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Ouya's $99 videogame console challenges pricier Xbox, PlayStation

By Malathi Nayak

SAN FRANCISCO (Reuters) - Ouya's $99 Android videogame console goes on sale on Tuesday, the latest attempt by a growing crop of niche hardware makers to chip away at a market dominated by Sony Corp, Microsoft Corp and Nintendo Co Ltd.

Ouya hopes its cheaper cube-shaped console will prevail over the long-established gaming triumvirate's pricier hardware. The new device has more than 150 free-to-try games, media features such as Flixster and radio service TuneIn, and an open ecosystem built on Google's Android operating system.

Founded by Julie Uhrman, a former executive at entertainment website IGN, the hackable, or customizable, device will go up this Christmas season against the $399 PlayStation 4 and $499 Xbox One. Both are packed with exclusive blockbuster titles from top developers, cloud gaming and other social features .

Ouya is going after core console gamers, as well as the mass market of college students, young adults and families that plays mobile games and is price-conscious, Uhrman said.

"Ouya is not an 'either-or' decision," Uhrman said. "It stands on its own and it's something that gamers are going to want in addition to whatever device plays the game that they've been playing for the last five years."

Ouya and other hardware companies, big and small, are hoping to claw their way into a global video games market expected to touch $66 billion in software and hardware sales this year, up from $63 billion in 2012, according to research firm DFC Intelligence.

The 2013 holiday season is shaping up to be the most hotly contested in years, with Microsoft launching its Xbox One and Sony's Playstation 4 coming to market.

Saratoga, California-based BlueStacks, will launch a $129 cube called GamePop that is expected to available this holiday season. Alternatively, gamers can pay $6.99 monthly for access to over 500 games and get the console and controller for free.

Next week, graphics giant Nvidia Corp will release its handheld Shield device, which runs games available on Android tablets and smartphones and streams titles from computers.

Demand for the new gadgets is unclear. Ouya has begun taking pre-orders, but is mum about figures. Just this week, Nvidia cut the price of the Shield, which starts sales on June 27, to $299 from $349, responding to what it called feedback from gamers.

"For a new product, we're satisfied with the reservation," Paul Raines, CEO of the world's largest games retail chain, GameStop, said about the Ouya.

But he added: "To really grow to billions of dollars, you've got have great IP that people want to play. People often talk about open platform gaming, but there's only one device that plays 'Halo' and that will be Xbox One, there's one device that plays 'Uncharted' and that will be the PlayStation 4, so the importance of the IP cannot be overstated."

DEVELOPER INTEREST

Ouya has received support from the gaming community. It racked up $8.6 million from 63,000 backers, mostly game enthusiasts and developers, on crowd-funding site Kickstarter. And it got $15 million in a funding round led by venture capital firm Kleiner Perkins Caufield & Byers, with participation from the Mayfield Fund, Shasta Ventures, Occam Partners and Nvidia.

Developers can earn revenue on Ouya's platform through several avenues, including selling virtual goods, subscriptions and donations. Sales will be split along the traditional 70-30 model, with Ouya getting 30 percent.

Over 17,000 developers are using the Ouya software development kit to bring games to the new device, including Square Enix Holdings Co Ltd's "Final Fantasy III" and nWay's "ChronoBlade", the company said.

Nvidia's Shield is intended for hard core PC gamers with a yen for continuing to play on the go.

Meanwhile, BlueStacks will target a younger demographic of 10 to 30 year-olds hooked on tablet and smartphone games, said Apu Kumar, senior vice president of global sales and business development, said.

Its GamePop is "bringing the games you are most familiar with on iPhones and Android to the large screen," he said.

(Reporting by Malathi Nayak. Editing by Andre Grenon)

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