An Empirical Analysis of Indirect Network Effects in the Home Video Game Market

@article{Prieger2006AnEA,
  title={An Empirical Analysis of Indirect Network Effects in the Home Video Game Market},
  author={James E. Prieger and Wei-Min Hu},
  journal={Information Systems \& Economics},
  year={2006}
}
We explore the indirect network effect in the market for home video games. We examine the video game console makers’ strategic choice between increasing demand by lowering console price and by encouraging the growth of software variety. We also explore the existence of an applications barrier to entry in the console market, and find that there is little evidence for such a barrier. Finally, we assess the applicability of the model to out-of-sample situations, to look at whether our model and… 
View on SSRN
archive.nyu.edu
38 Citations
Highly Influential Citations
7
Background Citations
17
Methods Citations
4
Results Citations
1

38 Citations

Entry into Platform-Based Markets 89

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…

Vertical Integration, Exclusivity and Game Sales Performance in the US Video Game Industry

This paper empirically investigates the relation between vertical integration and video game performance in the U.S. video game industry. For this purpose, we use a widely used data set from NPD on…

Vertical Integration and Two-Sided Market Pricing : Evidence from the Video Game Industry

This paper evaluates the e¤ects of vertical integration on two-sided market prices using data from the 128 bit video game industry which consists of Nintendo Gamecube, Sony Playstation 2 and…

Indirect Network Effects and Platform Dominance in the Video Game Industry: A Network Perspective

The model of platform dominance finds that each platform provider needs to differentiate its platform by attracting high-status developers and by providing third-party developers with toolkits that encourage them to develop exclusive titles.

The Role of Indirect Network Effects in Explaining Platform Dominance in the Video Game Industry (2002-2006): A Network Perspective

It is found that platform dominance is positively influenced by a greater variety of links with complementors and lesser degree of overlap with other platforms, and that this impact decreases with platform age.

The Impact Of Platform On Global Video Game Sales

This paper examines video game sales by platform in the global market from a period spanning 2006 through 2011. As the home video game industry has rapidly matured and become established as a…

COMPARING VIDEO GAME SALES BY GAMING PLATFORM

This paper examines video game sales by platform in the North American market from a period spanning 2006 through 2011. As the home video game industry has rapidly matured and become established as a…

Platform selection by software developers: Theory and evidence

Applications Barrier to Entry and Exclusive Vertical Contracts in Platform Markets

Our study extends the empirical literature on whether vertical restraints are anticompetitive. We focus on exclusive contracting in platform markets, which feature indirect network effects and thus…

Dynamics of Platform Competition: Exploring the Role of Installed Base, Platform Quality and Consumer Expectations

This work empirically examines the competition between the Xbox and PlayStation 2 consoles and finds that Xbox has a small quality advantage over PlayStation 2, and that the strength of indirect network effects and the discount factor in this market are within the range in which the market dynamics are quality driven.

References

SHOWING 1-10 OF 17 REFERENCES

Indirect Network Effects and the Product Cycle: Video Games in the U.S., 1994-2002

Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later, and a degree of inertia in the software market that does not exist in the hardware market.

Empirical Analysis of Indirect Network Effects in the Market for Personal Digital Assistants

A combinational logic circuit receives a control signal as input applied from outside the circuit onto a terminal and operates to select one of the fusible elements as a function of a signal applied thereto to adjust the value of the parameter.

INDIRECT NETWORK EFFECTS

It is shown that in markets where consumption benefits arise from hardware/software systems, adoption externalities will occur when there are increasing returns to scale in the production of software, free-entry in software, and consumers have a preference for software variety.

Network effects without network externalities

Critical Mass and Network Size with Application to the Us Fax Market

We analyze the equilibrium size of networks under alternative market structures. Networks are characterized by positive size externalities (commonly called "network externalities"). That is, the…

The Dvd Versus Divx Standard War: Empirical Evidence of Network Effects and Preannouncement Effects

In this Paper, we empirically test for network effects and preannouncement effects in the DVD market. We do this by measuring the effect of potential (incompatible) competition on a network…

Hedonic Price Indexes for Spreadsheets and an Empirical Test for Network Externalities

In this article, I first estimate hedonic price equations for computer spreadsheet programs, and then use the analysis to empirically test whether network externalities exist in this industry. The…

The Dynamics of Technological Adoption in Hardware/Software Systems

A dynamic model for estimating demand when costs (and license prices) are declining over time is developed and it is found that there is "two-way" feedback between hardware and software for compact disc players.

Monopolistic competition and optimum product diversity

Pettengill tests whether there is an excessive number of firms in a monopolistically competitive equilibrium by a device of considerable expository merit. He removes one firm, and redistributes the…

An Economist's Guide to U

We analyze the central economic issues raised by U.S. v Microsoft. Network effects and economies of scale in applications programs created a barrier to entry for new operating system competitors,…