Platform competition: Strategic trade‐offs in platform markets

Cennamo, Carmelo; Santaló, Juan

doi:10.1002/smj.2066

Cited by 572 publications

(488 citation statements)

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“…The video game industry displays strong indirect network effects, with games (i.e., complementary products) contributing significantly to the value of the entire system (Clements and Ohashi 2005, Cennamo and Santalo 2013, Cennamo 2016Kretschmer and Claussen 2016). The rise of multihoming in the videogame sector is well-documented (Corts and Lederman 2009;Landsman and Stremersch 2011) and is attributed to a decrease in the costs of porting games to different consoles relative to the upfront, fixed costs of developing the game.…”

Section: Setting: the Us Video Game Industrymentioning

confidence: 99%

Platform Architecture and Quality Trade-offs of Multihoming Complements

Cennamo

Özalp

Kretschmer

2018

Information Systems Research

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194

142

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Multihoming -the decision to design a complement to operate on multiple platforms -is becoming increasingly common in many platform markets. Perceived wisdom suggests that multihoming is beneficial for complement providers as they expand their market reach, but it reduces differentiation among competing platforms as the same complements become available on different platforms. We argue that complement providers face tradeoffs when designing their products for multiple platform architectures -they must decide how far to specialize the complement to each platform technological specifications. Because of these tradeoffs, multihoming complements can have different quality performance across platforms. In a study of the US video game industry, we find that multihoming games have lower quality performance on a technologically more complex console than on a less complex one. Also, games designed for and released on a focal platform have lower quality performance on platforms they are subsequently multihomed to. However, games that are released on the complex platform with a delay suffer a smaller drop in quality on complex platforms. This has important implications for platform competition, and for managers considering expanding their reach through multihoming. The logic is that multihoming offers potential additional revenues at limited costs for complementors, implicitly assuming that complements are the same on different platforms. But many platforms are not simple (two-sided) markets enabling transactions; they are also technology infrastructures whose features shape the development of third-party complementary products (Anderson et al. 2014;Gawer 2014, Tiwana et al.2010, Yoo et al. 2010. 2 Complements frequently must be tailored to a platform's core technological functions and interface specifications to take full advantage of its performance (Anderson et al. 2014, Claussen et al. 2015b, Tiwana 2015. In developing for multiple platforms, complementors must decide how far to specialize the complement to one platform (Schilling, 2000, Tiwana 2015, Yoo et al. 2010. We ask how the tradeoffs complementors face when designing products for multiple platforms affect the quality performance of multihoming complements across platforms. , Tiwana et al. 2010, Gawer 2014. As a system comprises the platform and its complements, the effect of platform architecture on both platform performance and complement supply matters for value creation at the system level (Cennamo 2016). the core technology components (e.g., processor cores), and the larger the number of specialized processors requiring a specific programming language for optimal utilization (i.e., no clean interface to handle the interdependencies), the more complex the platform. Complement developers must therefore choose to either use that language to optimally "conform" (Tiwana 2015) to the complex platform's specifications at the expense of integration and performance on other platforms, or to design the complement so it uses the lowest common denominator acr...

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Section: Setting: the Us Video Game Industrymentioning

confidence: 99%

Platform Architecture and Quality Trade-offs of Multihoming Complements

Cennamo

Özalp

Kretschmer

2018

Information Systems Research

Self Cite

194

142

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“…In this respect, heterogeneity of agents within the ecosystem can be a source of ecosystem differentiation [90,95,96]. Specifically, when customers have different preferences for a platform's particular characteristic, platform owners can simultaneously launch different versions of the platform that better fit the needs of different types of users [97].…”

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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“…By reducing the total market size and the required critical user mass, MSPs require fewer resources and less time to reach the critical inflection point from which the MSP can grow to other market segments. When initially focusing on a single market segment, MSPs can achieve higher levels of differentiation and platform performance in this market segment, which increases expectations among potential platform users that everyone else will adopt the same platform in future (Cennamo and Santalo 2013). Uber initially limited its operations to San Francisco and once it was successful in this city, the management decided to expand its business to other locations.…”

Section: Single Target Groupmentioning

confidence: 99%