Case Study-WWG, Inc. Players of video games often purchase their fun from Worldwide Games, which develops and markets game consoles, portable game devices, and software for playing games either on the company's hardware or on personal computers. Game enthusiasts are always on the lookout for game-playing experiences that are more intense, more lifelike, or more complex, so satisfying them drives constant innovation at Worldwide. The company has developed major and minor advances in screen resolution, processor speed, new kinds of controllers, creative story lines, and more. Its console division focuses on hardware technology, and its online division focuses on powerful new gaming software, often involving elaborate story lines played by subscribers around the world, using the Internet to collaborate or compete. Continuous innovation in both divisions essentially keeps Worldwide on a par with its major competitors, who are also constantly on the lookout for the best new ideas. In recent years, two related areas of technology have been essential for the growth of Worldwide and its competitors: social networking and the ability of broadband Internet connections to deliver fast audio and video streams for playing elaborate games online. Worldwide's console division has adopted this technology by inviting purchasers of its latest console to join its Players Network. Those who join the Players Network can use their console to make an Internet connection and play games with other members anywhere in the network. Each player uses his or her controller, console, and television display and sees all the participants' actions on the display. In addition, Worldwide's online division continues to push the limits of online games played with the processing power of the latest personal computers. For the most popular programs, gamers who pay a subscription fee create their own characters, or avatars, to act out the parts in the game. Although the personal data of the players are kept private, players can use the avatars' names to look up other players' track records and invite selected avatars to join their team. Because a necessary component of both kinds of gamesconsole based and computer basedis for players to register and pay a fee or join the Players Network, Worldwide collects not only money from customers but also information about them. That system came under real risk when hackers recent broke into first the Players Network database and then the registration records of Worldwide Online's subscribers. As soon as the company detected an intrusion into the Players Network, it shut down the network. When the company's security employees realized they couldn't immediately prevent intrusions within a day or two, Worldwide announced that hackers BITE 3228-WWG Case Page 1 had obtained the names and possibly the credit card numbers of its tens of millions of network members. Until the problem was fixed, they would be able to play games from disks loaded into their consoles but would not be able to use the network. While the company was investigating the original security breach, it discovered that the Worldwide Online user database had also been hacked. The company immediately announced that breach, including the fact that some credit card accounts might have been accessed. It shut down that network as well until the security hole could be plugged. Fixing the problem, which took about a month, included adding firewalls and encryption to the existing security measures. Afterword the company reopened both networks, apologized to consumers, and offered a month of free access to paid services. Returning customers had to download upgraded security software before they could resume play. The entire incident cost the company hundreds of millions of dollars for the investigation, upgrades, and lost sales. As operations returned to normal, Worldwide tried to minimize the risk of future intrusions by putting an executive in charge of security. The company announced that it had hired a chief information security officer, who reports to the chief transformation officer, who reports to the chief executive officer. Questions: 1. Is Worldwide Games (WWG) a technology leader or a technology follower? What do you see as the risks and benefits of staking out the position that WWG did in the market? Briefly support your position. 2. What opportunities might WWG be missing by not having its chief information officer report directly to the CEO? 3. What makes innovation important for Worldwide and companies like Worldwide? Following the hacking incident, how might bureaucracy be expected to interfere with innovation? How would you recommend that WWG break through the bureaucracy? BITE 3228-WWG Case Page 2