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.

OUYA: Lots of potential, but not quite ready for prime time

Last week, I got my OUYA game console, in what was one of the last batch of devices to go out to Kickstarter supporters. I've got it connected and working (sometimes,) but the device's potential is considerably greater than what the current console can deliver.

At the outset, let me make clear that I'm not dumping on either OUYA's device or the company itself. I want to see OUYA succeed, but to say that the current device is "rough around the edges" is an understatement:

• The instruction manual that comes with the console explains how to connect and power up the device, but it says nothing about how to add batteries to the controllers. It's easy enough to find information on the Internet on how to take off the side panels in order to add batteries, but users shouldn't have to do that.
• When I first turned the console on, all I got was the "circle U" logo on screen, which stayed there quite a while. I assumed that the console was locked up, so I held down the power button until the console powered down. Then, I powered it back up, and had the same problem, so I pulled the power plug, waited a while, and turned it back on. Same problem. It took several tries before the console successfully booted up and came to the home screen.
• Once in the user interface, OUYA bounces between customized screens and conventional Android menus and dialog boxes. That's not all that confusing for people who are familiar with stock Android, but it's likely to be a problem for novice users. For example, when downloading and installing a game, it looked as though I'd installed the game based on OUYA's prompts, but then I got an Android dialog box which asked if I wanted to install the game. So, I installed it (or installed it again.)
• My console has locked up a variety of times, usually when restarting the console or when searching for a game to install. Lockups require that the power cord be removed for several minutes.
• If you want to purchase a game, you have to first save your credit card information in an OUYA account. There's no way to enter a credit card from within games. At this point, I don't feel comfortable keeping my credit card permanently on file with OUYA, and I don't want to go through the process of first entering and then deleting it every time I want to buy a game or make an in-app purchase.
• There's also no way to manage your account from the OUYA website. It would be much easier to enter credit card information from a web browser, but other than creating an account, everything has to be done from the console.
• I love the fact that OUYA is open to any game developer, but that sometimes results in inconsistent or missing controls. For example, I've been unable to figure out how to completely exit from several games. In one case, the game has a menu with an "Exit" option that's available by pressing the power button on the controller, but all it does it take you back to the game's home page. There's no way to completely exit the game (at least that I've found.)

All of these problems are fixable, but taken together, it's clear that the OUYA console is, or should still be, in beta testing. However, the console is scheduled to go on sale to the general public on June 25th, through Amazon, Best Buy, GameStop and Target. As of today, I can't recommend that you buy an OUYA. If you wait a few months, the most serious bugs should be worked out, and there should be a much better selection of games available. OUYA would probably have been better off by holding off on general retail availability until the fall.

As I said, I'm a big fan of the ideas underlying OUYA, and I think that it will eventually be a great casual gaming console with lots of potential for set-top box applications as well. It's just not there yet.

The real appeal of crowdfunding

Crowdfunding sites--the best example being Kickstarter--are changing how creative projects and products get funded. The Ouya Android game console has already received $4.8 million in funding with 24 days to go. The Pebble E ink Bluetooth watch, which set a funding goal of $100,000, finished its funding with $10.3 million. Screenwriter Charlie Kaufman and "Community" creator Dan Harmon are looking for funding for "Anomalisa," a stop-action animated film, and are at $171,000 of their $200,000 goal with 56 days to go. "The Canyons," a movie written by Bret Easton Ellis and directed by Paul Schrader, received $159,000 in funding and surpassed its $100,000 goal.

Many observers misunderstand the appeal of crowdfunding. They believe that it's a quasi-charitable activity: People contribute money, and other people use that money to create things. It's true that most projects have $1 pledge levels--what I call "hearty handshake" pledges--where the person making the pledge usually gets little more than the satisfaction of helping the project along. However, the vast majority of pledges are at a level where the supporter actually gets something of value--a CD of music, a DVD of the movie, a copy of the book, or one of the products being developed. In many cases, supporters get those items at a discount from what they would pay if the project succeeds and they simply buy it at retail.

There are some crowdfunding sites that do work on a quasi-charitable level to raise money for personal expenses, such as tuition and medical expenses. However, they don't raise a lot of money: GiveForward, for example, has raised $17.7 million for personal expenses as of this writing, while Kickstarter is closing in on $300 million raised.

The real appeal of crowdfunding is to buy something that doesn't yet exist. Keep that in mind if you launch a crowdfunding project--people don't want to fund your idea, they want to buy your product.