First look ... Ouya games console

Negatives: less portable than a phone; less capable than a console.

Nowadays, video games are produced on an industrial scale. Three electronics giants – Sony, Microsoft and Nintendo – dominate the hardware market while a dozen or so global software houses churn out blockbuster games with Hollywood movie-sized budgets.

It's a fiercely competitive market where hardware manufacturers can expect to lose money on every console they sell, hoping to recoup those losses over several years through accessory sales and software licensing.

It wasn't always like this. Video games used to be written by teenage boys in their bedrooms and the simple, multi-purpose computers these games ran on were generally profitable from day one.

The explosive growth of gaming on smartphones and tablet computers has seen a return to those earlier principles. Hardware manufacturers don't rely on software sales for profit and the simpler nature of so-called casual gaming on mobile handsets has reopened the market to hobbyist game developers working from home.

Games industry veteran Julie Uhrman, most recently vice-president at games rental firm GameFly, watched this trend closely. There must be an opportunity, she reasoned, to bring the casual gaming experience people enjoy on their phones to the big screen.

So Ouya was born, a games console based on Google's Android phone operating system, some high-end phone hardware and a handheld controller that borrows heavily from the design of the Sony PlayStation handset.

In keeping with the philosophy of the Android OS, almost everything about the Ouya console is open and designed to be tinkered with. The software can be edited or replaced and buyers are even encouraged to open the case with a screwdriver.

Through its page on crowd-funding site Kickstarter, Ouya sought £600,000 in pre-orders from individuals who shared the open-source gaming vision. In less than a month it had raised £5 million from more than 60,000 people.

Not everyone is convinced by the need for another games console and I am among the sceptics. Casual gaming works well on mobile phones for two reasons: first, the handset is always with you, making it the perfect way to fill a spare five minutes; second, the touchscreen interface on a phone makes games instantly accessible, cutting out the learning curve of which button does what.

Ouya has neither advantage and faces some colossal competition. Microsoft's Xbox 360, now seven years old, runs rings around Ouya in terms of performance while the PlayStation 3 is even further ahead. With far superior rival consoles available for similar money and more capable smartphones in everyone's pockets, it's hard to see where Ouya will find its niche when it hits the market next March.