2 research outputs found
Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market
This paper investigates the scope of indirect network effects in the
home video game industry. We argue that the increasing prevalence of
non-exclusive software gives rise to indirect network effects that exist
between users of competing and incompatible hardware platforms. This is
because software non-exclusivity, like hardware compatibility, allows a
software firm to sell to a market broader than a single platform's
installed base, leading to a dependence of any particular platform's
software on all firms' installed bases. We look for evidence of these
market-wide network effects by estimating a model of hardware demand and
software supply. Our software supply equation allows the supply of games
for a particular platform to depend not only on the installed base of
that platform, but also on the installed base of competing platforms.
Our results indicate the presence of both a platform-specific network
effect and -in recent years- a cross-platform (or generation-wide)
network effect. Our finding that the scope of indirect network effects
in this industry has widened suggests one reason that this market, which
is often cited as a canonical example of one with strong indirect
network effects, is no longer dominated by a single platform
Software Exclusivity and the Scope of Indirect Network Effects in the U.S. Home Video Game Market
This paper investigates the scope of indirect network effects in the
home video game industry. We argue that the increasing prevalence of
non-exclusive software gives rise to indirect network effects that exist
between users of competing and incompatible hardware platforms. This is
because software non-exclusivity, like hardware compatibility, allows a
software firm to sell to a market broader than a single platform's
installed base, leading to a dependence of any particular platform's
software on all firms' installed bases. We look for evidence of these
market-wide network effects by estimating a model of hardware demand and
software supply. Our software supply equation allows the supply of games
for a particular platform to depend not only on the installed base of
that platform, but also on the installed base of competing platforms.
Our results indicate the presence of both a platform-specific network
effect and -in recent years- a cross-platform (or generation-wide)
network effect. Our finding that the scope of indirect network effects
in this industry has widened suggests one reason that this market, which
is often cited as a canonical example of one with strong indirect
network effects, is no longer dominated by a single platform