Rumors of Santa Monica video game console Ouya’s imminent sale were confirmed today when MESA Global, the investment bank handling the deal, accidentally posted acknowledgement of the transaction on its website.
The post confirming Ouya’s sale to computer hardware maker Razer of Carlsbad was quickly taken down, but not before it was first reported by technology news site Liliputing.
Ouya, Razer and MESA Global could not be reached for comment. The terms of the acquisition remain unannounced.
Ouya, an open source, Android-based video game console without the development costs and hurdles associated with gaming systems like PlayStation or Xbox, started in 2012 when the company crowdsourced $8.6 million from an enthusiastic community of independent game developers on Kickstarter.
“This is a big undertaking. We’re trying to disrupt an established industry,” said founder and Chief Executive Julie Uhrman in an early promotional video. “It takes a lot of guts and courage. If I wasn’t a female, I’d say, ‘big balls.’”
But soon after Ouya launched the bottom began to fall out of its freemium, casual gaming market.
While independent developers created more than 1,100 titles for Ouya, casual gamers, perhaps the best customers for its middle-of-the-road games, began moving their gameplay to mobile phones. What was left of the video game console industry was dominated by big-budget, high-quality video game titles, games Ouya’s independent developers couldn’t compete with.
Despite disappointing sales, Ouya has survived via a $15 million round led by Kleiner Perkins in 2013 and a $10 million round from Chinese e-commerce giant Alibaba in January. Somewhere among the flurry of venture capital and crowdfunding, Ouya also raised an undisclosed round of debt from TriplePoint Capital. It is that debt, and Ouya’s lack of revenue, that came back to haunt the company recently.
In April, after failing to renegotiate the terms of its debt, Ouya told investors in a memo that it was seeking a sale. Rumors of sales to Razer have circulated since, but today is the first confirmation.
Razer develops computer hardware for hardcore PC gamers and also has an Android-based TV gaming console, similar to Ouya’s hardware, but with a smaller catalog of games. Ouya’s game library as well as game developer relationships may be valuable to Razer.
Ultimately, Ouya is the casualty of a gaming industry that is changing rapidly with the introduction of new hardware. With new virtual reality hardware, such as the Oculus Rift, in the pipeline, more disruption may be ahead.
Technology reporter Garrett Reim can be reached at [email protected]. Follow him on Twitter @garrettreim for the latest in L.A. tech news.
