Cease and desist (being a platform)

8th May 2009 by Diane

privateBlizzard has recently sent cease and desist letters to the developers of iPhone apps using data from the Armory (of which the text can be found here), not so long after the announcement of the new add-on policy, which forbids add-on developers from monetizing their add-ons, and from obfuscating their code (preventing any sustainable competitive advantage for any of them. Except  established companies with leverage to negotiate.) Together, these moves seem to sum up to a clear policy : preventing anyone from doing money by providing services around World of Warcraft.

If  the use of the WOW IP in an unlicensed manner is admittedly technically illegal, the policy seems very strange in an age where a big number of successful companies are looking to foster such initiatives by releasing open APIs and  hoping to incentivize developers to grow around their service in a platform strategy. It’s not a new idea, empires have been built that way. Blizzard’s measures are likely to discourage add-on developers from putting effort in making Wow interface better, or more targeted to specific needs , in short from increasing the value for users. The people who were using the iPhone apps are likely to be disappointed and have a worse experience with Wow in general as a result.

In a way, Blizzard seems to have a bit of schizophrenia here : Making the UI customizable and releasing game data on the web are steps that they have been taking relatively early, but on the other hand, they refuse to acknowledge that they are opportunities for third parties to build extra value for their players around them, of which they would benefit as well (in free marketing, better player retention, by taking a cut on sales, etc…). One can literally imagine the legal /licensing head arguing with the community/marketing head there. In clear, they have done the first moves towards a platform strategy and are now backing off.

The problem for Blizzard is, there are only a few possible choices in terms of platforms around a service :

  • Don’t be a platform. Build everything internally. Send C&D notices to people building around your service and replace it by something you designed. This way, you can control everything and are sure that you users only have top-quality handcrafted experience, the way you want it to be. Problems : to achieve this, you have to hire a tremendous number of people, which can very well make you an unmanageable bureaucratic behemoth, making innovation expensive and above all, slow. You are also deprived of all the ideas you couldn’t have had internally, and will have to figure out everything your users want yourself, in which you will certainly miss a lot (in the same way that it was hard for centralized economies to plan everything people wanted and needed). Then, it doesn’t scale that well, and you are likely , even with a huge workforce, to not being able of offering enough compared to what the rest of the world who isn’t on your payroll can do. It only can work if you are in a position of dominance and able to absorb these huge costs, and then, can make you very vulnerable to more nimble challengers and even hamper your ability of competing with yourself and evolve. Nobody makes money out of your IP or service, but then you also make much less overall, while having bigger costs. Obviously, you might also be in a situation where you started by being closed and then can’t afford the investment to change your game’s structure for any of the other options.
  • Be a closed platform (the way a console manufacturer is, or the Apple App Store). This can be very different depending on how closed it is : either whitelist people allowed to work on your platform (the way Blizzard already does for product licensing, for T-Shirts, novels, miniatures, etc) , or have an approval process ensuring a minimum consistency of quality level (à la Apple). In doing so you can control quality and make sure your users aren’t exposed to anything bad. Problem : approvals are a lot of ongoing bureaucracy, taking your company time and resources. Although it works well for physical goods who don’t change often, for live services it creates its own specific challenges, similar to the problem for console manufacturer’s online games policies : do you have to review at every change (more bureaucracy and sluggishness) or is the license granted forever? Plus, by granting those licences, you are effectively giving the chosen ones a competitive advantage over other companies of their fields, who maybe could have had better ideas of products and services and have made more money for you, more value for your users and for your brand.
  • Be an open platform, à la Facebook or Amazon. You get much more content, services, marketing and revenue that you would ever be able to generate alone. You grow a huge pie, of which you get only a cut. Problems : your users indeed can be exposed to a lot of bad content, not find what they want, there are a lot of opportunities for exploits, etc. The quality of the content and services depends largely on the incentives for developers : it’s hard to get professional quality if developers can’t monetize their efforts at all.  One has to understand that developers of mashups and services using APIs are already in a challenging position to build any sustainable position, as a lot of times they would use data that they don’t own, and most apps, even if the code isn’t obfuscated, are not necessarily difficult to reproduce, as the rapid succession of cloned apps have shown. Ultimately, the level of quality on open platforms is pushed upwards by competition alone. And there’s always the risk that the platform itself develops their own, better marketed version of any application, undercutting the developer’s market. While a very nice approach, it has to be kept in mind that there are costs attached at being an open platform, and while they are likely to scale with the success of the platform.

To come back to the Blizzard case, it would be interesting to estimate the cost of opportunity of preventing addon developers from monetizing and anyone else but them to release WOW iPhone apps. There are already some going-around on this policy, as the Curse premium offer, whose announced benefit is amongst others supporting the addon developer community. Whole platforms such as Curse itself grew from Blizzard’s willingness to let people develop tools, but unwillingness to promote and offering convenient access to them, and impossibility to develop internally all the tools that created value for the user. Either way, some choices will have to be made – like Pandora’s box, you can’t open “just a little”.

One Response to “Cease and desist (being a platform)”

  1. Mike Says:

    I don’t know why I keep reading “cease & desist”… here’s the actual wording; “In light of the above, we request that you immediately cease marketing or distributing any products or services that use any Blizzard Entertainment intellectual property or otherwise violate Blizzard’s rights or the fair trade laws… – Pollie Gautsch”. Now Pollie Gautsch is an independently hired lawyer… an actual Cease and Desist “Order” is released from a judge and constitutes the individual as liable thereafter. THIS letter from Pollie Gautsch on behalf of Blizzard is NOT a cease and desist, its basically a threat to sue.

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