What can we learn from Ouya, Atari VCS, and Intellivision Amico?
The videogame industry is highly competitive and cuthroat. There is a glut of competition. The market is vast. Games are everywhere. You can play them on your desktop or laptop computer. You can play them on a gaming console attached to your TV. You can play them on your tablet or smartphone. You can play them on a handheld device. You can play them in a web browser.
The big players: Nintendo, Sony, Microsoft, Valve (Steam) all own hardware or distribution platforms. If you want to be a big player, you must own a platform.
Establishing a new platform that can compete in this market is incredibly difficult, and even big players with ultra-deep pockets can fail to establish a foothold. Atari and Sega couldn’t keep up and fell by the wayside. Apple and Google (Stadia) couldn’t get established and haven’t managed to build significant marketshare, but remain relevant to some degree due to the Apple App Store and Google Play Store with their vast catalogs of 3rd party mobile apps and games.
Most of the companies that have risen to the level of a top tier player in the market were either early innovators (Atari, Sega, Nintendo) who entered the market at a time when there was little to no competition and literally grew the industry up from nothing, or were already successful giant companies that could sink billions of dollars into R&D and operate at a loss for years in order to build marketshare in the gaming segment while operating profitably in other divisions (Sony, Microsoft).
There’s little to no room for also-rans. Tiny players can exist, but they don’t have a hope of cracking the “Big Three”. The best they can hope for is to establish themselves as niche players. AtGames, Hyperkin, and so forth produce clone systems for obsolete consoles that have exited the main market but still have healthy followings from large, established fan bases that will always be there.
On the side there’s some third party players who produce accessories and sometimes they can venture into creating actual consoles, although they tend to clone old systems. Semi-hobbyist and boutique projects (retroUSB AVS, Analogue, CollectorVision Phoenix, 8bitdo, Retrofighters) can be viable businesses, if they’re run right and can deliver products on time that are of acceptable quality and provide value to the consumer. Often these enterprises establish themselves first by making official accessories for the major console systems — controllers, carrying cases, and the like — and once they have a manufacturing and supply chain solution established, at some point they might try to expand by doing their own R&D to produce something beyond that.
Companies that fail tend to follow a pattern:
- An idea or concept is announced, often a rebirth of some old, idle IP
- They start trying to raise money, awareness, and support, by taking pre-orders and/or doing crowdfunding, but the fund raising goals are well under what would be required for a new platform to have any hope of becoming established as a big player. Nonetheless, the people behind the project push on.
- Then they get to work developing the thing they described in their concept
- Delays happen
- The thing eventually releases (or doesn’t) after much acrimony, disappointment, and diminished expectations
- If a product does get launched, it fails to meet expectations, doesn’t thrive in the market, the company fails, or drops support, and the product becomes irrelevant.
Ideas can be good and still fail. It takes more than a good idea for a thing to succeed.
A few million dollars raised, a few thousand backers, is not enough to support a new platform. It just isn’t. You need to sell at least a few million units at a minimum, and real success doesn’t come until you can sell tens of millions of units.
Ouya (2012-2019)
Ouya raised over $8 million in crowdfunding through kickstarter, which at the time was a record for crowdfunding. They had nearly 64,000 backers. Who knows how much money they raised through other means. But they didn’t have anywhere near the numbers they needed to succeed. Still, they “succeeded” in exceeding their crowdfunding goal (by over 8x), they “succeeded” in developing their console and controllers, getting them manufactured, and delivered them to backers. But that still wasn’t enough for Ouya to succeed as a new platform. They struggled to grow, they failed to gain marketshare, weren’t able to profit with their business model, ran out of money, and went out of business, went through acquisitions, the new owners tried to turn it around and still couldn’t, and today it doesn’t exist.
Ouya had no pre-existing market and didn’t try to leverage any old, defunct brands that had nostalgic mindshare. They didn’t necessarily need to, but it would have helped.
They had some problems with their controller hardware, but that could have been overcome had the company had deep enough pockets to stand by their products even if it meant taking a loss initially.
Ouya didn’t do enough to develop a library of first party/exclusive titles that would have given customers a reason to buy Ouya rather than another console. This was a strategic error. They thought they could court indie developers, who, at the time, faced high barriers to entry to get their games onto the platforms controlled by Big Gaming. At the time, though, this was already starting to change: mobile app stores, web gaming portals like Armor Games, Kongregate, Newgrounds, and the like, Steam Greenlight were all established to one degree or another, and providing indie developers with opportunities to bring games to an audience.
