The Creation of Battle.net 2.0: Part Five

Part One: Introduction
Part Two: Into the Dark Portal
Part Three: Cataclysm
Part Four: The Online Sensation
Part Five: An Open and Closed Case
Part Six: So, In Conclusion…

Part Five: An Open and Closed Case

It is impossible to ascertain the exact moment that Blizzard Entertainment decided to make a radical shift in business policy. This is something that requires a little bit of guesswork. Michael Morhaime told me that he won’t answer any of my “Question Rocks” until I agree to pay for the broken windows at Blizzard headquarters. I’m broke. So, here we are. What we know is that Garena, KeSPA, and the Glider software presented puzzling financial quandaries for the company. And no, you cannot blame this on Bobby Kotick. Blizzard would not announce their merger with Activision until December of 2007, well after the Michael Donnelly legal shenanigans began. Here is what we can say with certainty: To battle their opponents, Blizzard would go after the easiest target. They would go after the guy who was selling cheat software for a video game. In early 2007, Blizzard lawyers walked into an Arizona district court and announced their strategy for dealing with the ills of changing technology. This legal team would proclaim that the copyrights owned by their client were sacred and unalterable ground.

Blizzard would have to demonstrate that the Glider software infringed upon Blizzard’s copyright and that it violated an “exclusive right” held by the company. The crux of the argument made by Blizzard would have its roots in the precedent set by Vernor v. Autodesk (2006). That ruling would make headlines in 2010 when the Ninth Circuit Court of Appeals overturned the ruling (which had previously gone in favor of EBay auctioneer Timothy Vernor) and placed the first-sale doctrine for all computer and video game software in serious jeopardy. In 2007, portions of the ruling had already been established as precedent. Namely, it affirmed that if the user is designated as a licensee by the creator of the software, then that is what he is. He is a licensee. He does not own the software.

That would create the basis for the rest of the Blizzard argument. Since the company is the copyright holder for World of Warcraft, only they control the right to reproduce the game. Both parties had agreed that when the player loads a copy of the game software into the Random Access Memory on their computer, that copy can infringe upon the copyright unless the consumer owns the software or he abides by the terms and conditions set when a license is granted to him or her. According to the World of Warcraft End User License Agreement, “you…accept, a limited, non-exclusive license and right to install the Game Client for your personal use on one (1) or more computers which you own or which are under your personal control”. World of Warcraft players are licensees. No debate here. The World of Warcraft EULA authorizes the user to create one copy of World of Warcraft and only one copy. This copy must be used in a manner that is consistent with the rules outlined in the EULA. Automated programs and software bots had been banned by the 2005 update to the EULA. The update of the EULA was perfectly legal because the document stipulated “Blizzard reserves the right, at its sole discretion, to change, modify, add to, supplement or delete any of the terms and conditions of this License Agreement when Blizzard upgrades the Game Client”. From this line of logic, Blizzard would argue that any use of the Glider software by any licensee of the World of Warcraft software resulted in a modification of the game client that was not authorized in the EULA; that the use of the Glider software was a violation of Blizzard’s intellectual property rights, their copyright. In the plainest speak that I can offer to you: “Our copyright, our rules. If you don’t like it? You can go fuck yourself.” The Arizona district court agreed.*

In 1996, ProCD v. Zeidenberg affirmed the validity of the shrink-wrap agreement. In 2006, Vernor v. Autodesk affirmed the role of the consumer as a licensee. And in 2008, a court has stated that the computer program loaded into your computer memory is the sole property of the creator, and that your use of that memory is limited to the terms set by the company. From this point forward, it was elementary. Blizzard was able to argue that Donnelly knew he was infringing on the copyright of the company. This wasn’t hard, because he wrote on the Glider web site that the software was against the EULA. The company was also able to produce evidence that his actions financially harmed the company, leading to a loss of revenue. On April 1st, 2009, the Arizona district court found that Donnelly’s company was liable for 6.5 million dollars in damages and that he had violated two provisions in the 1998 Digital Millenium Copyright Act, an amendment to the Copyright Act of 1976 designed to update copyright law for a digital America.* (The ruling was later appealed. The Ninth Circuit Court ruled that Donnelly only violated one provision of the DMCA, the provision against trafficking a program designed to circumvent copyright protection. He was still on the hook for millions.)

