Demigod, Piracy And Good Business Models...

from the let's-walk-this-through... dept

Lots of folks have been submitting variations on the story about how Stardock's new game, Demigod, has been widely pirated, and that's resulted in server troubles for the company, as many of these unauthorized users try to connect to Stardock servers. Many are claiming that this shows that Stardock's customer friendly approach to video games fails. But, that's not true or accurate at all. It's just an issue of properly lining up the incentives and the infinite goods vs. the scarcities. In this case, one of the key scarcities was server access -- but Stardock set things up such that unauthorized copies could drag that down. The good thing, though, is that the company quickly got on top of the problem and has been implementing a technological fix rather than screaming and complaining about pirates. Meanwhile, some others have sent in links to the Demigod forums, where people recognize that many of the unauthorized users got the game to test it out, and are encouraging people to buy it to support Stardock and its fan-friendly attitude.

In the end, though, it does seem like Stardock has set this up a bit as a "give it away and pray" setup, which we tend not to agree with as a good business model. Since a big part of the game is the mutliplayer aspect, where you have to connect to a server and play against other players, why not give away the software itself (many people are getting it this way already) and charge a nominal fee for access to the server. That access is a scarcity -- and then you can scale based on users, since more users means more money. It seems like that's a reasonable business model that aligns everything much more nicely.
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Filed Under: business models, demigod, piracy, video games
Companies: stardock

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  1. identicon
    Anonymous Coward, 17 Apr 2009 @ 9:29pm

    Re: Re: Re: Re:

    I'm guessing you don't have a clue about software development, or maybe even computers in general.

    I'm guessing you'd be wrong, then, because I have a doctorate in Computer Science and I've been writing software for 20 years.

    The server must have most of the logic of the game, it has to hold and manage all the state. The clients main responsibilities are to display pretty graphics and communicate with the server.

    So all those high-fidelity Ultima Online shard emulators I linked above (and here) must not exist. I don't have personal experience with these, but from what I've read, these are in some ways even better than the official EA shards, because they let you play older versions of the game, or customized versions that EA doesn't offer.

    There are also lower-fidelity emulators for World of Warcraft, apparently. I guess WoW keeps a little more of the game's complexity on the server, and so that part is harder to emulate.

    A "fake scarcity" would be the client software. The marginal cost is basically zero. A real scarcity is server access. Server access involves bandwidth throughput, CPU cycles, memory usage... all of which are physically limited within a period of time. That's why you can't run WOW off your high end home computer and cable internet while expecting to compete with Blizzard.

    Well, that means any infinite good is a fake scarcity (or potentially so). I'm not sure that's what Mike meant.

    You are correct that bandwidth, CPU, memory, and so on are all scarce goods. But they're barely scarce. Companies like Blizzard and EA have to pay for these, too. But Blizzard and EA also have to subsidize the cost of the development of the games, which is fixed but very, very substantial.

    What's very nice today is that you can acquire bandwidth, CPU, memory, and so on at very close to marginal costs from cloud computing vendors like Amazon EC2. You even buy it pay-as-you-go. If I have a high-fidelity emulator (as the UO folks do), and a little time and creativity then I can probably host UO at capacity simliar to EA's, for a cost very similar to what EA pays. If I weren't worried about being sued out of existence, it might make a lot of sense as a business model. I could charge far less than EA charges for the same access. Maybe, because CPU cycles and the like are so cheap now, I could just sell advertising and give away the server access.

    Speaking of fake scarcity, isn't the server software also an infinite good? If I got a copy, I could set up a server for marginal cost, too, so maybe it's a fake scarcity? Should it be given away, too?

    This is all somewhat academic, of course, but it raises interesting questions about the edges of the infinite/scarce dichotomy.

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