Soon the even the major players began to notice indie developers, court the best of them, and eventually the best indies found ways to get onto the big platforms, where they could make the big money.
Ouya’s approach was to lower the barrier of entry for everyone, including lowering the cost for consumers to “free to try” for everything, and it turns out to make a lot of money selling games, you need to sell games for money, ideally for a profit. Ouya couldn’t figure out how to do this, and even then, they weren’t the ones making the vast majority of the games that could be played on the Ouya, so they were putting in a ton of investment into creating a platform that they were not positioning themselves to monetize very effectively, while attracting indie game developers of any skill level indiscriminately to publish games of any quality onto the Ouya marketplace, where it was up to the individual consumer to try to find games that were worth buying, and then didn’t give them enough reason to buy them, and conditioned customers to believe that games should be far cheaper than was really viable to sustain their developers or the platform.
The business model seemed like it made sense, given that it followed the familiar example of countless early internet startups that gave a lot away for free, operating in the red while living off startup investor funding. It was a gold rush strategy that rewarded a lucky few, who were in the right place at the right time and figured out how to strike it rich, and was far from guaranteed of success — it was high risk, high reward. Sadly the risks didn’t pan out, and the reward never materialized.
Still, Ouya was one of the most successful and most promising of these failures.
Retro VGS/Colecovision Chameleon (2015-2016)
Some projects are out and out scams. The Colecovision Chameleon was one such.
Chameleon was supposed to be a throwback to old-school cartridge based consoles, a rejection of the “release when promised, even if incomplete, and fix everything you couldn’t deliver with 0-day patches” model that too many developer studios had come to rely on because of project management that couldn’t deliver projects on time or on budget because creative productions like video games simply aren’t software engineering projects. Publishers couldn’t accept “it’s done when it’s done”, forcing developers to ship on deadline regardless of quality or completeness, and customers hated buying a much-anticipated game to find out that it sucked, or that you had to wait hours to download gigabytes of patch files to play it. Players were buying discs with outdated, obsolete, broken software, as a sort of token that would entitle them to a digital download of a 1.1 release that should have been the 1.0. Rather than simply switching to digital distribution, Chameleon’s pitch was to go back to cartridges; cartridges couldn’t be updated, so had to be complete before they shipped. Hey, it sounded good at the time.
Chameleon was so-called because it was going to have adapters that allowed you to play old existing cartridges from any game system, making the Chameleon “look like” whatever hardware was originally supposed to run those games — hence the name Chameleon. That’s not a terrible idea — imagine a multi-core FPGA system with a bunch of different cartridge ports capable of reading games from every conceivable system you could ask for, that could output HDMI and let you play your favorite games on a modern HDTV. That’d be awesome, right?
It was all smoke and mirrors. They didn’t have the rights to the Coleco trademark secured, and they tried to fool the public with an early mock-up of their hardware that was in reality a Super NES stuffed inside of a modded Atari Jaguar case. Nevertheless, they managed to fool a few people for a short time, taking some people for a little money. There’s little or no evidence the project ever had any real R&D or concept to it. It was all just mockups. People were fooled, and once the deception was uncovered, people were pissed.
I mention it despite the Chameleon not being a genuine effort, in order to underscore the point that consumers shouldn’t be pre-ordering products. Pre-ordering games was a thing for one reason: fear of missing out (FOMO). At the height of the NES’s popularity, 1987-88, a chip shortage made it difficult to find games in stock on store shelves. People scrambled to buy when they could find them, which sent demand through the roof. This was great for business and Nintendo to this day seems to like to size supply to demand in such a way that they can brag about selling out, and FOMO can persuade hungry fans to pay full retail, and use pre-ordering to feel secure that they will be able to get a copy of the next release in their favorite game franchise when it comes out.
There’s absolutely no reason to pre-order games if there’s no shortage. For digital download distribution, there will never be a shortage. You can buy whenever you want, and you can play wait and see, putting your money down only on games that deliver the quality and fun that you expect. You don’t have to take a gamble on a pre-order and wait months (or years) hoping there’s no delays and that the game is actually as good as the hype.
