Ouya: A Wake-Up Call for Video Games

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In less than 24 hours, Ouya’s $99 game console has created as much buzz as anything from Microsoft, Nintendo or Sony.

No one who’s written about Ouya has actually seen the thing, but the concept alone is intriguing: an Android-based TV box that will run inexpensive video games–likely the same ones you play on your mobile phone or tablet–and will include its own controller with analog sticks, buttons, triggers and a small touch pad. All Ouya games will have a free-to-play element, whether it’s a brief demo or a full game replete with microtransactions.

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On Tuesday, Ouya put its product on crowdfunding site Kickstarter, allowing people to pre-order one for delivery in March 2013. More than 25,000 people have already done so, and Ouya has raised more than $3 million from consumers and developers, far exceeding its $950,000 fundraising goal.

Beyond this initial push, I’m not yet convinced that Ouya will be a long-term success. There are too many unanswered questions about performance, developer support and mainstream distribution. Still, the underlying concept of a cheap, app-driven video game box is hugely important. The big guys better be paying attention.

A Broken System

Consider, for a moment, the current state of home console gaming. To join the fun, you must pay between $200 and $300 for a high-definition console. New games cost $60, and many of them don’t offer demos, so if you buy a critically-acclaimed game and it doesn’t click with you, you’re out of luck. You can buy used games for cheaper, but then you’re treated like scum by publishers, who have removed more and more features from used games to discourage second-hand sales.

Either way, forget about downloading games directly. Retail stores always get first crack at new games, and when a game finally becomes available for download, you can almost always find it cheaper in a store somewhere.

It’s a broken system. The problem is that traditional console makers are too entrenched to do anything about it. Retail is still a huge part of their business, so they can’t ignore it. New games need to cost $60 to recoup the massive costs of development for publishers and to allow console makers to profit after making huge hardware investments. The home video game empire has grown so large that no one wants to disrupt themselves with an inexpensive console and small-scale games.

(PHOTOS: E3 2012 Video Game Conference)

Time to Think Small

There’s a market for something smaller, and the proof is in the explosion of mobile gaming. I hear the same story over and over from people my age, who grew up on Nintendo: They like video games, but don’t have 10 hours a week to commit to the hobby, and therefore can’t justify spending $300 on a gaming machine. Instead, they play games on their phones and tablets. Why not make it cheap and easy for them to play on their televisions? Ouya is the first company to address that question by actually building the hardware.

Julie Uhrman, Ouya’s founder, seems shocked that the company’s in this field all by itself. “The ironic thing is, when I pitch people, the most common response is ‘Huh. Yeah, that makes a lot of sense, I can’t believe no one’s done that,'” Uhrman told me in an interview. “And I think it’s because it is such an entrenched business.”

The fact that Ouya’s all alone right now might be its biggest concern. Ouya’s problem isn’t Nintendo, Sony or Microsoft, not unless their next consoles radically change the way games are priced and distributed. The real threat comes from other tech titans who are just as unencumbered by the past.

If Ouya’s a modest hit, it may only validate the market for Apple and Google, who already have huge app ecosystems and fully-invested consumers thanks to their hit phones and tablets. Ouya will be starting from scratch, and Urhman was cagey about whether the company would ever expand its gaming platform beyond televisions to mobile devices. Ouya can only hope that Google and Apple never decide to take big-screen gaming seriously.

Before anyone puts words in my mouth, I don’t think Ouya signals the death of the established video game industry. I like big-budget games, and I hope the best ones find a way to survive even as the industry as a whole tumbles. (One scenario that at least addresses AAA gaming’s distribution issues: Cloud gaming services like OnLive and Gaikai finally take off.)

But there needs to be an alternative. Smaller, cheaper video games have been a huge source of innovation on phones and tablets, and they deserve to find a home on televisions as well. Even if Ouya doesn’t live up to the hype, it’s the first step in snapping the games industry out of its doldrums.

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