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On virtual disasters and consumer expectations

Peter Leung

Technologists often deride copyright holders for failing to move past antiquated business models. Last week’s disastrous launch of the latest entry in the SimCity computer game franchise shows how difficult it can be to get new business models to meet the expectations of customers.

A brief primer: The SimCity games place the player in the role of mayor in charge of building and maintaining a city. The first was published in 1989. Subsequent versions added new features, more buildings and transportation options.

Sim CIty - EAPublisher Electronic Arts (EA) boasted that the new game will add multiplayer support and simulate the behaviour of each citizen, rather than use statistical modelling. Because of the computing power required for these features, EA explained, players must be signed onto its servers during play to take advantage of cloud computing resources. This is true even for players who wanted to play alone. Of course, the login requirement made it much more difficult to pirate the game.

Player decried the system as a form of brute force digital rights management, taking away features (offline single-player) cynically dressed up as progress. Others asked what happens if EA had technical problems or stopped paying for servers; doesn’t this mean that the game will stop functioning?

In a word: yes. When the game launched last Tuesday, many found themselves unable to log in. Players were understandably upset that their $60 purchase did not work due to this requirement. Amazon temporarily suspended sales due to complaints.

EA’s response worsened the backlash. Lucy Bradshaw of Maxis, the EA-owned studio that developed the game, explained that the problems stemmed from the game’s popularity and the challenges of crunching “the vast amount of simulation data”. She claimed that due to this, adding offline play would entail “a significant amount of engineering work”. Not surprisingly, these claims were quickly contradicted by hackers and even an anonymous employee.

Where do we go from here?

This episode demonstrates the challenges of weathering technological change and finding that new business model. EA appeared to have been chasing the cloud computing craze by adopting aspects of the software-as-service model, but was unable to deliver adequately at launch or convince customers that they were benefiting.

Even attempts without similar technological problems have faced some resistance. The freemium model, in which users get the software for free but pay for additional features or in-game items, has been criticised as “nickel and diming” users rather than providing a truly useful product.

The music industry has also struggled to move beyond the album model. The industry initially resisted but has adopted and has found some success with selling digital singles, and seems to have some momentum with streaming services like Spotify and Pandora. Though tussles over royalty rates indicate that there are still questions about long term viability, the growing popularity of these services indicate an encouraging level of consumer acceptance.


World of WarcraftThe lesson seems to be that when devising new business models, rights holders need to fit customer expectations, which often analogise to existing products. Consumers accept music streaming likely because it can be thought of as a smarter, personalised version of radio. Freemium models can work because users understand what upgrades they are paying for. Its acceptance is particularly strong in the mobile realm, with the top eight grossing apps on iTunes being freemium.

Even consumer software can work as a service. World of Warcraft, with its $14.99 monthly fee, has been a runaway hit, and users seem to accept that the multi-player game does in fact need a server. SimCity may yet prove to be a financial success, but for now, it stands as a warning to content owners the PR headaches that await if consumers don’t believe in your business model.


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