Blizzard built World of Warcraft into a closed system because it was the preferred distribution model for the MMORPG. Nearly five years after their wunderkind evolved into the most financially-successful video game of all-time, it was the center of a legal barfight. At the end of this bloodbath, the United States legal system told Blizzard that any unauthorized modification or use of the game code could be challenged, so long as they outline which modifications and uses of the game code are illegal. If anybody violated this copyright, the company could summon more lawyers or simply disable the use of the software. In order for Blizzard to enforce these new-found god powers, they would have to do one last thing. All they would have to do is code any future games in a manner that granted them significant oversight of the game code.

Two months after Blizzard Entertainment brought a financial hammer down on Michael Donnelly, the company announced that StarCraft II: Wings of Liberty would not feature the ability to be played on a Local Area Network. World of Warcraft lead designer Rob Pardo stated that the elimination of LAN was “because of the planned technology to be incorporated into Battle.net”. Blizzard Entertainment decided that the only way their future products could be protected from this infringement would be to route and integrate the games into a new, closed version of the Battle.net service. This service would require a persistent internet connection. Battle.net 2.0 was born.

With these tools, Blizzard Entertainment could lash against all of the third-party entities (legal, illicit, immoral, ethical and elsewise) that had helped to make their games a worldwide phenomenon. They could prevent Garena from making StarCraft II compatible with their service. No LAN component, no emulation. They could demand licensing fees from the Korean e-Sports Players Association. No licensing fees, no games. Under the previous Blizzard Entertainment development philosophy, the distribution model was designed to maximize profit by attracting new audiences to their products. They would do this with “spawn modes” and Local Area Network play. They would offer players the ability to create multiple accounts that are independent of product keys. Now, the company would shift to a distribution model that was designed to take an existing user base and maximize profit. And with these exclusive distribution rights, the company would not have to worry about complaints that the Battle.net 2.0 service was sub-par. They could spend the bare minimum to create a crappy service and it would not matter. Their servers would be the only game in town. Blizzard took the goodwill created by these third-parties and then used it to give them the finger. Blizzard had designed Battle.net to protect their bottom line. They would accomplish this goal with two business strategies, one proceeding the other.

First, Battle.net 2.0 would be designed to eliminate a perception of ownership. Take the example of Sony. Sony argues that you do not own PlayStation 3 products when you purchase them. They argue that you do not own the software because there is a “Licensed, Not Sold” provision on the back of every box. They argue that you do not own the hardware because you must agree to their End User License Agreement in order to use the PlayStation 3. When the company went to court and fought with PlayStation 3 jailbreaker George Hotz, they argued that his circumvention of security measures was in violation of the EULA that he had agreed to. The Sony interpretation of computer software law is not in dispute. Should you decline to upgrade your PlayStation 3 firmware, you will eventually be shut out of newer services and newer games that will require that firmware. But you don’t really give a crap. You don’t give a crap because you can take that PlayStation anywhere you want and you can play those games whenever you want. The PlayStation 3 does not have to be connected to a network in order to function. (Not that the PlayStation Network functions all the time, anyway.) Video game hardware has functioned in roughly the same manner since the Atari VCS popularized interchangeable cartridges and media, long before the advent of End User License Agreements and software updates. Even as Sony tells you that you are a gigantic piece of shit and that your wallet is the only thing that is useful to them, there is a perception that ownership exists.

