I agree with you that adding a bunch of servers looks like the simpler (cheaper, in terms of Net Present Value) option. But I worry that however they've set it up is just not horizontally scalable.
They say that a large bunch of the simulation runs on their servers. And that each city is connected (via the graph) to every other city. What if they haven't built in clean partitioning? If cities really do interact with every other city, and they've haven't already seriously planned how to horizontally scale, they're hosed.
If it were just a matter of adding more hosts, wouldn't they have done that by now? Surely you over-provision for launch and then scale down once the first sales are over and people's interest dies down.