Classroom Companion: Business

19.4 · Digital Business Models

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core activities for Blizzard’s own devel-
opment team and are essential for the 
value proposition. In other words, the 
key resources are the game developers 
themselves. In addition, Blizzard needs 
an infrastructure of game servers to run 
the game. Both the game developers and 
the server infrastructure are significant 
elements contributing to the total cost of 
the company. Expenses related to devel-
oping the game are, to a large degree, 
fixed and independent of the number of 
gamers (4). Expenses related to the game 
infrastructure are partly dependent on 
the number of gamers (5). The key part-
ners are data centers running persistent 
WoW worlds, ISPs providing high-speed 
worldwide Internet access, and retail 
stores promoting and selling the game.
Gamers exhibit positive direct same-
side network effects on other gam-
ers—or, at least, on other gamers on the 
same server—as shown in 
.
Fig. 
19.5
. 
Gamers can come together in teams—or 
“clans”—to perform quests and tasks 
together, thereby increasing the gaming 
experience. Gamers also provide in-game 
items and content that other gamers may 
use. WoW Auction House is an example 
of a place where gamers can sell and buy 
items found during the game.
Key strategies for WoW are to acquire 
and retain customers who will pay 
monthly subscriptions. This can be done 
by aggressive marketing, offering a supe-
rior product, or exploiting the benefits 
of network effects. WoW has exploited 
all these strategies. WoW is the most suc-
cessful MMOG developed so far, at least 
from a financial point of view. Due to its 
success and impact in the gaming indus-
try, WoW has been a trendsetter of busi-
ness models for online video games.
Gamer
Gamer
World of Warcraft 
Gamer
Monthly subscription
Access WoW
User generated
game elements
(+/+)
User-to-user
Interaction (+/+)
. . .
. Fig. 19.5 World of Warcraft modeled using the SRM. (Authors’ own figure)