Compare that with StarCraft II. It’s one thing for Blizzard to say in their EULA that you are the only person authorized to use your purchase. How are they going to know that? Or rather, how does the company make it worth their time to know whether WeedMastr420 is sharing his account? They’re not. Instead, they will code various restrictions into the purchase. They’ll prohibit you from making changes to your user name. You will get one name and that is it. That name will be tied into a permanent ladder rating. This will diminish the resale value of the game account that you’re not supposed to resell. If you intentionally lose games to decrease that rating, the company will accuse you of “smurfing” and possibly suspend your account.* (This company has no fucking idea what “smurfing” is and why it is done. I find that highly entertaining.) And if you’ve already licensed other games into your Battle.net account, tough shit. Kind of hard to give your StarCraft II account to somebody else when they’ll take your Blizzard game library with it. The company will also enforce a custom content censorship system that puts your creations at the mercy of the company. Oh, and should you run your mouth at somebody and say the wrong thing, you risk the chance of receiving a warning or suspension for your conduct. You risk being blocked from the game service. So yeah, there’s a sense of ownership. Battle.net 2.0 gives you ownership of StarCraft II in the way that a ticket to Disneyland gives you ownership of the park. And when the guy in the Mickey Mouse suit says “Park’s closed, get the fuck out! Ha, ha!”, you will listen to him.

Then, using the service as a deterrent to both software piracy and copyright infringement, Battle.net 2.0 would stabilize a price point for the Activision-Blizzard business model. Remember what I said earlier: Back in the nineties, the goal of the Blizzard distribution model was to get the game in the hands of as many people as possible. That has now changed. Blizzard Entertainment has made a business decision that “making the same customers pay more for the games” is more profitable than “introducing new customers to the games”. The company believes that they can only make more money by aggressively targeting the existing fan base. That is why software piracy had to be eliminated. Most people pirate software because “I can, you dumbass!” or “Software can be purchased for money? Really?” The Robin Hood philosophy of software piracy is that it acts as a check and balance against the creator of a work; that the terms of use will be decided by what the consumer believes is reasonable and not by the company or author that creates them. (If you are a subscriber to this philosophy, then you are a dumb fuck. Just saying.) The major publishers hate the idea that if they piss off their consumers, these potential purchasers can white knight their way to ThePirateBay and download the game for free; that they can use the purchase in a manner that they see fit.

If you can eliminate software piracy, you eliminate that check and balance. To successfully accomplish this, you must eliminate software piracy to a degree that it is either difficult for the average consumer or that it is driven completely underground, out of the mainstream’s eyesight. Even with the release of a working crack for StarCraft II, Blizzard has accomplished this. In this case, it’s not about the money “lost” from the illegitimate download of the software. It’s about the money gained from absolute authority over your pricing, your distribution model, and the terms of how that software can be used. This is a sentiment I channeled back in May of 2011 when I was discussing the rise of the Xbox Live service:

Look at what Xbox Live did. It convinced millions upon millions of people to pay a monthly fee for a peer-to-peer networking model. That is, “a central server uses minimal bandwidth and upkeep to organize the creation of online matches”. That is, little actual hosting is done by the server. That is, what Blizzard has been offering customers for free through Battle.net since they released Diablo in 1996. They convinced people to pay for the privilege of using their internet connection to do the heavy lifting in online video games! Using a networking format that generated inferior latency in first-person shooters!

I mean, holy crap! If you could do that, imagine what else you could bilk this audience out of! Developers would have been crazy to pass on this gold rush! To consider the inverse, look at what happened when Apple built their mobile phone game store. When the company allowed anybody to make a video game for the iPhone, the price point for portable video games collapsed and Nintendo is still scrambling to deal with it. The opposite happens when an open system becomes closed. The closed system called Xbox Live created a market for maps, for clothes, for guns, whatever you could price! When Epic Games released the computer-exclusive Unreal Tournament 2004, it was packaged with nearly one-hundred maps for use across half-a-dozen game types. Thousands upon thousands of free, community-created maps followed. Two years later, Epic Games released Gears of War, a third-person shooter touted as (and would become) a cornerstone of the Xbox 360 game library. It was packaged with ten maps. Two downloadable map packs would up that number to sixteen. One of the map packs was released for free. The other one featured four maps. It could be downloaded for a price of 800 Microsoft Points™, a price point of approximately ten dollars. And they were able to set these prices by appealing to an audience that had never created a multiplayer map for Doom or downloaded free mods such as Counter-Strike.

The Ghetto, “The History of Why I’m Tired of Your Tactical Shooters: Part Three”; May 12, 2011* (Citing my own article seems a little bit pretentious. Eh. Not my fault that I’m the greatest writer who ever lived. Deal with it.)

