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
    Manitcor, 18 Apr 2009 @ 8:57am

    Turns out the servers may not have been hammered as claimed

    First it is important to note that pirated copied were NOT able to play multi-player. Retail copies do include a serial number checked against their DB. (

    Further the issues where around some of the automatic pings and check the app does when checking for updates and friends. Based on the link above it seems to me that the StarDock exec is not necessarily in alignment with his underlings.

    The high ratio of free:pay sounds about right when you don't include DRM or if you offer your product for free with optional pay if you want. The idea behind "free" it to get your content (game, music, whatever) more recognition and wider market/mind share.

    It sounds to me like the StarDock CEO is just whining that he isn't seeing more conversions from those 120-150k gamers. What he really should be whining about is not coming up with a business model that would capture some dollars from those pirates. They would not pay for the game, but maybe they would pay a nominal monthly fee to get on the service, or maybe they would pay for DLC or some other service or value add.

    Granted there are some people that will pirate regardless and NEVER pay a dime, but out of that group of users that pirate there is a certain percentage that would be willing to pay. The trick is knowing what they would pay for (is the game too expensive? is there more value we need to be providing?) and if producing that offering is worth it over the life of the product. All of this can be determined through the correct market research and planning.

    In this case it seems like Stardock just said they would go DRM free to get a headline and some more interest in their products but haven't thought about ways to exploit the extra 120-150k people using their product.

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