These days, everyone is suddenly extolling the virtues of "open-source" gaming consoles, such as Valve's upcoming Steam Box, Nvidia's (NASDAQ:NVDA) Shield handheld console, the kick-starter-funded Ouya, and the new Mad Catz M.O.J.O.

However, in this world of next-gen Linux and Android consoles, the word "open-source" has been widely misused to classify all non-mainstream consoles not manufactured by Sony (NYSE:SNE), Microsoft (NASDAQ:MSFT), or Nintendo (NASDAQOTH:NTDOY)

Therefore, I think we need to take a moment to step back, reevaluate what open-source software actually is, and determine whether these new "alternative" Linux and Android consoles can actually make an impact in the next generation of console gaming.


Three Android consoles, from left to right: The Shield, The Ouya, and The M.O.J.O. Source: Company websites.

What open source is, and what it isn't

When software is open source, it simply means that the source code is available for anyone to freely download and modify with relaxed or non-existent copyright restrictions. Developers of closed source software, by comparison, don't let the public peek behind the curtain, much less modify the code.

Android and Linux, for example, are open source operating systems, and can be downloaded and modified by anyone free of charge. Windows and Apple's iOS, by comparison, are closed source systems, in which the source code is locked away by the companies. Any attempts to reverse engineer or modify the software would constitute copyright infringement.

Therefore, for a game or app to be open source, the developer must reveal their source code. Games like Angry Birds and apps like Adobe Flash Player are not open source -- the code is kept under lock and key by the companies. Therefore, calling Android an open source operating system can be confusing -- while the underlying operating system can be legally modified by skilled programmers, many third party apps (especially paid ones) can not.

The upcoming revolution in open source consoles

Valve, on the other hand, appears to favor the development of a hackable Steam Box, and has promised that source code for SteamOS will be available as a free download for anyone looking to create their own modified distribution of the operating system.

Meanwhile, companies like Nvidia, Ouya, and Mad Catz have taken advantage of the open source nature of Android and created their own customized operating systems for their gaming consoles. However, most of the third-party games that will be installed on these consoles will be closed source, unless the developers specifically encourage programmers to modify their programs.

The costs of development

For developers, open source operating systems are much cheaper to develop software for. To develop a game or app for a console, developers need to own a developer kit ("dev kit"). Dev kits can be expensive compared to the free coding options for Android, Linux, and iOS, as seen in the following chart, but prices have mostly declined since the previous generation.


Eighth generation console

Price per dev kit

Price per dev kit (previous generation)


Playstation 4


$2,000 (originally $20,000)


Xbox One




Nintendo Wii U



Apple iOS

iPhone, iPad



Google Android









In the past, this kind of comparison would have been a comparison between apples and oranges, but as companies are now blurring the lines between mobile and console games, it's more relevant than ever.

For large publishers, a few thousand dollars is less than pocket change, but the cost of a dev kit can lock out some smaller indie publishers. Sony and Microsoft are worried about this difference, and it shows -- Sony has started loaning out their next-generation dev kits for free to some indie publishers, and Microsoft is offering free dev kits to approved indie game makers.

Therefore, paid dev kits are looking increasingly like a business model from a bygone era, and is the main reason that Valve's CEO Gabe Newell so boldly proclaimed that Linux is the "future of gaming".

Although the majority of console games are still ported to Windows first, EA (NASDAQ:EA) Digital Illusions CE (DICE) creative director Lars Gustavsson strongly voiced his support for Linux gaming, stating that all Linux needed was "one killer app or game" to make the niche gaming platform a mainstream one. Those words should not be taken lightly -- DICE is the studio responsible for such mainstream hits as Battlefield, Mirrors Edge, and Star Wars: Battlefront.

Will these 'alternative consoles' disrupt the gaming industry?

So far, I've established two things:

  • For developers, an open source OS means freedom from dev kit fees and oversight from large hardware companies.

  • For consumers, an open source gaming OS could bring in a wider variety of original titles from smaller, independent studios and individuals.

Based on these facts, companies such as Nvidia, Ouya, and Mad Catz have introduced their own consoles to tap into this market. However, can these Android-based systems succeed?

Ten years ago, no one would have ever thought to bring mobile phone games to a home console. The reason was simple -- games of that age could simply not measure up to their console counterparts. Today, smartphones and tablets are comparably powered to lower- and mid-end PCs, opening the door to a wider variety of games featuring full 3D hardware acceleration.

The proliferation of Android apps and games has also created a rich, cloud-based repository of games that users of any Android device can access. Therefore, it can be tempting to believe that one of these consoles -- the handheld Shield or the living room-based Ouya and M.O.J.O. -- could be a viable Xbox One, Nintendo Wii U, or Playstation 4 killer.



Form factor





Handheld, with controller and touch screen


1.9 Ghz Quad-core Cortex A15



Living room console with wireless controller


1.7 Ghz Quad-core ARM Cortex A9

Mad Catz


Living room console with wireless gamepad


Nvidia Tegra 4 T40S 1.8GHz processor


Yet if you're an Android developer, these oddball devices add another layer of confusion to the already fragmented Android world, which spans a wide variety of hardware configurations. In addition, many Android games are developed for touchscreens and motion sensor controls first, and not controllers.

Moreover, since the horsepower of Android devices is so varied that large publishers are hesitant to create full-featured versions of their "triple A" titles. Instead, Android gamers usually receive watered-down companion versions of hit titles, such as EA's Mass Effect: Infiltrator, Dead Space, and Sims Freeplay. While the idea of playing these more compact titles on a dedicated console might appeal to some, their appeal is limited to an audience of more casual gamers.

Moreover, the Shield and M.O.J.O. are not competitively priced against the $399 Playstation 4 and the $499 Xbox One, considering their glaring limitations.

A final thought

If one of these open source consoles is going to make a difference, it's going to be Valve's Steam Box. Valve has given considerable more thought and planning to its approach than the aforementioned Android console developers, and if it can achieve the following four things, it could be destined for success:

  • Offer a high horsepower gaming machine for the living room at a competitive price

  • Convince 'triple A' developers to produce native Linux games

  • Attract more independent developers to quickly build up a software library

  • Allow users to help improve its base operating system

Gamers and developers should root for Steam Box to succeed, since it could turn the entire console-based business upside down and reset the playing field. Stayed tuned for more updates and details!

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends NVIDIA. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.