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.
Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: business models, demigod, piracy, video games
Companies: stardock

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. icon
    Eclecticdave (profile), 18 Apr 2009 @ 6:32am

    Re: Re: Re: Re: Re:

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

    In fact that exactly is Mike's position - "infinite good" is the opposite of "scarce good".

    > isn't the server software also an infinite good?

    Yes and no. Technically it's an infinite good only if it's released, but since these components aren't normally released it could be considered a scarcity of a sort. However since it can be leaked or reverse engineered it might not be a very good scarcity to base a business model on.

    > But Blizzard and EA also have to subsidize the cost of the development of the games, which is fixed but very, very substantial

    Yes, and you and others are correct in pointing out that these companies would need to charge a higher amount to recoup this cost, than someone else running a look-a-like server might have to. (Assuming they chose not to sell the client as they currently do).

    However as Mike points out server access on it's own isn't the only scarcity at work here - the official servers usually offer a better experience because they are usually better supported and maintained and attract a larger community. They also get a head start when the company implements new features. Even with the help of EC2 it is still a significant undertaking to compete successfully with an official server.

    Which is not to say it can't be done of course, and in fact if someone does set up and run a server that appeals to a people more than the official servers (like the Ultima example you give) then that's fair enough. They put in the hours to keep the server running and attract a community so they deserve to profit from it as well.

    Just because a company writes some software doesn't mean they get a guarantee to be able to recoup the cost, that's a "business risk" and it's up to the company to figure out a way to make a net profit. That's no different than if you're running a shop and you spend a chunk of money buying stock - you don't get a guarantee you will be able to sell the stock and make a profit - it's up to you to figure out how to do this.

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Insider Shop - Show Your Support!

Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.