhrman,
founder and CEO of Ouya, led her to play on various platforms, but she always wanted to
return to one: TV. That’s why she decided to promote this initiative. The project was born in 2012, but the console
was a commercial fiasco. In 2015, it was acquired by the video game company Razer and survived
until June 2019, when that company decided to end it. What happened? This is Startup Forensics:
Ouya. The origin of Ouya begins with Julie Uhrman,
an entrepreneur and passionate about video games. Video games of all kinds: platforms,
shooting, mobile phones, but especially those that can be played in the living room of the
house and in front of the TV. This Californian yearned to return the games
to TV and that’s why she created a campaign on Kickstarter, to make Ouya possible, in
July 2012. The idea excited thousands who were willing
to donate $8.5MM to make it a reality, although initially, its creators asked for less than
a million dollars, to nail down the idea. Who could deny that the console was innovative?
It allowed any developer to bring a game from a mobile application to a TV. Other features
such as a beautiful, open and economical design made it stand out from traditional game consoles. Ouya became a reality thanks to donations
from 63,416 donors, who soon got the first disappointment. Although the developer kits began shipping
in December 2012, those who contributed to the Kickstarter campaign received their consoles
until March 2013. When it hit the market, the standard version
of the Ouya console was $99 and offered 1 GB of RAM and 8 GB of internal storage. Although there was also a 16 GB version, which was sold for $129. One of the competitive advantages that Ouya
wanted to offer to distinguish itself from others was the price of its games. The initial idea was that its cost would be only a fraction of what traditional consoles charged for their
games. The company would not have it easy. They had
to face already established giants, such as Play Station and Xbox. In addition, they would have to come up with ways to seduce the developers and convince them to create games for Ouya. When the console hit the market, the expert
Piers Harding-Rolls of the IHS firm said the gaming industry was transforming, in part
due to video games for the phone. These types of games tend to have lower prices
than traditional consoles and in many cases they are free. Ouya was being disruptive when
bringing that system to the screen and trying to monetize it by selling game updates. One of the strategies that the company identified
to impact the market was to encourage developers to create content. They offered $45,000 as
a reward, to those who were able to create a successful game for the console, in just
10 days. Ouya wanted to shout to the world, especially
to developers that anyone could make a game, because “each Ouya console was a development
kit.” But how was this console?
Minimalist is the correct word to describe this 7.5 mm cube. Its design was in charge
of Yves Behar, who was also the creator of the famous Jambox speaker of Jawbone. The device was equipped with a network and
control adapter, an HDMI cable and batteries for the controller. It was connected via Bluetooth
or WiFi. One of the most flashy features is that you
could play 10m away from the TV. Another positive aspect were free games. The
user had access to some lifetime deals for free. The console was easy to configure. You only
needed to connect it to electricity, place the HDMI cable that went from the console
to the TV and synchronize the control. Although on paper, the features of the console
seemed irresistible, in practice those who tested the device had some things to say about
it. For example, while interesting and renowned
titles such as “Final Fantasy III” and “Syder Arcade” could be found, you had to go through
many, many mediocre titles before actually getting to them.
