Set-top boxes and game consoles: The $99 option

Last week, I wrote about installing my OUYA game console, which lists for $99 (U.S.) OUYA's isn't the only Android game console--there are several available or in development, all of which sell in the $99-$129 price range and all of which run "casual" games. $99 is also the consensus price point for over-the-top (OTT) set-top boxes from Roku, Vizio, Apple and other vendors.

It's very unlikely that hardcore gamers will prefer Android consoles to the Xbox One or Sony's Playstation 4. Even with a Tegra 4 chip set, which some of the newer Android consoles will have this fall, they won't have the performance to be able to compete with Microsoft's or Sony's consoles. On the other hand, while the Xbox One will have features that the $99 set-top boxes don't, such as voice recognition and gesture control, it's equally unlikely that set-top buyers will be willing to spend $400 more to get them. In short, serious gamers want high-end game consoles and are willing to pay for them, while Internet set-top box buyers who aren't gamers are unlikely to pay a high premium in order to get gaming features.

For the OUYA and similar devices to succeed, they have to prove that people want to play the same games that they already play on their smartphones and tablets on their big-screen televisions as well. Despite OUYA's successful Kickstarter campaign, that's still an unproven hypothesis. In addition, the Internet set-top box market is still far from proven--Logitech dropped its Google TV-based STB, Boxee is said to be looking for an acquirer or additional capital, Roku is increasingly emphasizing software licensing to HDTV manufacturers, and Apple TV has graduated from being a "hobby" but still contributes minuscule revenues to the company.

It's still too early to tell if there's a market for either low-cost game consoles or third-party Internet set-top boxes at any price. We may get more clarity by the end of this year's Holiday season.