Ouya Gives Its Backers a Kicking

The Kickstarter financed open-source games console Ouya hit the shops this week.  Designed by  Yves Béhar – the creator of Jambox and UP – the Android powered console found 63,000 backers on the crowd-funding platform last July raising $5.5m (£5.2m), with some 21,000 backers leaving encouraging comments of support.

But for all the fanfare of the fundraising and early sales success of selling out on Amazon UKL/US and with US retailer Target it’s not all high-fives for the Ouya team.

In particular Ouya have failed to deliver on those promises made to their early backers, their Kickstarter investors, who were told they would receive priority shipped consoles long before they became available to the general public and hit the store shelves.

Ouya founder Julie Uhrman sent out a message to all their early backers:

“I am pissed. Some of you have not yet received your Ouya, and to you, I apologize. I did not promise to ship to most of you before we hit store shelves. I promised to ship to all of you. I’ve been reading your comments, and we are working to solve this.”

Ouya’s angry backers have taken to the company’s Facebook page to vent their anger.  But the misery for Ouya doesn’t start and end there.  Industry reviews have also been stinging.  Will Greenwald of PCMag, giving the Android based console a poor 2/5 stars said that:

“The  Ouya could be a great, inexpensive Android-based gaming system for everyone. Right now, though, it isn’t even close.”

Other reviews have similarly latched onto the potential of the Ouya but also highlighted the far less appealing reality.  Whether subsequent software updates deal with the many early teething issues remains to be seen.

But the biggest losers in this mess could be other tech companies looking to find funding  on Kickstarter for their hardware or software projects.   The Ouya case-study shows that even where a well received, well backed project hits targets it’s no guarantee that the  project backers will get what they’ve been promised.   And of course this is particularly true where the project you’re backing is for a console that doesn’t even exist yet.  You’re buying into an idea.

And Kickstarter backers need to be clear about their role in projects.  As “backers” they’re often buying the “right” to get a product early or have other perks.  Think of yourself as more of a “fan” supporting the project, but whatever you do don’t think of yourself as an investor. You don’t own shares in the company or get any uplift in the event that the product sells like hot cakes.   And perhaps you should ask yourself why the company is turning to Kickstarter for funding the project.  Is it that traditional fund-raising routes have not been successful?  Why have angel investors and VCs turned it down?  And just because a company or person has successfully launched projects in the past doesn’t necessarily guarantee future success.  If the project promoter has money of their own why aren’t they personally backing the project rather than expecting you to back it?  They should put their own money where their mouth is, their own skin in the game.

So is the Ouya experience the exception or the rule? According to analysis carried out by CNN Money of the top most-funded projects on Kickstarter, 84% missed their promised shipping dates.  CEO of Oculus Rift whose company also secured Kickstarter backing summed it up perfectly to CNN.

“In the first 24 hours, everyone is happy and slapping your hand. And 48 hours later, the reality sets in. There’s a bit of fear: We’re going to have to make all of these.”

The lesson for Kickstarter backers?  Perhaps simply wait until the product hits the store shelves.  If it ever does!

James Barnes, StatusCake.com