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- Title
Intertemporal Demand Spillover Effects on Video Game Platforms.
- Authors
Haviv, Avery; Huang, Yufeng; Li, Nan
- Abstract
Many platform strategies focus on indirect network effects between sellers through platform expansion. In this paper, we show sellers on the console video game platform generate a positive intertemporal spillover effect and expand the demand for other sellers, holding the set of platform adopters fixed. We propose a novel identification strategy that leverages exogenous variation in the release timing of games exclusively available on a console platform, and examine how this variation affects the sales of games available on both platforms. We find a sizable intertemporal demand spillover effect between games: A 1% increase in total copies sold on a platform leads to a 0.153% increase in the sales of other games in the next month (i.e., an elasticity of 0.153). Additional analysis suggests this demand spillover effect is reminiscent of habit formation on the consumer side, in that past purchases keep end users active on the platform. Our finding provides a potential explanation for recent platform sales events and subscription services that provide free games to consumers every month. This paper was accepted by Eric Anderson, marketing.
- Subjects
VIDEO games; VIDEO game consoles; ECONOMIC demand; NETWORK effect; SUBSCRIPTION services
- Publication
Management Science, 2020, Vol 66, Issue 10, p4788
- ISSN
0025-1909
- Publication type
Article
- DOI
10.1287/mnsc.2019.3414