Zynga. Zynga has made a fortune profiting off of other smaller outfits, just merely by studying and copying. They didn't have source-code (to my best knowledge), but they knew how to make a game mass-appeal. This happens more often in gaming than you'd like to think.

But that's wrong because, as you say, if some company wants to clone an idea, they're not even going to bother reading the code, let alone steal the code. And I know of no one who's ever stolen code for a game since, say, 2003, and gotten away with it. Reddit changes the game. You can crucify a competitor for such behavior, and gamers will shun them.

My advice (I work at a gaming company) is to hold all your IP close as possible. Game design, art assets, source code, whatever. You have a right to own it so why not hold on to it for a while until you establish a solid competitive advantage.

I think your advice is coming from a gut feeling or intuition rather than experience. But empirically it's mistaken. It's a natural reaction to be hesitant to release code powering your product, but I'm pretty sure it's never been a problem in practice. They will get major major PR and respect, both of which can only help a fledgeling startup.