Closed systems dramatically inflate the value of the post-release content that can be sold with a game. And currently, the development focus and core upgrade of Battle.net 2.0 for use with the StarCraft II expansion pack Heart of the Swarm will be a marketplace similar to the one used by Apple for their smartphones.* In other words, one of the main selling points in a forty-or-fifty-dollar expansion pack will be a feature that allows you to spend more money on the game. Under the previous system, maps and custom content could be freely and openly transmitted for no price. It could be downloaded from third-party web sites. No market existed for custom content. In a system where Blizzard can regulate that custom content to the fullest extent of their ability, there is money to be made in a marketplace. And with that, the goals of Blizzard were established. All the company now had to do is leverage their capital in order to crack down on the liberals and pedophiles who would dare defile the copyrights of Blizzard Entertainment. It would be so.

In 2007, a group of passionate StarCraft players created the International Cyber Cup, a StarCraft private server hosted somewhere in the coldest depths of Mother Russia.* The illegitimate nature of the server was never ever in doubt, since it was an emulated version of the Battle.net service as provided for StarCraft. A similarly-engineered Diablo private server named BnetD was lawyered out of existence by Blizzard two years after the release of Diablo II. However, ICCUP would provide numerous features that would make it superior to the StarCraft experience on Battle.net 1.0. Among the features were improved latency, a robust anti-hack detection system, and clever management of the custom game system that allowed players to host “ladder matches” on a constantly-rotating map pool. Almost immediately, ICCUP gained a reputation for its ruthless level of play. In StarCraft II parlance, the lowest rating of “D” was equal to the level of play that can be found in the StarCraft II Master Leagues. It became a preferred practice destination for top-level amateur players and even a number of professional StarCraft players. The service hosted the highest level of play in online StarCraft, period. Shortly after the June of 2009 statement on StarCraft II and Local Area Networks, Blizzard broke a long-standing silence on ICCUP and declared that it was a “pirate server”. The creators and handlers of ICCUP fired back, saying that StarCraft II would eventually be playable on their service. Blizzard has taken no action against ICCUP and the service is still limited to use with StarCraft and Warcraft III.

Possily pictured: Blizzard Entertainment employee goes undercover to crack down on ICCUP.

Meanwhile, Blizzard continued through three years of negotiations with the KeSPA over the use of Blizzard’s “intellectual property”. While fans of StarCraft had been unaware that direct negotiations were going on behind the curtains,* decisions and posturing by both entities had suggested that something was amiss. In June of 2009, StarCraft Terran legend Lee Yun-Yeol (NaDa) was scheduled to play Warcraft III figurehead Jang Jae Ho (Moon) in a special StarCraft II exhibition series at the South Korean eStars gaming event. KeSPA used their clout to make sure that the games never made it onto television or a webstream.* Later on, StarCraft II was given the equivalent of an Adults Only rating by South Korea’s video game rating commission, which would have prohibited the game from being broadcast on television.*

In April of 2010, after months of rumors and musings from fans,* it was reported that Blizzard would be ceasing negotiations to grant KeSPA a license for broadcasting StarCraft II.* The next month, Blizzard CEO Michael Morhaime published a letter that was directed towards South Korean StarCraft fans and organizers. Morhaime claimed that his company learned “KeSPA did not recognize our intellectual property rights”, to which Blizzard “decided we could not delay any further in finding a trustworthy partner who respected our intellectual property rights,” and would be taking these actions as “a way to protect our intellectual property rights as well as help e-Sports to grow further.”* Intellectual property rights. Shortly after, Blizzard signed a StarCraft II licensing deal with streaming video software company GreTech, placing the very existence of KeSPA’s meal ticket in serious jeopardy. The situation is currently amicable and the television rights for each game have been licensed accordingly. Today, Blizzard Entertainment requires that all StarCraft II tournaments be authorized by the company, and a submission form is present on the Battle.net web site for assisting in this manner.*

In October of 2010, PC cheat code and trainer website Cheat Happens reported that a number of players had been banned from Battle.net for using the web site’s programs for use in the StarCraft II single-player modes. While there was a less-than-noble incentive for using the trainers (they provided the ability to earn achievement points in both the single-player campaign and modes versus the artifical intelliegence), the company was setting new precedent: Using cheats to modify game modes that did not actively inhibit or disturb the game experience of others were now also against the End User License Agreement. The incident caused a very brief stink and then quietly sifted under the radar. Little sympathy was presented to the players that were banned.

