Microsoft Corporation (MSFT), Sony Corporation (ADR) (SNE): Console Gaming Is Safe — for Now

Not long ago, Ouya represented a potentially disruptive threat to console gaming. The affordable $99 gaming console that was looking to borrow from mobile platforms in more ways than one had serious potential to hurt Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) just as they prepare to release their respective next-generation consoles.

Instead of using bleeding-edge hardware coupled with a licensing model, Ouya opted for modest mobile ingredients typically found in smartphones and embraced Google Inc (NASDAQ:GOOG) Android for its extensive library of existing games. Ouya is also betting big on the freemium model, requiring developers to offer a free version of all games with the hopes that gamers will pay up for additional content of virtual goods.

Sadly, Ouya isn’t living up to those lofty expectations. For most of the early developers that made the plunge to port their games to Ouya, it hasn’t moved the needle in any meaningful way, according to a new report from IGN. Some developers are enjoying success, and fortunately Android games are extremely easy to port since Ouya runs on Google Inc (NASDAQ:GOOG)’s platform.

There haven’t been any blockbusters, though, and there aren’t any exclusive titles that can convince customers to buy Ouya. The small company has recently launched a Free The Games Fund, putting up $1 million to match Kickstarter pledges, with the hopes of getting some exclusive content. Ouya had plenty left over after it was Kickstarted, since it overshot its goal by $7.6 million, so it’s giving some back to the Kickstarter community.

Ouya’s biggest weakness is the overall quality of titles available, with some already straining the NVIDIA Corporation (NASDAQ:NVDA) Tegra 3 processor inside. The Motley Fool’s senior tech analyst, Fool Eric Bleeker, also wasn’t overly impressed with the console’s execution, since the hardware isn’t top-notch and the available titles are similarly mediocre.

Microsoft Corporation (NASDAQ:MSFT) has already sold out of Xbox One preorders, after it reversed course on its initial strategy. Following Microsoft’s early backlash, Sony Corporation (ADR) (NYSE:SNE) had increased its internal forecast for the PlayStation 4, and there’s no word to whether or not the Japanese company subsequently reduced its estimates after Microsoft’s reversal.

As the Xbox One and PlayStation 4 prepare to hit the market later this year, Microsoft Corporation (NASDAQ:MSFT) and Sony Corporation (ADR) (NYSE:SNE) can rest assured that the Ouya won’t be stealing sales.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool recommends Amazon.com (NASDAQ:AMZN), Google, and Netflix (NASDAQ:NFLX). The Motley Fool owns shares of Amazon.com, Google, Microsoft, and Netflix.

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