Strategies for online game publishers to counter third-party cheats

Some players of online games download third-party cheats to gain an unfair advantage, which frustrates regular players and lowers the publisher’s revenue from in-game purchases. The publisher may respond by turning a blind eye, banning suspected accounts, or sequestering suspected players against each other on isolated servers. In this study, we apply the technique of industrial organization to investigate the dynamics between a game publisher and a cheats developer in a vertically differentiated market to figure out whether these countermeasures can effectively curb the use of cheating add-ons. Depending on the countermeasures adopted and their impacts, the cheats developer may either cater to a small but loyal customer base for avoiding further removal action or attract a large group of players to evade isolation. Particularly, this study, based on market mechanisms, explains the prevalence of cheating in massively multiplayer online games, despite the efforts to curb such behavior.