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 @ 10:23pm

    Stardock is validated.

    As someone who has been making games for over 15 years I find this to be an exciting number and "GOOD" for the game. Ok, the servers were not ready for such a huge inrush, that's a tech problem which can be fixed quickly as Stardock shows. As much as I test our servers at work, I *KNOW* that something, somewhere, will not scale as well as expected, will not be as stable as it has been during testing, etc etc etc. I.e. something will always go wrong proving Murphy's Law.

    I don't see anything wrong with the given model though. It is a variation of the long tail approach. Stardock now has an online verification system which they can use for future games beyond this and the quick patch will likely be formalized into the Stardock Validation System (TM somewhere) which will allow them to have a scalable validation system which won't get DDos'd by their own games anymore. This is the first try and they got bitten by the standard Murphy case, "something" will not scale as expected and blow ups will happen when you actually go public.

    I see this as long tail because they have been gaining user base by not treating their customers as criminals, they have been releasing good games that people "want" to play. Having an obviously desirable online component in this case is "why" folks will actually buy the game "after they have downloaded it illegally". It is that last bit which is the "long tail" in my thinking. Anyone who pirates the game is not going to give them a dime unless Stardock "makes" them want to give them the dime. As has been mentioned around here in opposition to most industry funded research, a pirate copy is "not" a lost sale. In the way Stardock is approaching things every pirate copy is a "potential" sale because obviously the pirates want the online component.

    Playing devils advocate, in this case, without DRM etc, they have lost 100k sales somehow. Bullshit, they have 100k potential buyers and a good number of those folks "will" buy because they like the game and want to play online.

    Different from Mike's free game idea, I think this is the long tail model you actually want. (Outside of MMO's.) I make games you want to play, I charge "x" for a proper license to the game and allow you to play more of the same game online against other folks. (MMO's are an exception as you can't play at all offline.)

    Using Stardock as an example, they have 120k interrested folks they can try to sell to even if they only have 10k paid customers. In no way is this a loss, it shows that the limited resource is in demand. It will now be up to the pirates if they want to buy into the game to play it online or if they will move elsewhere.


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