Can Startup Ouya's Crowd-Sourced Gaming Console Challenge Sony, Microsoft and Nintendo?

The open-source, crowd-funded, cloud-gaming Ouya console has covered all the right buzzwords. But can a $6 million Kickstarter project really compete with gaming giants Microsoft, Sony and Nintendo?

Take one part gaming business savvy, and one part cutting-edge industrial design, sprinkle in some open-source software, and add a pile of crowd-sourced cash and what do you get? A gaming console revolution.

So says Julie Uhrman, founder of the gaming upstart Ouya. Uhrman, who most recently served as vice president and general manager of IGN Entertainment, has joined forces with Yves Béhar (the famed industrial designer behind the XO laptop and the Jawbone Bluetooth headset and the JAMBOX wireless speaker system), to create a populist response to the hegemony of the Big 3 console vendors and open TV gaming to a broader audience.

 

The premise is simple: give the users inexpensive, current-generation hardware with a great controller and use a free, standard development environment (in this case, Android) to bring new developers to the table. Mandate at least some amount of try-before-you-buy free content for every game and everyone wins.

Uhrman set out to raise $950,000 on Kickstarter. She passed that total in the first eight hours, and as of Monday the project had raised more than $6,818,000.

While the $99 Ouya consoles aren’t scheduled to ship to the general public until March, 2013 (Kickstarter backers will get theirs first), there are early signs of a strong launch. The Ouya will support all Android games out of the gate (which its competitors will not), as well as OnLive! cloud gaming, VEVO videos, a 1080p version of the classic Final Fantasy III, and at least one original title. WIth 7 months remaining till rollout, the partner list should be much bigger by then.

(Disclosure: I spent $99 to preorder a system and reserve my username - so if you get pwned by BigBaldPirate, just deal with it.)

While 51,000 pre-orders and $7 million wouldn’t even register a blip to the Big 3, they’re more than enough to get Ouya moving. Uhrman doesn’t have to outsell the Playstation to be a success. She just has to make the Ouya a viable entertainment delivery system that keeps its users happy. To get a read on her long-term chances, I had a chat with Uhrman:

ReadWriteWeb: One of the problems facing the console market today is that the traditional console hardware cycle is pretty long. A $100 PC video card makes an XBox look pretty shabby these days, and my laptop pushes better graphics than a Playstation. Are you worried that the hardware lock-in will hurt adoption over time and/or bum out developers?

Uhrman: Right now we’re focused on making our little box hum – it has twice as much RAM as a modern console, and is powered by the can-do-plenty Tegra 3 chipset. Over the longer term, OUYA’s hardware will be much easier to update than traditional consoles: the chips are all standard, not custom. So, no, we’re not concerned about lock-in.

RWW: You addressed some of this on Kickstarter, but if device churn puts an equally powerful tablet in the hands of consumers within a year or so of the release of the Ouya console, how will you compete?

Uhrman: We offer a platform that’s less expensive than even the least-expensive comparable tablets, and made for gaming. The typical consumer isn’t buying a tablet, controller and HDMI cable and hooking them all together – it needs to be seamless. It just needs to work.

RWW: One way to mitigate technical obsolescence is cloud-based gaming, with the console a relatively dumb terminal with a great UI and controllers. How heavily do you plan to lean on this model?

Uhrman: We just partnered with OnLive – we’ll be streaming top tier games from Ouya to your TV, and we’ll also feature great new games in the Ouya storefront. That means we’ll have the best of both worlds – a direct-download console and a cloud-based gaming console all in one beautiful package.

ReadWriteWeb: Sony has a ton of Free-to-Play (F2P) titles in its stable, thanks to Sony Online Entertainment (SOE), and signs point to pretty low price points for upcoming consoles. Do you think Microsoft and Sony will ever be able to compete in the F2P space?

Uhrman: That’s a question for them – but sure, why not.

ReadWriteWeb: With the consoles gunning for the living room entertainment hub, everyone introducing a set-top box or a smart TV, and gaming slowly heading toward the cloud (bound by broadband adoption), do you think this next round of consoles will be the last?

Uhrman: We think gaming on a TV will be around forever. What’s more likely is that consoles will be the new generation of set-top boxes. A beautiful, affordable, accessible inexpensive console – just like Ouya.

You expect confidence from a startup founder, and Uhrman certainly delivers on that score. But in some ways, Ouya is in a good position. Given its modest size, the company can thrive even if the upcoming Xbox 720, Sony PS4 and Nintendo Wii U all become big successes. On the other hand, if the Ouya turns out to be a hit, the Big 3 may need to start paying attention to a little startup with a big idea.