Network Effects and Competition: An Empirical Analysis of the Home Video Game Industry

2002 ◽  
Author(s):  
Venkatesh Shankar ◽  
Barry L. Bayus
Keyword(s):  
Empirical Analysis ◽  
Video Game ◽  
Network Effects ◽  
Video Game Industry ◽  
Home Video ◽  
Game Industry

Nintendo Co., Inc.

2017 ◽  
pp. 1-19
Author(s):  
Mark Satterthwaite ◽  
John-Lindell Pfeffer
Keyword(s):  
Video Game ◽  
Video Game Industry ◽  
Home Video ◽  
Game Industry

Describes Nintendo's rise to dominance in the home video game industry in the late 1980s. Then presents the challenges Nintendo faced in 1990 as 16-bit processors entered the market against the 8-bit Nintendo Entertainment System.

EXPRESS: Halo or Cannibalization? How New Software Entrants Impact Sales of Incumbent Software in Platform Markets

2021 ◽  
pp. 002224292110178
Author(s):  
B.J. Allen ◽  
Richard T Gretz ◽  
Mark B. Houston ◽  
Suman Basuroy
Keyword(s):  
Video Game ◽  
Network Effects ◽  
Direct Impact ◽  
Video Game Industry ◽  
Indirect Network Effects ◽  
Game Industry ◽  
Empirical Tests ◽  
Direct And Indirect Impacts ◽  
Indirect Impacts ◽  
Positive Effect

Platform markets involve indirect network effects as two or more sides of a market interact through an intermediary platform. Many platform markets consist of both a platform device and corresponding software. In such markets, new software introductions influence incumbent software sales. New entrants may directly cannibalize incumbents. However, entrants may also create an indirect halo impact by attracting new platform adopters, who then purchase incumbent software. To measure performance holistically, this article introduces a method to quantify both indirect and direct paths and determine which effect dominates and when. The authors identify relevant moderators from the sensations–familiarity framework and conduct empirical tests with data from the video game industry (1995–2019). Results show that the direct impact often results in cannibalization which generally increases when the entrant is a superstar or part of a franchise. For the indirect halo impact, superstar entrants significantly increase platform adoption, which can help all incumbents. Combining the direct and indirect impacts, only new software that is both a superstar and part of a franchise increases platform adoption sufficiently to overcome direct cannibalization and achieve a net positive effect on incumbent software; all other types of entrants have a neutral or negative overall effect.

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