Ouya, the maker of a low-cost Android-based gaming console of the same name, has been engaged in preliminary acquisition talks with multiple big players in China, as well as a few here in the U.S., according to several sources close to the situation.

Sources said the talks are early, but that the company considers it one of its more likely options rather than raising more money. There are no current offers on the table, said sources, but the talks are proceeding.

The companies that Ouya has had discussions with include Xiaomi, Tencent and others in China; there has also been some engagement with Google and Amazon.

The Chinese option is interesting since that country lifted a ban on consoles earlier this year, which had been in place since 2000. The move, part of its efforts related to its free-trade zone in Shanghai, has caused firms there to figure out their strategy in the space, including making their own units as well as buying existing technology like Ouya’s.

Sources tell Re/code that the acquisition would be for staff talent more than the company’s console product, which has not found much traction with gaming consumers after it launched last year. While Chinese companies could make their own consoles, sucking up a company like Ouya would move it forward quickly.

The early buzz for Ouya, at least, was intense. The startup raised more than $8 million on crowdfunding website Kickstarter in August 2012. After a string of delays, the consumer Ouya hit retail the following summer for $99, with the requirement that all games be “free to try” — a strategy imported from the mobile app world, where free-to-play games are the norm.

However, the console’s selection of games was limited and not sophisticated enough to challenge the big-budget games for other TV-connected consoles, such as those made by Microsoft, Nintendo and Sony. As Re/code’s Lauren Goode (then at our predecessor site, AllThingsD) wrote, it lacked “broad appeal” because it couldn’t match those consoles’ games or, at launch, most of their media apps.

To improve its library, Ouya tried offering developers new incentives through a Kickstarter fund-matching contest called Free the Games. However, the campaign was plagued by accusations that some participating developers had taken advantage of the contest’s rules.

Recently, Ouya had shown signs of trying to change course. It partnered with Mad Catz to put its software store on more devices, test-launched a Netflix-style game subscription service, dropped the “free-to-try” requirement for games and — just last month — partnered with Xiaomi to put Ouya software on set-top boxes and smart TVs made by the Chinese electronics company.

We contacted Ouya seeking comment last night and will add when we hear back.



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