Ouya’s extensive library of games could help Alibaba sell more devices in China

Alibaba Group Holding Ltd Injects $10 Million Into Ouya

Ailing U.S. gaming console maker Ouya has found a new strategic partner in Chinese e-commerce giant Alibaba. The online retailer has injected $10 million into Ouya to help strengthen its presence in Asian markets. Sources familiar with the matter told Douglas Macmillan of The Wall Street Journal that Alibaba is planning to add Ouya’s software and over a thousand games to its set-top box.

Ouya still struggling to gain a footing in the U.S.

Though no such deal has been signed yet, Alibaba wanted to bring the Santa Monica-based company’s marketplace of games to its set-top boxes. The deal could breath a new life in the U.S. start-up, which is still struggling to gain a foothold in the United States. Ouya was launched by Julie Uhrman in 2013. The Chinese gaming console market is primed for an explosive growth as the government recently lifted a ban on video game consoles.

Ouya was expected to disrupt the U.S. gaming market. Its gaming consoles cost only $99 compared to $399 for PlayStation 4. Its Android-powered OS made it easier for developers to make games for Ouya. But its consoles received poor reviews. The company found it difficult to make inroads into the U.S. gaming market dominated by Microsoft and Sony.

Ouya to help Alibaba sell more set-top boxes in China

Poor sales, coupled with the high cost of manufacturing devices, prompted the company to shift its strategy from hardware to licensing its marketplace of games to other manufacturers outside the United States. Last year, Ouya partnered with Chinese set-top box maker Xiaomi. Uhrman said that the company was in talks to incorporate the Ouya platform into more devices in markets like China and India.

Alibaba manufactures its own set-top boxes and licenses an OS for other companies’ devices. Ouya’s library of games could help Alibaba sell more devices in China, which could lead to increased sales of digital content. The Chinese company has been investing aggressively in the U.S. start-ups to bring new technology and entertainment to China.

Alibaba shares rose 1.10% to $90.80 in pre-market trading Friday.