“The Terms of Use state that you may not engage in exploitative activities. Any breach of these terms can result in an account penalty ranging from a warning to closure of the account or accounts associated with the activity, based on the severity of the infraction and how often a player has violated our policies in the past. While single player campaigns may only appear to be you and a computer at first, your achievements and gamer score also caries weight and prestige for your online play. Please understand that we do not reach this decision lightly. This action has been taken in accordance with our Terms of Use. (Blizzard Entertainment: Battle.net Terms of Use).”

Blizzard Game Master Valakith, speaking in e-mail correspondence, published in “Blizzard Bans Single Player Cheaters” on Cheat Happens; published October 10, 2010*

The most recent of all these notable events occurred in late June of 2011. World-class Canadian Protoss player Chris Loranger (HuK) achieved a personal milestone. He accomplished what most gamers would kill to brag about: His matchmaking rating was so high that he could not find games through the Battle.net 2.0 matchmaking service. Now, this isn’t anything new in Blizzard strategy games. This was a common occurrence in both Warcraft III: Reign of Chaos and its expansion pack. But in those games, the player could make a new account name and start with a fresh ladder rating. In StarCraft II, that solution was not present. Rather than discourage new account creation by eliminating long search times, Blizzard had eliminated new account creation. Each player would only have one user name per game license. The company stated this was done to prevent skilled players from making new accounts so they could “beat up on the noob”, or some dumb crap that Rob Pardo should have never said.*

HuK did not have the option of making a new account. While every minute of practice time is valuable to a top-level StarCraft player, HuK was participating in a live stream of a practice session. People tuned in to see him and they were not getting what they came for. Viewers equal advertising, so this was costing HuK money. He considered his options and went with the best one: He borrowed the account of world-class German player Dario Wunsch (TheLittleOne). As it turned out, one of the twenty-five-thousand people watching HuK play on this alternate account was German World of Warcraft Community Manager Vaneck. Vaneck got in contact with HuK over the phone and informed him that he did not discontinue the use of TheLittleOne’s user name, he would close the account. The reason? Account-sharing is against the StarCraft II End User License Agreement.

I will repeat that: A two-thousand-eight-hundred-employee creator of recreational computer software called up one of their most famous consumers and chided him on his use of the product, a violation of the EULA that was committed because their game was improperly programmed. I mean, what the fucking hell? Apparently, we’re past the “Apple gets the police to hunt down their iPhone prototype” phase.* Corporations are just going to skip the middleman now. But that’s the world you live in, gentlemen. Fuck ICCUP, fuck Garena, fuck KeSPA, fuck trainers, fuck pirates, fuck HuK. Blizzard created Battle.net 2.0 in order to make their position very clear: You do not own the software, you have no rights to that software, and you cannot use the software in a means that is not approved by the company. Future Blizzard games will also use this closed network. It has already been announced that Diablo III will not have a Local Area Network component and will only work through Battle.net 2.0.*

Thanks to to ProCD v. Zeidenberg (1996), MDY Industries, LLC v. Blizzard Entertainment, Inc. et al. (2008), and Vernor v. Autodesk (2006), you now have a system where shrink-wrap agreements are as enforceable as the contents within. I’m sure the Europeans reading this are giggling in a corner and daring these American companies to come across the ocean and lay down the legal hammer. The End User License Agreement is a bit of a punchline in the European Union. Well, it’s simple: Which one of you has the money to fight this in a court of law? In order to invalidate a portion (or all of) a contract, somebody has to take it to court. And when that happens, these publishers will leverage superior legal teams and limitless legal funds to help set precedent and affirm their declarations. Good luck.

Continue to Part Six: So, In Conclusion

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