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Yep, Alibaba's Investing in Ouya. Here's Why. (Q&A)

"It's a new playing field" for the crowdfunded gaming startup.


Chinese Internet giant Alibaba is investing in the initially crowdfunded American gaming startup Ouya, the two companies told Re/code today.

Ouya and Alibaba declined to confirm the size of the investment, but did not deny the $10 million figure originally reported by the Wall Street Journal. Ouya’s library of more than 1,000 games will be integrated into Alibaba’s Yun operating system, a forked version of Android, which powers the company’s Tmall set-top boxes.

That’s a departure from Ouya’s original strategy, a dedicated living room “microconsole” costing $99 that debuted to a lukewarm reception in the U.S. in 2013. But it’s more in line with a 2014 partnership that brought Ouya’s games to the microconsole of an early competitor, Mad Catz.

Ouya CEO Julie Uhrman and Alibaba spokesperson Samantha Verdile explained more in this Q&A with Re/code, which has been edited for brevity and clarity.

Re/code: Ouya had some difficulty catching on in the U.S. Why might it do better in China?

Julie Uhrman: There’s plenty of opportunities for game developers, globally. Up until recently, western developers focused on the U.S. market because it’s what they know. But that doesn’t necessarily mean that’s where the greatest growth is. For Ouya, there’s plenty of opportunity markets that include China, India, Latin America and elsewhere.

Are Alibaba’s gaming efforts only in China right now?

Samantha Verdile: This is part of our broader strategy where we’re trying to enhance our digital entertainment offerings, and this will help increase user engagement on our set-top box, which is sold in China through Tmall.

So, this investment will mix Ouya’s content with other types on content on the Tmall box?

Verdile: Yeah, and obviously we’ve been around for 15 years, we have deep expertise in China and the general Asian market. We think with our reach and scale and resources, the relationship is a great combination.

Are there certain games, certain developers or features that you see as being a particular fit for the Chinese gaming market?

Uhrman: It’s going to take a bit of trial and error. The television gaming space in China is incredibly new. The ban was just lifted last year, and we’re slowly starting to see games make their way to televisions. The Chinese have historically consumed content very differently than the U.S. Free-to-play is the norm, not the exception. We know that action-adventure RPGs [role-playing games] are very popular genres, we’re going to want to test some games that are those genres as well as others and see what resonates. It’s a new playing field.

Since the console market is so new, do you see Sony and Microsoft as more direct competitors than they were in the U.S. or elsewhere?

Uhrman: No, I don’t think so. You also have to look at the price to entry [799 yuan, or about $125 in U.S. dollars], the brand that’s bringing you the content and how the games are developed. The market is much more used to downloading games and paying as you go. And that’s something that U.S. console players are just not familiar with. Our games aren’t $60. Most of them are free to try. A lot of them have in-app payments.

How does Alibaba’s set-top box compare to the competition, both in other set-top boxes and in other gaming devices?

Verdile: I would completely echo what Julie said. It’s not direct competition at all.

Is Ouya’s partnership with Xiaomi from last year affected by the new investment?

Uhrman: No, we’ll continue to support Xiaomi. In fact, we expect to have some games live soon on their platform. We have a number of other partners that we’re working with that we’ll be announcing soon, as well.

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