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. icon
    Mike (profile), 17 Apr 2009 @ 6:37pm

    Re:

    That works really well unless some creative person reverse engineers your server-side protocol and then implements a workalike server

    Not at all. That just puts the emphasis on making sure that the official server is better. Even though there are many other servers for WOW most people prefer the official one.

    The workalike can offer the server access service to anybody (legitimate copy or not), and at a much lower price than Stardock, since they don't have to try to recoup the cost of development of the original game.

    But they can't offer new features or the larger community that the official servers can offer.

    If we accept that people will find a way (legal, illegal, or gray-area) to drive things toward marginal costs, we have to accept that it's going to happen for both scarce and infinite goods. The drug industry knows this fairly well already.

    Which is why people still pay orders of magnitude more for brand name drugs over generics? Oops. Being the official and authorized provider brings in a nice boost. Always has.

    Sounds like it would be in Stardock's best interest to rustle up some more scarcity.


    Huh? There are always scarcities, but you don't "rustle them up." Fake scarcities don't last. You focus on the scarcities that already exist.

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