IDEAS home Printed from https://ideas.repec.org/a/kap/jculte/v42y2018i1d10.1007_s10824-016-9276-7.html
   My bibliography  Save this article

Strategic timing of entry: evidence from video games

Author

Listed:
  • Benjamin Engelstätter

    (Zentrum für Europäische Wirtschaftsforschung
    Hochschule Darmstadt)

  • Michael R. Ward

    (Zentrum für Europäische Wirtschaftsforschung
    University of Texas at Arlington)

Abstract

This paper investigates how video game publishers’ choice of game release date is affected by the expected level of competition within the game’s product niche. We identify game niches by genre, age-appropriateness, console system, a release cohort, and publisher. First, we show that games are more likely to be released so as to avoid weeks when their niche already faces competition. Next, we show that consumer substitution across games is stronger within most of the dimensions describing product niches. Sales volumes decay quickly after the opening weekend, so at any point in time, a niche will typically be served by few current titles. From this, we calculate that delaying game release 1 week yields substantial increase in revenue for a video game facing higher-than-average competition.

Suggested Citation

  • Benjamin Engelstätter & Michael R. Ward, 2018. "Strategic timing of entry: evidence from video games," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(1), pages 1-22, February.
    • Handle: RePEc:kap:jculte:v:42:y:2018:i:1:d:10.1007_s10824-016-9276-7
    DOI: 10.1007/s10824-016-9276-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10824-016-9276-7
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10824-016-9276-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 217-235.
    2. Ricard Gil & Frederic Warzynski, 2015. "Vertical Integration, Exclusivity, and Game Sales Performance in the US Video Game Industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(suppl_1), pages 143-168.
    3. Douglas, George W & Miller, James C, III, 1974. "Quality Competition, Industry Equilibrium, and Efficiency in the Price-Constrained Airline Market," American Economic Review, American Economic Association, vol. 64(4), pages 657-669, September.
    4. David A. Reinstein & Christopher M. Snyder, 2005. "The Influence Of Expert Reviews On Consumer Demand For Experience Goods: A Case Study Of Movie Critics," Journal of Industrial Economics, Wiley Blackwell, vol. 53(1), pages 27-51, March.
    5. Orbach, Barak Y. & Einav, Liran, 2007. "Uniform prices for differentiated goods: The case of the movie-theater industry," International Review of Law and Economics, Elsevier, vol. 27(2), pages 129-153.
    6. Demsetz, Harold, 1973. "Industry Structure, Market Rivalry, and Public Policy," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 1-9, April.
    7. Barrie R. Nault & Mark B. Vandenbosch, 1996. "Eating Your Own Lunch: Protection Through Preemption," Organization Science, INFORMS, vol. 7(3), pages 342-358, June.
    8. Matthew T. Clements & Hiroshi Ohashi, 2005. "Indirect Network Effects And The Product Cycle: Video Games In The U.S., 1994–2002," Journal of Industrial Economics, Wiley Blackwell, vol. 53(4), pages 515-542, December.
    9. Paul L. Joskow, 1980. "The Effects of Competition and Regulation on Hospital Bed Supply and the Reservation Quality of the Hospital," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 421-447, Autumn.
    10. Claussen, Jörg & Kretschmer, Tobias & Spengler, Thomas, 2010. "Backward Compatibility to Sustain Market Dominance – Evidence from the US Handheld Video Game Industry," Discussion Papers in Business Administration 11499, University of Munich, Munich School of Management.
    11. Yong Chao & Timothy Derdenger, 2013. "Mixed Bundling in Two-Sided Markets in the Presence of Installed Base Effects," Management Science, INFORMS, vol. 59(8), pages 1904-1926, August.
    12. Glen L. Urban & Philip L. Johnson & John R. Hauser, 1984. "Testing Competitive Market Structures," Marketing Science, INFORMS, vol. 3(2), pages 83-112.
    13. Rodríguez-Pinto, Javier & Carbonell, Pilar & Rodríguez-Escudero, Ana I., 2011. "Speed or quality? How the order of market entry influences the relationship between market orientation and new product performance," International Journal of Research in Marketing, Elsevier, vol. 28(2), pages 145-154.
    14. Klepper, Steven & Leamer, Edward E, 1984. "Consistent Sets of Estimates for Regressions with Errors in All Variables," Econometrica, Econometric Society, vol. 52(1), pages 163-183, January.
    15. Craig Palsson & Joseph Price & Jared Shores, 2013. "Ratings And Revenues: Evidence From Movie Ratings," Contemporary Economic Policy, Western Economic Association International, vol. 31(1), pages 13-21, January.
    16. Harald J. van Heerde & Shuba Srinivasan & Marnik G. Dekimpe, 2010. "Estimating Cannibalization Rates for Pioneering Innovations," Marketing Science, INFORMS, vol. 29(6), pages 1024-1039, 11-12.