There’s absolutely no reason to pre-order games if there’s no shortage. You don’t have to take a gamble on a pre-order and wait months (or years) hoping there’s no delays and that the game is actually as good as the hype.
Chameleon promised everything and delivered nothing. But a lot of the ideas that were part of its pitch were things that appealed to gamers who weren’t happy with the status quo at the time, and felt nostalgia for how games used to be.
It’s possible that the people behind the Chameleon didn’t set out to defraud the public, and that they really wanted to develop the concept. But it was so under-developed at the time that they pitched it, they had no working model, nor did they truly have the capability to design a working model. It was basically just an idea. An idea that seemed cool and exciting. Imagine: being able to play all your favorite old games in their original format on a new console attached to a modern TV, that can also play new games with classic flavor, delivered in the way those old games you loved were, without the perceived downsides of modern games. In reality, it’s a long way to go from a cool idea to a prototype, and the people behind the Chameleon weren’t capable of delivering that, but they maintained a charade of it for as long as they could. Perhaps they were hoping they could get real hardware engineers interested in working with them, but it didn’t pan out.
Disappointment with underwhelming games is bad enough. Outright deception and scams a la the Coleco Chameleon is terrible. At that point, people should have wised up, and many of them did. The public had been so conditioned by Nintendo and Sony’s successful products that they forgot that they probably weren’t the first kid on their block to buy a NES or a Playstation. They wanted to be the first kid on their block to own a Chameleon, even though the developers of it had nowhere near the reputation or resources of a Nintendo or Sony.
The lesson: don’t buy into something just because it sounds cool. Buy a real product, not an idea. If the hot new thing is destined to be a success, you’ll have no problem buying it. If you buy it the moment you hear about it, without seeing if it’ll prove to be a success, you have a much greater likelihood of buying into a failure. Don’t waste your money.
But as P.T. Barnun said, there’s a sucker born every minute. So this story goes on…
Atari VCS (2017- )
Initially Atari was mysterious about their AtariBox concept. It was all image and brand. This generated a lot of interest. It might have worked had they had a product ready to go, to follow up quickly on the interest their early marketing efforts had generated.
Sadly, they teased a little, waited, then teased a little more, then waited, then eventually they announced a concept for what AtariBox was. Renamed Atari VCS, reusing the original name of the first Atari home gaming console, they had a great looking design for the system, which beautifully recalled the aesthetic of the original woodgrained CX2600 system.
But it took Atari over 3 years to develop a manufacturable version of this case, put low-end commodity PC hardware into it, set up a graphical UI shell and store for downloadable games for the system, arrange some third-party deals and ship it to the retail channel. At the same time, they should have been developing games for this system, and they did work on a few, but all of it was underwhelming. Mostly you can play old games that have been available for years through other platforms on the Atari VCS.
Atari claims a library of thousands of games for the VCS through providing gaming marketplace apps for Google Stadia, Luna, nVidia GeForce Now, XBox Game Streaming, AntStream Arcade, and AirConsole, and… so what? These are all available on any Windows PC, which you already have, and probably has better hardware specs. And these aren’t free subscriptions bundled with the VCS, these are add-ons that you have to pay extra for. So why do you need a VCS, then? This is like picking the dandelions that happened to grow in your yard and calling it a garden salad. Technically it is. But you didn’t have to buy a house to make yourself a dandelion salad.
This is like picking the dandelions that happened to grow in your backyard and calling it a garden salad. Technically it is. But you didn’t have to buy a house to make yourself a dandelion salad.
There are a handful of new titles, some third-party games that aren’t great and are available on other platforms as well, and as for the first-party content, they’re all warmed-over remakes of old classic Atari games which they brand as “recharged”. Mostly this means a re-skinning, updated graphics, and the original game play, which, while classic and solid, doesn’t offer anything innovative or novel. Just a slightly more polished version of some 40 year old arcade IP with some neon glowing wireframe vector graphics.
Other games they used to hype the project (Tempest 4K) were released on the major platforms years before the VCS was ready to ship. Atari outright lied about its relationship with the Tempest 4K developer and implied that it would be a launch title and exclusive, when none of that was true. A total embarrassment. Tempest, originally an Atari classic IP, should have been an exclusive, and a launch title. But (wisely) the developers of Tempest 4K put it out when it was ready, on platforms that existed at the time, and made money.
