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 @ 7:01pm

    Re: Re:

    I just feel bad for Stardock. If they're unlucky, they could find themselves in an arms race. They have to continually improve their servers at a faster pace than emulator-developers can copy those new features. Given the nearly necessary properties of MMORPGs, the new features are largely implemented client-side, and that's the part they have to give away.

    Stardock isn't guaranteed the largest community, either: according to the article, 12% of the users connecting to the Stardock servers were legitimate. 12%.

    The fact that people pay more for brand-name drugs than generic drugs is because they are dumb. There's no difference in active ingredient, effectiveness, or any actual, physical property. They buy brand-name largely because of mass misconceptions and the effectiveness of marketing. I guess that's proof that you can build a successful business model on stupidity arbitrage.

    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.

    You know exactly what I meant. To clarify, I'm just pointing out that there's not a simple, predictable business model here, and server access isn't really enough of a scarcity to build your business model on. If they're smart, they're going to have to come up with and monetize a bunch of other scarcities.

    I like this term "fake scarcity." How would you define that? Can you provide some examples? Do you actually mean to imply that you can identify a fake scarcity because it doesn't last? If so, isn't server access a fake scarcity? Isn't the perception of difference between brand-name and generic drugs a fake scarcity?

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