Another of the complaints was that the touch area of ​​the controller was very sensitive
and that the graphics offered by the console were very similar to the qualities provided
by cellphones and tablets. That is, nothing outstanding if compared to what delivered
other consoles such as PlayStation 4 and Xbox Although Ouya was a young promise, its takeoff
was not so simple due to delays in the deliveries of the consoles promised to the donors of
his campaign, as well as the inconvenience with the device controller In addition, despite being so disruptive,
competitors appeared in the same niche. Among them, GameStick, nGees and Project Shield. Competition Android-based consoles soon appeared on the
market and one of them did so in a similar way to Ouya. GameStick whose funding was also achieved
through a Kickstarter campaign came with some advantages under the arm. Among them: smaller
size and smaller price. While Ouya was a box similar to the size of
a Rubik’s cube with a control, the GameStick was basically a control from which the stick
was released. In addition, it was $20 cheaper than Ouya. The device had an HDMI port to connect to
the TV and was also based on the Jelly Bean version of Android. Behind this initiative was Play Jam, a software
company that had been creating content for SmartTVs. In February 2013, a device of Polish origin
called nGees also appeared, which could not necessarily be defined as a console. It was an Android-based device, which allowed,
in addition to playing, listening to music, playing video, surfing the Internet, among
others. At CES 2013, a new console based on Google’s
OS was added to the list: Project Shield. The console was an Nvidia project and appeared
in a stand of the electronic consumer fair in Las Vegas, sheltered by a showcase. It was a console somewhat different from the
others in its category, especially since the control included a five-inch screen. But it could also be used with a television
screen to enjoy the gaming experience. In addition, it was designed for multiplayer
games between users, each with its console. Although the company had trouble finding buyers
of the console, it did manage to stand out for the number of applications it offered. That is how in 2014 Ouya signed an agreement
to deliver their games through the televisions and decoders of the Chinese company Xiaomi. The app library was one of the aspects of
Ouya that made its CEO very proud. Uhrman told Fortune in April 2015: “We believe
we have built something real and valuable. I continue to read the tweets and emails of
our fans who play Ouya every day, and our catalog now has more than 1,000 applications
and 40,000 developers. We have the largest library of Android content for TV (even larger
than Amazon’s). But that was not enough to keep the company
afloat. Allies Although Ouya’s growth was not going as
planned, some other companies saw in it a good option display themselves. One of them
was Alibaba, the Chinese e-commerce giant that in January 2015 decided to invest $10MM
in the company. Alibaba’s intention was to publicize its services,
supported by the Ouya platform. The hardware was not the strong point of the
company, but its software platform was successful. The CEO of the company considered at some
point that they could pivot to a software company, after all, they already had the experience,
both in the development of video games and interfaces for Android TV. In July 2015, a video game firm called Razer
decided to buy Ouya’s software assets, as well as its technical and development teams,
to expand the Android TV game business. Its CEO so far supported the transition, but
would not go to the new company. Techcrunch informed on that occasion that
with the acquisition, Razer would integrate the games, controllers, and accounts of Ouya
into its Cortex TV gaming platform. It would also relaunch the Ouya store as Cortex for
Android TV. Despite not having purchased the hardware
assets, Razer also offered to migrate about 200,000 Ouya users and to guarantee, for at
least another year, support for Ouya’s hardware. They also wanted to make them migrate to Razer
devices, such as the Forge TV micro-console and the Razer Serval controller package. Prior to its sale, Ouya had raised $33.6MM. Between 2015 and 2019, Ouya managed to survive
at the hands of Razer, who announced that they would definitively close the service
in June of this year. The purchase would be cash, which Techcrunch
explained allowed venture capital investors to charge their share. The acquisition would put several inconveniences
on the table. The first one: the download server would stop working. Players had to
download their favorite titles locally because after June 25 they could no longer download
anything else in Ouya. In addition, the closure of the store would
disappear the credits they had. This means players would be forced to use them or lose
them. What went wrong for this console? Ouya promised more than they could give. Their
ideas were ingenious but they ran into an unexpected success in Kickstarter that finally
played against them. The company had delays when sending the consoles.
This gave them a bad image in the eyes of their backers. Another of the company’s early failures was
to bet on a marketing campaign in which, literally, a user was seen vomiting, yes, vomiting. Can
you believe it? That’s just weird… The company failed to capitalize on the success
early and it took time to take advantage of the support initially obtained by the Kickstarter
donors. They left room for other companies to offer something similar and even better
than their console. Ouya was later acquired by Razer, a company
that promised to support the consoles and to keep the platform working for some time. The commitment was kept for one year. But
for a consumer who made a significant investment, it is hard to forget that he paid for a product
and that the responsible company abandoned him to his fate.

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