Ouya could be a "black hole of losses"

The creator of the Pandora explains why the Ouya could fall on its face

As the Ouya Kickstarter passes $4.2 million, people are beginning to express doubts about how revolutionary the console will truly be. Pandora co-founder Craig Rothwell has dealt with a launch when his team released their portable in 2010, four years after the initial announcement. Rothwell casts doubt on whether Ouya's creators can hit their ambitious targets.

"You simply cannot make a quality console and controller for $99, no matter how low you go in China," Rothwell told PocketGamer UK. "Even a Chinese semi-slave production line won't hit $99 at that spec, as the big name parts they are talking about are a set cost. "

"My feelings are that at that price - and remember you have to take off the Kickstarter fees, which brings the console and touchpad-equipped controller in at less than $99 - they will be making a loss on each unit sold."

The Pandora ran into a ton of delays before finally launching and Rothwell believes the same could happen to the Ouya if their numbers aren't solid.

"We worked out all costs and had quotes which we went public with, and even then everything which could go wrong did go wrong. We survived by the skin of our teeth and via some very, very kind customers and developers," said Rothwell.

"Now we have been though that baptism of fire, and know everything that is involved, it's clear that a race to the lowest possible price isn't how you succeed. That's generally how things can go majorly wrong; when trying to come to market with a rock bottom price, one error, one contractor messing up, and it's curtains," he added.

"Because Ouya is already being sold at that rock bottom price before going to production, there is no way for them to adjust for error. I hope they have a big secret pile of cash they can call on if they need it."

Rothwell expects the Ouya team to turn to alternate methods other than console sales to pull in revenue. He also wonders if developers will want to create games for another fork of Android with a small userbase.

"My guess is that you will have to pay some kind of subscription to use the console, and that is where they plan to claw back some money," he began. "What's the point in doing all that work for their comparatively tiny audience when you can get a better deal releasing on iOS or 'normal' Android via Google's popular Play Store?"

"When all the hype dies down, this machine could well be DOA, and Ouya could be looking at a giant black hole of losses."

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Latest comments (7)

Adam Campbell Game Production Manager, Azoomee5 years ago
I thought that price was for a certain number of people pledging/preordering?

The price subsequently raising for those who are not early birds, then further adding the controller, but still at a reasonable price.

This is very experimental but I hope it works.

Edited 1 times. Last edit by Adam Campbell on 13th July 2012 12:50pm

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Edward Buffery Head of LQA (UK), Testronic5 years ago
Indeed, Adam! I see no reason why it won't retail for more than $99 once it's released, and I also assume that they'll take a cut from all purchases made on it, whether via their app store or through in-game micro-transactions, just as Apple do for iPhone.

Selling a new console as a loss leader is certainly nothing new, and the massive amount of surplus money they'll have from the Kickstarter campaign alone that far exceeds their stated goal will help buffer any unexpected development or release costs. It will also be neither insignificant, nor secret.
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Pier Castonguay Programmer 5 years ago
Except for the controller, I still don't understand how this console is supposed to be any different from the Android phone with a HDMI port that I currently own.
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Jeffrey Ates Critic/Writer/Enthusiast 5 years ago
^ I dont have to buy a 600 dollar phone to play the same games...just maybe?

Edited 1 times. Last edit by Jeffrey Ates on 14th July 2012 1:58am

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Adam Campbell Game Production Manager, Azoomee5 years ago
I'm glad I'm not the only one who picked on that fact Ed.

I do hope it comes in pretty cheap though at final retail. I also hope they have good sales channels in the UK and the rest of the world so we're not burnt by importing.

Edited 1 times. Last edit by Adam Campbell on 15th July 2012 9:55pm

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Murray Lorden Game Designer & Developer, MUZBOZ5 years ago
The more I read about it, and think about it, the more I like it, to be honest.

I've skipped every console generation since the Atari 2600.

I've been tempted by the Xbox 360 and the Playstation 3, occasionally, because I want to play, say "Journey". But I can't justify the cost of the machine, I know it'll just sit there. Games consoles represent a pit of my time spent playing games I don't really need to play.

But this Ouya is exciting! For about $130, I can have a console, for the loungeroom, with two controllers, to once again play games with friends! And also, to check out the creative experimental world of indie developers, which, to be honest is much more interesting to me than mainstream games.

On top of that, I can build my own Android games for it. Fantastic.

I think a lot of people will sit back and watch how the first generation goes. But I think that if it goes well, and there's buzz around the community of developers and players, then a LOT of people would jump in for a spare $120, and grab themselves this whole new system for playing games, and checking out the latest games in an open system of game development.

And with an open system like that, there's room for interesting peripherals, and real inventiveness there, that we've seen to some extent with the Xbox Kinect and such.

How it all really turns out, economically, we'll have to wait and see. :) But in many ways, it is the logical way forward for consoles.
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Murray Lorden Game Designer & Developer, MUZBOZ5 years ago
And yes, they will take 30% of money earned from all games. So if they can sell enough consoles, even if it's at cost price, or at a loss, they could still make a lot of money if the market for it is healthy.

And with the success they've already had on Kickstarter (23 days to go!), I think they could quite easily raise another $10m - $50m from eager venture capitalists who'd like to be part of a new Android console's success, to be honest.

If they could get that sort of money behind it (and they seem like a pretty organised and bright bunch to me), then I don't see why they couldn't bring this Ouya to market all around the world, in a really major way.

I think the real threat is that ANYONE could try to do the same thing. The beauty of their plan is their boldness. They are trying to build an entirely new segment of the games industry on an open platform!

If it works, I can see it being the YouTube of video games. It'll be full to the brim with every sort of whacky bizarre game and app that people can think of making. And the most viral of them will reach millions of players, and some will be ignored. Personally, I think that's what computer games really needs! A thriving, crazy open community of games makers and players.

If this thing can get a solid market, I think that this is where the ARTHOUSE GAMES will start appearing in full force. :)
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