from the bad-business-decision. dept
When you look this over, you begin to realize just how badly Hasbro screwed up in handling this situation. In focusing on a legal solution, it may have created the worst case scenario for the business side of the company.
When we talk about various trademark and copyright disputes, one response we often get is that a company has to react that way to "protect" its "property." This is not quite accurate. While there are some issues concerning trademark and preventing a trademark from going generic, there are almost always better business responses than suing -- and on copyright issues, there's no requirement to protect. However, in an age where lawyers all too often make business decisions based on what can be done legally, rather than what makes the most business sense, those options are all too rarely considered. In the past, there was often little that could be done for those impacted by such decisions. These days, however, things are quite different. Pissing off a large group of people, even if you have the legal right to do so, can often be a disastrous business move.
This is clearly demonstrated by Hasbro. The saga began earlier this year when Hasbro realized that Scrabulous was ridiculously popular on Facebook. Scrabulous was developed by two brothers who liked the game Scrabble and noticed that it couldn't be played online. Hasbro had done little to help put the game online, and the brothers were merely doing a much better job responding to the market need than the company that supposedly "owned" the rights.
Hasbro finally put together its own version (which got terrible reviews) and then sued Scrabulous, getting the brothers to take the game down. And, historically, that's where all this would end. Hasbro was legally in the right and had every right to push to block Scrabulous. But, as a business decision (as counterintuitive as it may seem), this reaction may be quite bad for business.
First, witness the rather loud and nearly immediate response from many Scrabulous fans, slamming Hasbro for its actions and pushing a boycott on all Hasbro products. Some will surely claim that many of these folks would probably never buy a Hasbro product in the first place and so this is a lot of noise about nothing. However, don't underestimate the reputational hit that Hasbro will take for this -- especially among younger folks who may be Hasbro's most important target audience. As Metallica is still in the process of learning, your reputation is extremely important, and damaging it by treating your fans incorrectly can do an awful lot more damage to your brand than you might expect.
Now, add in the fact that the Scrabulous guys have come back with Wordscraper, and chances are people are going to flock to it, just as vehemently as they now want to avoid Hasbro's Scrabble. That's about the worst case scenario for Hasbro, and it was entirely avoidable if they had simply realized how people would react to their decisions (which wasn't hard to guess from earlier responses prior to the lawsuit).
Update: Some folks in the comments (and via email) are pointing out the rumor that Hasbro offered to buy out Scrabulous from its creators. That's a valid point, but it doesn't really change the rest of the calculus here at all. Even given the fact that Hasbro made an effort at buying them out, that still doesn't mean that (having failed that) suing them was the proper second response -- as evidence by exactly what's happened since then.