Failure to Launch in Two-Sided Markets: A Study of the U.S. Video Game Market

Zhou, Yiyi

doi:10.2139/ssrn.2163948

Cited by 6 publications

(4 citation statements)

References 54 publications

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“…Lee (2012) examines the impact of vertically integrated and exclusive software on industry structure and welfare in the U.S. video game industry. Zhou (2012) proposes a framework for studying dynamic pricing problems in a two-sided market, and applies it to the U.S. video game industry; she extends the estimation method proposed by Ishihara and Ching (2012) to estimate her model. Both studies abstract away the used video game market.…”

Section: Japanese Video Game Industrymentioning

confidence: 99%

Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games

Ishihara

Ching

2012

SSRN Journal

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For information/digital products, the used goods market has been viewed as a threat by producers. However, it is not clear if this view is justified because the used goods market also provides owners with an opportunity to sell their products. To investigate the impact of the used goods market on new goods sales, we collect a unique data set from the Japanese video game market. Based on the data, we develop and estimate a new dynamic structural model of consumers' buying and selling decisions. The estimation results show that the consumption value of owners depreciates much faster than that of potential buyers, and consumers are heterogeneous in transaction costs of buying and selling used copies. We also find evidence that new and used copies are not close substitutes, and consumers are forward-looking. The latter suggests that the future resale opportunity could increase consumers' willingness-to-pay for new copies. Using the estimates, we quantify the impact of eliminating the used game market on publishers' profits. We find that this policy would reduce the average profits per game by 10% if publishers do not adjust their prices. However, if they adjust prices optimally, it would increase the average profits per game by 19%.

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Section: Japanese Video Game Industrymentioning

confidence: 99%

Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games

Ishihara

Ching

2012

SSRN Journal

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“…The latter generates lower profit margins for the console manufacturer, but third party developers bring many highly desirable games franchises and products to the console, making it more attractive for users. Console manufacturers are therefore central players in a two-way "platform" marketplace (Zhou, 2012). This places them within a complex set of partnerships and dependencies.…”

Section: Case Studiesmentioning

confidence: 99%

How Systems Engineering and Systems Thinking Enable Innovation

Beasley

Ingram

2020

INCOSE International Symp

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There are many significant challenges facing the world, necessitating innovative and effective systems and products to enable a prosperous and sustainable future. However, successful delivery of innovative systems is very difficult. We argue that appropriate application of Systems Engineering and Systems Thinking plays a critical role in ensuring innovations have the best chance of success. Although many innovation methodologies exist, few incorporate the concepts or vocabulary of Systems Thinking in a structured way. This paper attempts to rectify this, by taking some basic innovation concepts and a simple structured approach to thinking about the system and its wider environment, and showing how they can be integrated in order to augment innovation processes with Systems Thinking concepts. Through applying Systems Engineering principles to the innovation context we identify innovation traps that may arise when failing to think about a system in its wider context, and we provide detailed case studies to illustrate our points.

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Section: Japanese Video Game Industrymentioning

confidence: 99%

Dynamic Demand for New and Used Durable Goods Without Physical Depreciation: The Case of Japanese Video Games

Ishihara

Ching

2019

Marketing Science

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For information/digital products, the used goods market has been viewed as a threat by producers. However, it is not clear if this view is justified because the used goods market also provides owners with an opportunity to sell their products. To investigate the impact of the used goods market on new goods sales, we collect a unique data set from the Japanese video game market. Based on the data, we develop and estimate a new dynamic structural model of consumers' buying and selling decisions. The estimation results show that the consumption value of owners depreciates much faster than that of potential buyers, and consumers are heterogeneous in transaction costs of buying and selling used copies. We also find evidence that new and used copies are not close substitutes, and consumers are forward-looking. The latter suggests that the future resale opportunity could increase consumers' willingness-to-pay for new copies. Using the estimates, we quantify the impact of eliminating the used game market on publishers' profits. We find that this policy would reduce the average profits per game by 10% if publishers do not adjust their prices.However, if they adjust prices optimally, it would increase the average profits per game by 19%.

show abstract

Failure to Launch in Two-Sided Markets: A Study of the U.S. Video Game Market

Cited by 6 publications

References 54 publications

Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games

Dynamic Demand for New and Used Durable Goods without Physical Depreciation: The Case of Japanese Video Games

How Systems Engineering and Systems Thinking Enable Innovation

Dynamic Demand for New and Used Durable Goods Without Physical Depreciation: The Case of Japanese Video Games

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