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Platform Strategy: Managing Ecosystem Value Through Selective Promotion of Complements
Platform sponsors typically have both incentive and opportunity to manage the overall value of their ecosystems. Through selective promotion, a platform sponsor can reward successful complements, bring attention to underappreciated complements, and influence the consumer’s perception of the ecosystem’s depth and breadth. It can use promotion to induce and reward loyalty of powerful complement producers, and it can time such promotion to both boost sales during slow periods and reduce competitive interactions between complements. We develop arguments about whether and when a platform sponsor will selectively promote individual complements and test these arguments on data from the console video game industry in the United Kingdom. We find that platform sponsors do not simply promote “best in class” complements; they strategically invest in complements in ways that address complex trade-offs in ecosystem value. Our arguments and results build significant new theory that helps us understand how a platform sponsor orchestrates value creation in the overall ecosystem.
Journal Article
Simulation modeling and analysis with Arena
Simulation Modeling and Analysis with Arena is a highly readable textbook which treats the essentials of the Monte Carlo discrete-event simulation methodology, and does so in the context of a popular Arena simulation environment.\" It treats simulation modeling as an in-vitro laboratory that facilitates the understanding of complex systems and experimentation with what-if scenarios in order to estimate their performance metrics. The book contains chapters on the simulation modeling methodology and the underpinnings of discrete-event systems, as well as the relevant underlying probability, statistics, stochastic processes, input analysis, model validation and output analysis. All simulation-related concepts are illustrated in numerous Arena examples, encompassing production lines, manufacturing and inventory systems, transportation systems, and computer information systems in networked settings. · Introduces the concept of discrete event Monte Carlo simulation, the most commonly used methodology for modeling and analysis of complex systems· Covers essential workings of the popular animated simulation language, ARENA, including set-up, design parameters, input data, and output analysis, along with a wide variety of sample model applications from production lines to transportation systems· Reviews elements of statistics, probability, and stochastic processes relevant to simulation modeling* Ample end-of-chapter problems and full Solutions Manual* Includes CD with sample ARENA modeling programs
eBook
Platform competition: Strategic trade-offs in platform markets
Because the literature on platform competition emphasizes the role of network effects, it prescribes rapidly expanding a network of platform users and complementary applications to capture entire markets. We challenge the unconditional logic of a winner-take-all (WTA) approach by empirically analyzing the dominant strategies used to build and position platform systems in the U.S. video game industry. We show that when platform firms pursue two popular WTA strategies concurrently and with equal intensity (growing the number and variety of applications while also securing a larger fraction of those applications with exclusivity agreements), it diminishes the benefits of each strategy to the point that it lowers platform performance. We also show that a differentiation strategy based on distinctive positioning improves a platform's performance only when a platform system is highly distinctive relative to its rivals. Our results suggest that platform competition is shaped by important strategic trade-offs and that the WTA approach will not be universally successful.
Journal Article
Cooperative Gaming
Cooperative Gaming provides context and practical advice regarding diversity in the games industry. The book begins with a deep dive into research literature and the history of diversity in the games industry to provide context around what diversity is and why it is a topic worth considering. The book looks at the different facets of diversity and games, exploring the issues and solutions within game development, studio management, event planning, and more. It provides people with practical advice around being a marginalized person in the games industry and how to be heard, how studios can support inclusive practices, and events can actively become more accessible to a diverse audience.
eBook
Platform Performance Investment in the Presence of Network Externalities
Managers of emerging platforms must decide what level of platform performance to invest in at each product development cycle in markets that exhibit two-sided network externalities. High performance is a selling point for consumers, but in many cases it requires developers to make large investments to participate. Abstracting from an example drawn from the video game industry, we build a strategic model to investigate the trade-off between investing in high platform performance versus reducing investment in order to facilitate third party content development. We carry out a full analysis of three distinct settings: monopoly, price-setting duopoly, and price-taking duopoly. We provide insights on the optimum investment in platform performance and demonstrate how conventional wisdom about product development may be misleading in the presence of strong cross-network externalities. In particular, we show that, contrary to the conventional wisdom about \"winner-take-all\" markets, heavily investing in the core performance of a platform does not always yield a competitive edge. We characterize the conditions under which offering a platform with lower performance but greater availability of content can be a winning strategy.
Journal Article
Entry into platform-based markets
This paper examines the relative importance of platform quality, indirect network effects, and consumer expectations on the success of entrants in platform-based markets. We develop a theoretical model and find that an entrant's success depends on the strength of indirect network effects and on the consumers' discount factor for future applications. We then illustrate the model's applicability by examining Xbox's entry into the video game industry. We find that Xbox had a small quality advantage over the incumbent, PlayStation 2, and the strength of indirect network effects and the consumers' discount factor, while statistically significant, fall in the region where PlayStation 2' s position is unsustainable.
Journal Article
Balancing the Tensions Between Rationalization and Creativity in the Video Games Industry
This paper investigates the forces that influence creativity in the video games industry. We adopt a qualitative approach to guide the development of grounded theory across multiple levels of analysis, including the industry (consisting of multiple actors), organizational, and individual creator levels. Our study shows that business and production interests currently drive the rationalization of video game production. There is a maturing trend, with product designs becoming well established as genres, and consumers and publishers desiring incrementally innovative games. This leads publishers to focus on acquiring intellectual property, and publishers and studios alike to make incrementally innovative sequels. The increasing complexity of products leads to further rationalization in their development. However, the need to satisfy consumers' continually evolving tastes and game developers' inclinations to be creative also creates tensions with these rational forces. Different actors balance these tensions differently. Studios may seek to balance these by shifting between more and less innovative products, by creating original intellectual property to increase their bargaining power with publishers, and by iterating and repositioning products during development to adapt them to the market. Publishers may enhance their portfolio by hiring highly creative designers into their stable. New products are created through combinative creativity, that is, the recombination of existing ideas from different sources into new products. The connection of combinative mechanisms with the balancing behavior at the firm level provides a means for understanding the evolution of innovative products and, therefore, industries.
Journal Article
Producing Games
Computer games are big business - tens of billions of dollars are spent annually by the worldwide video games market. The cost of producing video games has ballooned to beyond $20 million dollars in many cases, and team sizes are quickly growing past 100 team members. At the center of this storm is the producer - one person who transforms the money, the hours spent by the team, and the latest technology into a work of art that millions of people will call fun. This book will dig deeply into the role of the producer and expose secrets of game production that stand the test of time: how to build a great team, how to plan a major game development project, and how to pull the development team toward the vision of a great game.
eBook
Predatory Monetisation? A Categorisation of Unfair, Misleading and Aggressive Monetisation Techniques in Digital Games from the Player Perspective
Technological shifts within the video game industry have enabled many games to evolve into platforms for repeated expenditure, rather than a one-time purchase product. Monetising a game as a service is challenging, and there is concern that some monetisation strategies may constitute unfair or exploitative practices which are not adequately covered by existing law. We asked 1104 players of video games to describe a time when they had been exposed to transactions which were perceived to be misleading, aggressive or unfair. We found 35 separate techniques over eight domains: game dynamics designed to drive spending, product not meeting expectations, monetisation of basic quality of life, predatory advertising, in-game currency, pay to win, general presence of microtransactions and other. Notably, several of these reported practices seem to not align with existing UK consumer protection regulations. We discuss this potential misalignment, as well as the implications of identifying what players believe to be problematic monetisation techniques.
Journal Article