Hardware quality vs. network size in the home video game industry

Gretz, Richard T.

doi:10.1016/j.jebo.2010.07.007

Cited by 30 publications

(20 citation statements)

References 27 publications

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“…Second, we confined attention to a single generation console market, and thus were not able to gauge the importance of software quality relative to hardware quality. As Basu et al (2003) and Gretz (2010) showed, there can be significant interactions between software availability and hardware attributes as well. Thus, it would be also useful to investigate how software quality might affect this relationship.…”

Section: Discussionmentioning

confidence: 99%

Indirect network effects and the quality dimension: A look at the gaming industry

Kim

Prince

Qiu³

2014

International Journal of Industrial Organization

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a b s t r a c t JEL classification: L14 L82 M21 Keywords: Network effects Superstar software Game console Killer applicationsTwo-sided markets consist of platforms that need to bring both retail consumers and complementary goods producers on board to be successful. Consumer adoption of these platforms can often hinge on the presence and magnitude of indirect network effects -the positive feedback loop where a larger base of adopters of a primary product ("hardware") creates a larger market for complementary goods ("software"), which in turn increases the value of the primary good. Prior work attempting to measure indirect network effects often uses aggregate counts of software variety to do so. In this paper, we illustrate the importance of accounting for variation in software quality -a feature present in many markets -when conducting this measurement, and provide the conditions under which not doing so results in over-or underestimation of the actual indirect network effect. We apply our framework to the 7th-generation video game console market with quality-differentiated titles and show that in this market the use of aggregate software measures underestimates the indirect network effects by approximately 30%.

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Section: Discussionmentioning

confidence: 99%

Indirect network effects and the quality dimension: A look at the gaming industry

Kim

Prince

Qiu³

2014

International Journal of Industrial Organization

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“…Differentiation, which has been present in platform research as an alternative to pricing [86][87][88], refers to a strategy that aims to provide a unique ecosystem attracting users to adopt it. For example, quality differentiation may be a strategy to overcome a latecomer disadvantage and challenge an incumbent's dominant position [2].…”

Section: Differentiationmentioning

confidence: 99%

Unraveling Platform Strategies: A Review from an Organizational Ambidexterity Perspective

et al. 2017

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Abstract:Platform strategies, which highlight the interdependence in and evolution of business ecosystems, are increasingly relevant for sustainable business models in the digital era. So far, platform research has existed as a fragmented body of insights from different fields, but an integrated theoretical perspective can lead to a more coherent understanding of the research overall. Organizational ambidexterity emphasizes the balance between exploration and exploitation, which is particularly conducive to understanding the sustainability of a firm. Using an organizational ambidexterity perspective, the authors analyze five platform strategies: pricing, openness, integration, differentiation, and envelopment. This paper provides a systematic review of the theoretical and empirical studies in leading management, economics, and information systems journals from 2000 to 2016. The findings show that platform strategies can help platform owners achieve ambidexterity by domain, temporal, and organizational separation. Finally, this paper proposes an agenda for future research.

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“…Recent studies have criticized earlier research that examined demand-side effects without controlling for the endogeneity of title availability (e.g., Dubé, Hitsch & Chintagunta, 2010;Gretz, 2010;Inceoglu & Park, 2011;Zhu & Iansiti, 2012;Kim, Prince & Qiu, 2014). In a reanalysis of the data from nine consumer electronic product categories, Stremersch et al (2007) compared the relative importance of the supply and demand effects.…”

Section: Attributes Of Ine Softwarementioning

confidence: 99%

“…They concluded that software availability typically followed hardware sales, while 'the reverse almost never happens' (Stremersch et al, 2007, p. 68). However, more recent studies focusing on specific categories have found evidence supporting the existence of demand effects in the markets for home video games (e.g., Corts & Lederman, 2009;Dubé, Hitsch & Chintagunta, 2010;Gretz, 2010;Zhu & Iansiti, 2012;Kim, Prince & Qiu, 2014) and DVD players (e.g., Inceoglu & Park, 2011).…”

Section: Attributes Of Ine Softwarementioning

confidence: 99%

The Adoption of Electronic Innovations with Indirect Network Externalities that Compete with Standalone Physical Products

Kawakami¹,

Parry²

2015

Creat Innov Manage

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The authors consider how a change in product form impacts the adoption decision for an innovative product based on digital technology. Examples of changes in product form often arise in products that feature indirect network externalities, such as MP3 players, PDAs and e-readers. Existing research suggests that, for innovations with indirect network externalities, the consumer's hardware adoption decision is influenced by the availability of complementary products. However, these studies of complementary products tend to focus on products that exist only as complementary products, such as DVDs, CDs, and video games. This research focuses on the case of an innovative hardware product that uses digital complementary products that compete with standalone versions of the same products. The authors argue that high levels of experience with a standalone product that competes with an innovative hardware/software bundle should increase the consumer's appreciation of (1) the utilitarian benefits of the hardware/software bundle and (2) the hedonic benefits of the standalone product, some of which may not be transferable to the electronic hardware. An analysis of data collected from 549 potential adopters of e-readers in Japan support these hypotheses. The findings have important implications for the design and marketing of digital innovations that involve a change in product form.

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Hardware quality vs. network size in the home video game industry

Cited by 30 publications

References 27 publications

Indirect network effects and the quality dimension: A look at the gaming industry

Indirect network effects and the quality dimension: A look at the gaming industry

Unraveling Platform Strategies: A Review from an Organizational Ambidexterity Perspective

The Adoption of Electronic Innovations with Indirect Network Externalities that Compete with Standalone Physical Products

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