Hanna Halaburda, Robert McKeon and William Collis talk about their case, One Game to Rule Them All: Lord of the Rings Online and the MMO Market. The case, also co-authored with Ivan Nausieda, won the Hot topic: Social Media and Change case writing competition category at the ecch Case Awards 2012.
The case is set in 2006 when Jeff Anderson, Turbine Inc’s CEO, was carefully monitoring Turbine’s development of its new massively multiplayer on-line game (MMO), based upon The Lord of the Rings franchise. The brand’s fan base had grown explosively following the release of The Lord of the Rings film trilogy between 2001 and 2003, creating a cultural phenomenon. Anderson hoped this brand momentum would propel The Lord of the Rings Online game to the top of the MMO market. At the same time, he struggled with how best to position this game against successful competitors like World of Warcraft.
Why Lord of the Rings Online?
We had noticed that network effects were taught to students in an overly simplistic way, as an all-powerful barrier to entry. Yet in reality, the strength of network effects varies substantially across industries and markets. Sometimes their presence can even help competitors with sufficiently differentiated products. Looking at Turbine's attempt to enter the MMO space, with its powerful network effects, seemed like a good way to explore the variations of network effects and their more subtle competitive implications.
Two of the co-authors (William and Ivan) met Dan Scherlis, the former CEO of Turbine, at a Boston video game developers’ conference. Dan is an HBS alumnus and kindly agreed to be interviewed about his time at Turbine. His knowledge allowed us to focus our field-based research and build a solid understanding of both Turbine and the larger MMO industry.
Keeping it short
We wanted to make sure that the case was short and engaging but also contained enough information to stimulate discussion in the classroom. Finding this balance between brevity and content was very challenging and time consuming. The key in overcoming this challenge was to continuously develop the case in parallel with the teaching note, allowing us to keep a clear focus on the purpose of the case.
After teaching the case the only modifications we made were to the teaching note. In class students came up with creative and plausible ideas for successful business models for companies competing in an environment with network effects. We incorporated these ideas in the teaching note, with additional possible directions for the discussion.
Our advice is to always think about how the information in the case will translate into a classroom setting. The value of a case does not lie in describing a company or an industry. Instead, a case is first and foremost a tool to communicate strategic or business insights. Consequently, while it might involve a lot of research, the final product is very different from a report on findings of this research.
Teaching the case
Our case is short, and yet it serves two different teaching objectives depending on how much experience students have with strategy and network effects. For students with less knowledge, for example first year MBA students, it can be used to introduce to the concept of network effects and allows students to see how network effects vary in intensity between market segments, how network effects can actually be just segment-specific and how they are different than switching costs. For more experienced students, particularly those in digital marketing or strategy classes, the teaching objective is to provide an introduction into how companies, by taking niches of the market, can actually benefit from new entrants in an environment with network effects. Turbine's experience with Lord of the Rings Online really throws the power, and vulnerability, of user-base driven network effects into stark relief. This insight, however, is also useful to many companies relying on network effects. The case could be a tool for training the management of such companies.
A variety of useful material can be found on-line to bring the case to life in the classroom: videos of World of Warcraft and Lord of the Rings Online, in particular, gameplay trailers and TV commercials. We also recommend a clip from the Lord of the Rings movies, perhaps to open the class, to excite students and get them interested in the case in a visceral, relatable way.