October 23, 2014

Ouya Gets Lesson on How NOT to Use Kickstarter

ouya

If you’re thinking of getting financing for your new product idea through a crowdfunding site like Kickstarter, a lot could be learned from the problems currently facing the creators of Ouya.

The lesson: Make extra sure you can deliver on the promises you made to your backers. In this case, literally deliver.

Ouya is a new video game console that hit retailers this week. While it’s hardly a substitute for the more complex gaming systems like Xbox or Playstation, the $99 price tag and what could be a raft of games produced by independent developers in the future certainly make it an intriguing option. There are currently 179 games available on Android-based Ouya, according to its website, 40 of which are exclusive to the system.

The Ouya Kickstarter plan backfired this week, however, as a lot of the people who were promised their own systems before the game hit retailers have still not received their consoles. And it could take weeks before they get the system they helped to get off the ground. TheVerge.com cites a report that says as many as 7,500 systems are in a Hong Kong facility awaiting shipment to backers.

 

Meanwhile, Ouya has already sold out at its retail locations, further angering backers who are still waiting. The system first became available on June 25 at Amazon, Best Buy, GameStop, Target and GAME, as well as at the Ouya site.

The issue also got Ouya CEO Julie Uhrman upset because there were some backers who did receive their system before the retail launch. Uhrman is quoted by TheVerge.com as saying “I did not promise to ship to most of you before we hit store shelves. I promised to ship to all of you.”

Most of the backers who have yet to receive their Ouya are outside the U.S. Still, the company certainly has an uphill climb to restore its reputation and to somehow make good on its promises. The fiasco could also reflect negatively upon Kickstarter and the whole crowdfunding movement.

The Ouya campaign has been one of the most successful in the site’s history, raising $8.5 million from backers. But many of those backers are now waiting to see whether promises made to them will finally be kept.

9 Comments ▼

Joshua Sophy - Staff Writer


Joshua Sophy Joshua Sophy is a staff writer for Small Business Trends, covering technology and business news. He is a journalist and editor with 15 years experience in media. A former newspaper reporter and editor, Joshua also serves as President of the Board of Directors of a curling club and is editor of a regional newsletter focused on the sport of curling in the Eastern U.S.

9 Reactions

  1. Joshua,

    I am a big believer of how crowdfunding can be a great leveling ground for people/company with big ideas but lack of funding options.

    Unfortunately, as you mentioned it, Ouya has tainted the crowdfunding reputation, and will impact backers’ trust on project owners.

    But then again, trust is a big issue for everything using the model of pay-first-deliver-later (e.g. coupon site like Groupon, for example.)

    Perhaps crowdfunding platforms now have to guarantee something, i.e. guaranteeing that the crowdfunded products will be delivered as planned (or else…)

  2. I disagree that OUYA has tainted crowdfunding. Yes, they have made some fundamental mistakes, but to say this reflects negatively on Kickstarter is a stretch.

    Unfortunately, there are backers who did not receive their OUYA prior to retail. Unfortunately, there are backers who received a dysfunctional controller/OUYA. Unfortunately, many things went wrong. Lessons learned: QA is important, distribution/logistics is important, and being able to scale your business matters. This will reflect negatively on OUYA, and they will have an uphill battle resolving this. OUYA does have invested interest as a company to produce and deliver as many OUYAs as they can: devs to make more games, and gamers to buy said games. OUYA gets a 30% cut of whatever the price a game is sold for.

    What does taint crowdfunding more than anything are scams — one of the recent ones being the “Kobe Beef Jerky” project. While Kickstarter strongly suggests “buyer beware,” and that if a project fails to deliver, the owner(s) ought to refund backer money lest the backers sue the project creator — legally there is nil. “Kickstarter does not guarantee projects or investigate a creator’s ability to complete their project. It is the responsibility of the project creator to complete their project as promised, and the claims of this project are theirs alone.” OUYA was not a scam – just a poorly executed on the logistics/QA/delivery side of the equation. Those who backed OUYA will get theirs. When and whether it will have sticky buttons/joystick issue remains to be seen.

    It sucks that OUYA’s execution of distribution was dismal. I don’t regret backing OUYA, and look forward to seeing what games people create for this console.

    • Hi Kim,

      Speaking personally I agree with you that it’s more about lessons learned.

      I really feel for Ouya’s CEO. You can tell from her quote that she’s distressed by the whole situation. Sometimes, despite your best intentions, things don’t go as planned, especially in startups. Executing in business is harder than it may appear sometimes.

      – Anita

  3. I honestly believe you completely missed why the bakers are upset. OUYA inc garanteed they would ship to backers before retail. They missed this, but shit happens. What mostly upset backers is that on may 25th they claimed having shipped to all backers. They simply lied on this and continued lying for weeks. And I’m quite sure that as of today they still did not ship all.

    Also they always give promises (like I’m gonna fix this) – but we never see any action.

  4. People can and will accept delays and such, but in this case OUYA has become a master of not answering questions.

    Look at the twitter feeds – clearly the problems are systemic, yet they address individually. Every communication that does come across is forced and has a promise of prompt communication in the future (which never happens).

    I have zero sympathy for their CEO. Clearly, she’s the ringleader that has botched this entire operation. After the backing, they got an additional 15M of funding. Where did that go? NOT to support, PR, or logistics – that is clear. For her to come out with the “I’m pissed” comment is absolutely laughable, since nobody at OUYA (especially Julie) is doing anything to really rectify the problem. They point at imaginary problems with their shipping partner, but offer no remedy. (honestly, it’s pretty clear to me they chose the absolute cheapest shipping method that probably gave no guarantees for timely delivery).

    Ouya has certainly given masses of people second thoughts of crowd-sourcing. It’s unfortunate that it seems it was with a cool product, but management incompetence.

  5. The other thing to consider is that OUYA had to ship all of their product, all at the same time, rather than being able to slowly ramp up production as more sales came in.

    This turned out to be more of a problem for the customer support, because there was no lead-in time for CS to get good at handling different types of complaint, and no way to estimate how many support requests they might have and how long each would take to process. As it transpired, OUYA massively underestimated, and got so far behind in answering them that customers would create new requests asking why their previous one was ignored. This had a snowball effect that was probably a bigger problem in terms of perception and reputation hit than the actual shipping delays

    For something else, I made a handy diagram about how your business scales normally, vs kickstarter:

    http://www.crystallinegreen.com/wp-content/uploads/2013/07/support-cliff.png

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