That left Atari with nothing, and when the VCS went to market, Tempest 4K would be a 2-year old, non-exclusive game. And guess what? You still can’t buy Tempest 4K for the VCS. It’s a Windows/XBox/PS4 game. (Which means you can sort of play Tempest 4K on an Atari VCS, if you boot it in PC mode and run Windows. You’re kidding, right?) Even if Tempest 4K had been an Atari VCS exclusive, I’m not sure that Tempest has enough draw to it to make it a killer app that would have sold consoles. Like, Tempest is a cool game for 1981, but it’s no Mario or Zelda. Nowhere near.
The VCS has been out for a little over a year now, and while it at least exists today, it is hardly compelling.
The best parts of the Atari VCS were the joystick hardware and the “recharged” games. Atari could have put all of its effort into developing these, put them out on existing platforms in 2017-2018, and built from there. Instead, they tried to build themselves a platform which would give them power to be masters of their own fate (or something) but really just made it harder for them to bring a product to market.
It’s pretty clear they never intended to go toe-to-toe with the big platforms of Nintendo, Sega, Microsoft, and they’ve always said as much. They certainly never had the capability to do so. But what then is the point of having a low-end non-competitive platform that doesn’t offer anything unique or exclusive? Atari have no real answer to this. They’ll tell you it’s a “hybrid” console that you can also boot into “PC Mode” and use as a Windows or Linux computer, but so what? Everyone has 2-3 old PCs sitting around that they can install Linux or Windows on. Probably with better specs than the VCS, or cheaper, or both.
After years of delays, people starting to question whether the project was legitimate or a scam, Atari finally launched the VCS, and it was pathetic. It felt incomplete, like a homework assignment by a kid who procrastinated until the morning the project was due, and tried to con the teacher into accepting something they were scribbling on in the minutes between classes.
Atari’s main problems were having insufficient resources to match their ambition, combined with a complete lack of strategy and planning, and half-assed execution. They hyped their project before it was even a project. If they had developed the product quietly and then launched it within a few months of their initial hype announcements, and had a launch library of new, exclusive games that leveraged their classic trademarks and provided novel and innovative gameplay experiences on par with what Pac-Man Championship Edition was to Pac-Man, or what Yacht Club Games is to the NES, it could have been a completely different story. As it is, Atari VCS has been a disappointment. Atari does have a wealth of IP that they could do something with if they had the resources and talent behind it, but instead they wasted years trying to sell a budget PC to sell games they didn’t have yet.
Intellivision Amico (2018- )
In October 2018, a group owning the Intellivision trademark lead by Tommy Tallarico announced the Amico, a relaunch of the Intellivision brand that would embrace retro-style gaming and provide simpler, family oriented gams for all ages at a budget price point. Their four word pitch: Simple, Affordable, Family, Fun.
They had a lot of good ideas: all games that would run on the system would be exclusives, that you couldn’t get anywhere else. The games would be super cheap, there would be no hidden costs like in-app purchases or DLC, and they would be designed with couch multiplayer in mind, and provide balanced play so that players of different skill levels from toddler to great grandma could get in on the action and still have fun and feel challenged. The target market was families with young children, and parents (or grandparents) who remembered the original Intellivision system from 1979.
Similar to the pitch of the Coleco Chameleon, Intellivision pitched that the present-day game industry had gone astray in so many ways, and lost sight of what we used to love about video games. This meant that a return to classic roots would tap into a latent market of everyday people who want to play casual “fun” games, and couldn’t get into big budget “hard core” games that require hundreds of hours of focused play and high skill to beat. They promised to eschew violence and adult themes, and everything would be 2D only, aiming at an all-ages family friendly audience.
In short, their vision differentiated them from existing platforms enough that it seemed like they might have a shot at finding underserved markets. The announced price point was a budget bargain $150-180, with games costing under $10. Additionally, all games were to be Intellivision exclusives.
Unlike the frauds behind the Chameleon, the people involved with Intellivision appeared to have legitimate pedigree and full ownership of the Intellivision trademark. They had physical demo units early on, and a few teaser trailers of games in various stages of development. The controllers were unique, intriguing, and paid homage to the original Intellivision controllers. It looked like they were serious, capable, and had a clear concept of what they were going to build, unlike Atari which mostly focused on superficial case design, logos, 3D model mockups, and branding.
The Amico had a unifying vision and a market strategy. It even appeared that they were already pretty far along with physical prototypes of their system, which included a unique and interesting controller design.
The controller gave Amico the opportunity to make games with unique player interaction, with motion controls, a touch screen, as well as a classic Intellivision-style thumb disc. The thumb disc was a slightly controversial and perhaps questionable design choice, considering that the original Intellivision controller wasn’t necessarily great. But it tied the Amico to its predecessor in a way that a D-pad couldn’t. It wasn’t yet-another standard, off the shelf dual-stick gamepad. It made the Amico unlike any other console. Who knew, maybe it would turn out to be strong selling point, like the Nintendo Wiimote.
You could, in a pinch, even use an Android smartphone as a controller by installing an Amico app on it, as well. So instantly you could add 3rd and 4th players to the game cheaply, without having to buy additional official controllers. Maybe not with all the features of the official control, but would provide at least something.
Intellivision issued an early release of the Amico app, which wasn’t actually the controller app, but rather a demo of a re-imagined Moon Patrol that you could play on your smartphone, without any Amico hardware. It wasn’t much of a game, but it really existed, and gave the project legitimacy. It seemed like they had the hardware ready to go, or nearly so, and just needed to complete some games to provide a decent launch library, manufacture them, and get them into stores.
Over time, though, the project seemed to stall. The COVID-19 pandemic lead to economic disruption and supply chains stalled. The electronics industry was disrupted by chip shortages, the effects of which rippled through the economy and were widely felt by many industries.
With Amico development, not much happened for months on end, deadlines slipped, news announcements appeared to be using recycled footage and showed little to no actual progress. Worse, it appeared that some of the games they demoed were using stolen graphical assets. Tommy Tallarico leapt into action with excuses and damage control. The graphics were placeholder, not final, and so on. Some of this might have been legitimate, but a lot of it was suspect. Tallarico’s personality rubbed a lot of people the wrong way, and his tendencies to get into petty internet wars with minor “influencers” on forums or social media didn’t look good.
Today, the future of Intellivision appears to be in doubt. Tallarico has just been replaced as CEO, and there’s a lot of concern among the community following the project that the delays may prove fatal as cost overruns and lack of revenue due to not having a product to sell will doom the console, which never had much of a chance of becoming a major player alongside the likes of Nintendo, Microsoft, and Sony, but might have been viable as a B-grade market alternative.
Lessons
- Startups shouldn’t launch platforms as their first product.
- It takes billions of dollars and vast resources to develop and launch a successful platform. Only a mature, thriving company can properly support a console and bring it to market.
- Even then the chances are good that it will fail in the market.
- History shows that at most there is room for 2-3 successful platforms.
- If you can’t knock out Nintendo, Microsoft, or Sony, you’re going to fail. Google failed.
- Hitting a crowdfunding goal is not success. It’s a very early step along the road.
- Success means in 5-7 years, you have enough profits that you can self-fund R&D for your next generation console without having to crowdfund or court investors.
- The best time to launch a new console is 5-7 years after the successful launch of your previous console.
- The best time to announce a new console is within weeks of retail launch, and not more than 1 year ahead of time.
- If you can’t take money and ship immediately after your announce your product, you’re probably going to ship late and disappoint a lot of people after they spend a lot of time hyping themselves up to a point where nothing can possibly meet their expectations and dreams.
- Don’t let them dream too long, give them a reality. Or when you deliver your real console, it will reality-check their dreams and inevitably lead to dissatisfied customers. Those who once sang your praises will suddenly call for your head.
- It takes longer than you think to develop a console. It takes longer than that to manufacture and distribute that console.
- Don’t try to combine pitching to investors and marketing to customers. Crowdfunding is not the way.
- If you don’t have a previous console in your past, perhaps consider not trying to develop a platform. Develop other things — games, controllers, accessories. Perhaps in time you can gain experience from doing these things that can allow you to develop a console.
- If you have a vast, successful business with R&D, manufacturing, distribution, logistics, software development, marketing, and customer support all figured out, and sufficient reserves and revenues that can afford to pour billions of dollars for several years without realizing a profit, you might have a chance of developing your own console platform. If you’re not sure, ask yourself: do you have a lot in common with Microsoft, Sony, Google, or Apple?
- If you can’t do something unique and better than what already exists, why are you even bothering? If you want to make games, make games. Pick any of the existing platforms, or all of them.