Ouya is taking on the games giants but will it stumble over a lack of funding?

Julie Uhrman drummed up millions online to launch the new console, but its journey from concept to front room has been a rough ride

The history of videogames is full of casualties: the 3DO, the Amstrad GX4000, the Commodore 64GS, the Amiga CD32 and so many more. Sega pulled out of the hardware market due to poor sales of the Dreamcast, and there was once a hand-held console called the Gizmondo that, on launch at London's Park Hall Hotel, attracted a host of star names such as Sting and Jay Kay, pulling up in their fast cars and majestic limousines. Only 25,000 consoles were sold.

With this in mind, gaming veteran Julie Uhrman may well be feeling rather anxious. On 10 July 2012, she asked for $950,000 on Kickstarter to help get a new Android-based, open source videogame console called Ouya (pronounced "ooya") off the ground. By 9 August, the machine, created by the man behind the stunning Jambox and UP, Yves Béhar, had 63,416 backers and a rather impressive $8,596,474 in pledges.

But since then, there have been problems. Uhrman was to be found on Twitter trying to placate angry backers who had not yet received their consoles – even though they had been promised they would receive them before the consoles hit the shops on 25 June. The poor reviews were not helping much either. Even a further $15m in new funding from a venture capital firm will not guarantee that Ouya can take on the PlayStation 4, Xbox One and the Wii U.

And yet there are signs that Uhrman and her 25-strong team may well be on to something different. Over the past month, since that UK launch, figures have suggested that games sales, while encouraging for some developers, are nonetheless small. One of the best-rated games, TowerFall, has sold around 2,000 at $15 each and it has been reported that Ravensword: Shadowlands has brought in around $100 to $200 a day. Yet some games, despite being well downloaded, are not doing quite so well. Nimble Quest has been downloaded for free 6,508 times but only 122 purchases have been made.

The crux of the matter is that the impressive sums of cash pumped into Ouya may not be enough because new console launches are expensive beasts. Sony announced its game division was to suffer an $877m loss when the PlayStation 3 launched in 1996. The Xbox One's data centre in Iowa will need a $677m investment. The expectations for Ouya may be high but it remains a small-fry project and it may well be that it becomes a platform of experimentation and ports rather than anything near the mainstream.

"I think open source is the future, but I'm not sure Ouya will be the one to take it," says Lorne Lanning, creator of the Oddworld series of games which have been released on PlayStation and Xbox consoles. "Ouya has a lack of funding and it is hard to make a major hardware play with so little money."

While no one thought Ouya would become a major player, there is a lack of forgiveness among some as the spirit of creative endeavour is overshadowed by funders asking for their money back on the grounds that they expected more. Ouya, however, needs all the money it can get. "They only need to sell around two million to break even and their marginal profit is probably $25 a box, so they have the potential to make a lot of money," says gaming analyst Michael Pachter, of Wedbush Securities. "I think that the Kickstarter campaign shows that the Ouya idea resonates with gamers but only 63,000 people plonked down a deposit. "

Bob Mills, who refers to himself as Ouya's games guy and works in developer relations, acknowledges the struggle. "We're a startup, and we're working every day to make our presence known," he says. The open-source nature of Ouya allows any developer, whether a student or a larger team, to make a game for the system. There is no strict vetting process as with Apple, Sony, Nintendo or Microsoft, and neither do they have to pay to be a developer.

Each game is downloadable (there is no physical media) and it has to be available on a free trial, after which players are told the cost of the full title and given the chance to upgrade. The idea is that developers will not have to spend money on a development kit and licence nor fork out for the creation of physical media and distribution. "We wanted Ouya to be accessible by all types of developers, from triple As to indies," says Mills. "So we went open source as all sorts of developers use all types of middleware. We're constantly churning out documentation and tutorial videos for different middleware engines so we can support as many developers as we can."

It is not surprising that many games on Ouya draw inspiration from a bygone era. One such title, 8Bit Ninjas, has been created by Ethan Redd, a 19-year-old New York student. It feels like a classic game. "Keeping with a retro setting felt like the most honest direction to take the game," he said. "On a stylistic and design front, 8Bit Ninjas is supposed to play like a forgotten Nintendo or arcade game restored for the modern era."

Redd says he established his limitations and worked with them but the Ouya is not under-powered. It has an HDMI connector so it works with high-definition television up to 1080p and it also has a Tegra3 quad-core processor. The graphical ability can only match high-end PlayStation 2 games, however, which does take it out of direct competition with the next-generation consoles and therefore makes it more of a hobby console, for those curious about more creative games.

And yet there has been criticism that many games are mere remakes, such as Cannabalt HD. Its creator Adam Saltzman admits he has produced a straight port of the existing Android version of the game but there is a reason. "We're seeing a basic chicken-and-egg thing," he says.

"Most game-makers will feel pretty hesitant about making games for a console that hasn't sold very many units yet, and generally console-buyers will feel pretty hesitant about buying a new console that doesn't have very many games yet."

He does point to the indie-friendly features, non-existent gate-keeping and affordable hardware as plus points. "But barriers are totally still there," he says. "I mean there is a reason that the NES launched with like eight or 10 games all made internally at Nintendo, right?"

But while some developers are sceptical ("Consoles are all about the games – the exclusives in particular – and the Ouya doesn't have any must-play exclusive games," says legendary British developer Ste Pickford), Saltzman believes that Ouya has a bright future and says that even the Nintendo DS and 3DS struggled to find their feet before people got a sense of what was possible.

"Is it the next Xbox? No. Will it continue to evolve into something with an ecosystem that has a place in people's homes? It's looking more and more likely, I think," he says. First, though, Ouya has to get those promised machines into people's hands. "We're growing," says Mills confidentally.

Watch a video review of Ouya, which highlights all its features: