In 2002, when they launched The Sims Online, Maxis/EA Games was in a great place. Their blockbuster game The Sims had sold 11.3 million copies since its release in 2000 and was the best-selling game ever at the time. Ultima, Everquest, and Runescape were doing very well and had proven that people enjoyed online social games, and EA was well positioned to draw their existing playerbase into a subscription service where they could collect continued revenue and increased loyalty. The social element was expected to be a hit, as people stepped away from the solo play model of The Sims and into a new virtual world where they could keep the sandbox-style gameplay they loved while interacting with others who shared their interests. They anticipated the traditional network effects, where more users would produce a sense of community and interesting user-created content that would draw more players. The year it came out, it won E3’s “Best Simulation Game” and IAA’s “Best Massively Multiplayer” awards. So why did it close its doors permanently after only a few years?
The game had a moderately strong start, selling 82,000 subscriptions in the first month. Players quickly set up community lots where players could practice specific skills while having conversations- the amount of experience gained for actions scaled with the number of people on a lot, which encouraged the social aspect and strengthened network ties directly. There were groups dedicated to re-enacting theater and movie in-game, debate groups, and even (perhaps to EA’s chagrin) in-game prostitution and gambling. There was an internal rating system where users could flag others as trustworthy or untrustworthy, which shaped the interactions; more well-liked players would have easier access to live in better neighborhoods, have more trusted in-game businesses, and be able to join more exclusive clubs. Making real friends- forming your network- was part of the game. All of these kept players engaged with the community, subscribing, and coming back to the virtual world for more.
But they soon learned that for a network effect to be effective, the additional players have to add value, not detract from it. Suddenly, people realized that one way to maximize their profits was to shake down new players- forming a “Mafia” that would threaten to use the in-game rating system to demolish the reputations of people who wouldn’t pay them. New players would sign in, and their first experience wouldn’t be a fun, social game- it would be a threat. It was nearly impossible for new characters to build any social or economic capital; either they gave the extortioners all of the Simoleons they started with, at which point they had nothing with which to build their businesses or enhance their characters- or they kept the gold and their reputation plummeted to the point where nobody would be willing to let them into their houses. Their subscriber base barely grew after the 6 month mark, peaking at 100,000 and then declining rapidly as people got tired of being bullied. Eventually, the Mafia won and the game was shut down.
The lesson I’m drawing from this is that while network effects can be a very positive force, it has to be somewhat controlled by the company. Letting the customers run wild can lead to an implosion. Some customers aren’t valuable customers- so even if, on aggregate, more people would be a benefit, a few bad apples can poison the entire business.