Hasbro Threatens Facebook's Scrabulous

If the traffic-generating Scrabble knockoff is removed due to copyright issues, the social networking site may lose many frequent visitors

Joel Bussanich, 31, logs onto Facebook with an agenda. Sure, it's nice to check in with pals, but mostly he's there because it's his turn on Scrabulous, the Scrabble knockoff that's grown wildly popular with millions of Facebook users. But now Scrabulous is in danger of being wiped from the site, and if that happens Bussanich says he'll have little reason to spend much time on the social network. "It is the one thing I use the most on Facebook," says the resident of Little Ferry, N.J., in between turns of 14 Scrabulous games he's playing simultaneously. "Facebook is going to lose a lot."

Since launching on Facebook last year, Scrabulous has attracted millions of players like Bussanich who spend hours each month trying to find the highest-scoring word from as many of seven randomly selected letters as possible. Nearly 513,000 people play the game on Facebook each day. Best of all for Facebook, they're viewing ads as they play—helping generate revenue for a company that has struggled to find the best way to make money.

The playing may soon stop. On July 24, gamemaker Hasbro (HAS), which owns the North American rights to Scrabble, demanded Facebook remove the Scrabulous program, saying it violates Hasbro's copyright. The same day Hasbro filed an intellectual property lawsuit against the Scrabulous creators, Rajat and Jayant Agarwalla, brothers and Scrabble fans from Kolkata, India, who created the game in 2005. "The Scrabulous site is a theft of intellectual property, and we can't allow that to continue," says Mark Blecher, Hasbro's general manager of digital media and gaming. "We expect that Facebook will take it down."

Facebook said in a statement that it forwarded the takedown notice to Scrabulous and "requested their appropriate response." Facebook added that over the past year, it has urged Hasbro and Scrabulous to settle their differences. "Facebook has tried to use its status as neutral platform provider to help the parties come to an amicable agreement," according to the statement. "We're disappointed that Hasbro has sought to draw us into their dispute."

Good News for Electronic Arts?

Hasbro is urging Facebook players to switch to a licensed version of Scrabble created by Electronic Arts (ERTS). The authorized Scrabble began a public testing phase days on Facebook before the lawsuit was filed. Hasbro signed a deal with the well-known video game maker in August 2007, after months of negotiations, to create digital versions of all its game and toy brands for social networks, video game consoles, and mobile phones. Hasbro says social networking games were always on the agenda, long before Scrabulous made its debut on Facebook.

In the last several weeks, EA has unveiled Scrabble games for Apple's (AAPL) iPod, iPhone, and a variety of social networks. "Our goal is to have an authentic version that has a high production quality and…a consistent look to the game," Blecher says.

Hasbro first threatened legal action against Scrabulous in January at a time when there were 2 million registered Facebook users of the game. Representatives of Hasbro and Mattel (MAT), which owns the rights to Scrabble outside the U.S., told The New York Times earlier this year they hoped to reach a resolution that would not result in the shutdown of Scrabulous. Blecher said on July 24 that Hasbro had never spoken to the Agarwalla brothers. Scrabulous' founders did not immediately return an e-mailed request for comment.

Fan Backlash

Fans of Scrabulous on Facebook responded to Hasbro's initial threats of lawsuit by sending petitions to Hasbro and creating "Save Scrabulous" groups on Facebook. One petition collected more than 8,800 signatures in a month. When supporters learned that Hasbro decided to go through with a lawsuit, they had harsh words for the company. "Hasbro has just managed to annoy potentially millions of customers," says Shel Israel, a Scrabulous fan and co-author of Naked Conversations: How Blogs are Changing the Way Businesses Talk with Customers. He added: "They missed a really big marketing opportunity to connect with a whole new generation that doesn't play board games."

Before Scrabulous, Bussanich hadn't played Scrabble for years. The inventory manager at Home Depot had initially learned the game by playing with his grandmother. When she died, he didn't bother to pick back up those well-known wooden letter tiles—until he saw them digitized on Facebook. "This brought me back to playing Scrabble again," he says.

Bussanich says he might play the EA version, but he's become attached to Scrabulous. But if that goes away, he may not be on Facebook long enough to try the licensed version.

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