Ouya's demise: What went wrong?

Ouya? Oh no.

On Tuesday, we got word that Ouya, the Android-based machine that kicked off the micro-console flood, is in dire financial straits and is desperately seeking a buyer. But take a look at the company's history of missteps, and it's really something of a miracle that it lasted this long.

Ouya was one of the first real breakouts on Kickstarter, raising $8.6 million from gamers eager for something new. With its $99 price tag, sleek design, and promise of affordable gaming, the system seemed poised to shake up the console hierarchy.

It didn't take long before things started to go wrong, though. And the mistakes began compounding. In its short history, Ouya has made just about every possible mistake a gaming start-up can make - and invented a few new ones along the way.

A shaky start

I first met with Ouya CEO Julie Uhrman in March of 2013 to talk about the then-much-anticipated system and learn more about the company's business plan. By the time I walked out of that meeting, alarm bells were shrieking in my head.

Uhrman, whose machine-gun speech style can be a little tough to follow, said Ouya had decided not to work with the ESRB and wasn't planning on having any parental controls at launch. The company, she said, didn't differentiate between players and developers. She confessed to having absolutely no idea how many games would be available at launch, despite having publiclly given a number the previous month at the D.I.C.E. Summit. (That number, it turned out, had been lifted from a community site.) And there was no plan in place for compliance with COPPA, the Children's Online Privacy Protection Act, a real problem considering many Ouya games would contain microtransactions.

But Uhrman was undaunted, and things kept moving along.

Rickety reviews

A month later, reviews of the system started trickling in. They weren’t very kind.

The Verge pointed out numerous flaws with the controller, the system interface and the lack of software support. "Ouya isn't a viable gaming platform, or a good console, or even a nice TV interface," the site wrote. "I don't know what it is, but until Ouya figures it out, it's not worth $99." Engadget took it to task for feeling unfinished, calling it a "beta release" that "is simply not ready for retail."

Ouya immediately adopted a combative stance, saying it had sent out no review units, apparently failing to grasp that once the system began shipping to Kickstarter backers, it was fair game.

When the official retail launch took place two months later, the criticisms were just as rough. Kotaku echoed Engadget's concerns by calling out its lack of polish and claiming it "does not feel like a stable, properly functioning platform." IGN wasn't impressed, either. "For all of its promise, the Ouya falls victim to design missteps, poor performance, and a critical lack of compelling content," the site said.

Perhaps more embarrassing for Ouya, though, were the complaints from several Kickstarter backers who said they still hadn't received their promised 'early' versions of the console.

Uhrman apologized, but said it could be another two or three weeks before those users got their units. That didn't happen, either. The complaints about unfulfilled units on Kickstarter's comments page continued well into last year.

It kept getting worse. In an interview with The Verge, Uhrman noted only 27 percent of the people who owned the system had paid for games. The company's "Free the Games" fund, designed to lure game makers by helping pay for development, was mired in controversy.

Not-so-positive cash flow

Despite these issues, Ouya still managed to lure investors. It pocketed $15 million in a Series A round in 2013, then an unknown (but presumed hefty) amount from TriplePoint Capital.

The influx of cash didn’t help. Last year, co-founder Muffi Ghadiali left the company without explanation. A short time later, Ouya shifted its business model, a move that might have been too little, too late. It dropped the "free to try" requirement for game makers and began marketing itself as a software service, partnering with companies like Mad Catz and China's Xiaomi. Talk began to spread that the company was looking for a buyer.

By any reasonable corporate measure, Ouya was not in a good spot, but Uhrman publicly refused to acknowledge this. I ran into her at E3 last year and asked for her thoughts on how things had been going for the company.

"It's been a great year," she told me.

The search for cash to pay the bills continued, though. Two months ago, Alibaba put $10 million into the company, but that apparently wasn't enough. Investment bank Mesa Global is managing the sale after Ouya reportedly tripped a debt covenant - an agreement with a lender to take action when a company's debt-to-asset ratio reaches a certain point.

In her memo to the staff announcing the company was being put on the block, Uhrman said Ouya was looking to nail down bidders by the end of this month, giving prospective buyers just a few days to decide.

Despite the sinking ship, she continued to boast about the company's achievements in her own, inimitable style.

“We believe we’ve built something real and valuable," she reportedly wrote. "I continue to read the tweets and emails of our fans who play Ouya every day, and our catalog is now over 1,000 apps and 40,000 developers. We have the largest library of Android content for the TV (still more than Amazon) — hells ya!”

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