    17. K. Sridhar Moorthy & I. P. L. Png, 1992. "Market Segmentation, Cannibalization, and the Timing of Product Introductions," Management Science, INFORMS, vol. 38(3), pages 345-359, March.
    18. P. Belleflamme & D. Paolini, 2015. "Strategic Promotion and Release Decisions for Cultural Goods," Working Paper CRENoS 201508, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    19. Timothy J. Richards & Stephen F. Hamilton, 2006. "Rivalry in Price and Variety among Supermarket Retailers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(3), pages 710-726.
    20. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    21. Gurumurthy Kalyanaram & Glen L. Urban, 1992. "Dynamic Effects of the Order of Entry on Market Share, Trial Penetration, and Repeat Purchases for Frequently Purchased Consumer Goods," Marketing Science, INFORMS, vol. 11(3), pages 235-250.
    22. Amit Gandhi & Luke Froeb & Steven Tschantz & Gregory J. Werden, 2008. "Post‐Merger Product Repositioning," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 49-67, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christopher S. Brunt & Amanda S. King & John T. King, 2020. "The influence of user-generated content on video game demand," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(1), pages 35-56, March.
    2. Cristina Mihale-Wilson & Patrick Felka & Oliver Hinz & Martin Spann, 2022. "The Impact of Strategic Core-Component Reuse on Product Life Cycles," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 64(2), pages 223-237, April.
    3. P. Belleflamme & D. Paolini, 2015. "Strategic Promotion and Release Decisions for Cultural Goods," Working Paper CRENoS 201508, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    4. Franziska Handrich & Sven Heidenreich & Tobias Kraemer, 2022. "Innovate or game over? Examining effects of product innovativeness on video game success," Electronic Markets, Springer;IIM University of St. Gallen, vol. 32(2), pages 987-1002, June.
    5. Paul Belleflamme & Dimitri Paolini, 2019. "Strategic attractiveness and release decisions for cultural goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 28(2), pages 198-224, April.
    6. Amy Whitaker, 2021. "Economies of scope in artists’ incubator projects," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 45(4), pages 613-631, December.
    7. Oliver Schaer & Nikolaos Kourentzes & Robert Fildes, 2022. "Predictive competitive intelligence with prerelease online search traffic," Production and Operations Management, Production and Operations Management Society, vol. 31(10), pages 3823-3839, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martin Gaynor, "undated". "What Do We Know About Competition and Quality in Health Care Markets?," GSIA Working Papers 2006-E62, Carnegie Mellon University, Tepper School of Business.
    2. Dürr, Niklas S. & Engelstätter, Benjamin & Ward, Michael R., 2018. "Strategic microscheduling of movies," ZEW Discussion Papers 17-033, ZEW - Leibniz Centre for European Economic Research, revised 2018.
    3. Peters, Frank, 2018. "The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries," Other publications TiSEM 886b3148-4bbb-4ea4-b666-0, Tilburg University, School of Economics and Management.
    4. Masakazu Ishihara & Eitan Muller, 2020. "Software piracy and outsourcing in two-sided markets," Quantitative Marketing and Economics (QME), Springer, vol. 18(1), pages 61-124, March.
    5. Siebert Ralph B, 2010. "Learning-by-Doing and Cannibalization Effects at Multi-Vintage Firms: Evidence from the Semiconductor Industry," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-32, May.
    6. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    7. Nilsson, Tomas K.H. & Foster, Kenneth A., 2005. "Certification of Pork Products," 2005 Annual meeting, July 24-27, Providence, RI 19350, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Michelle Haynes & Steve Thompson & Peter W. Wright, 2014. "New Model Introductions, Cannibalization and Market Stealing: Evidence from Shopbot Data," Manchester School, University of Manchester, vol. 82(4), pages 385-408, July.
    9. Jordi McKenzie, 2023. "The economics of movies (revisited): A survey of recent literature," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 480-525, April.
    10. Zhang, Yibin & Hafezi, Maryam & Zhao, Xuan & Shi, Victor, 2017. "Reprint of “The impact of development cost on product line design and its environmental performance”," International Journal of Production Economics, Elsevier, vol. 194(C), pages 126-134.
    11. Kopalle, Praveen K. & Pauwels, Koen & Akella, Laxminarayana Yashaswy & Gangwar, Manish, 2023. "Dynamic pricing: Definition, implications for managers, and future research directions," Journal of Retailing, Elsevier, vol. 99(4), pages 580-593.
    12. Luca Aguzzoni & Elena Argentesi & Paolo Buccirossi & Lorenzo Ciari & Tomaso Duso & Massimo Tognoni & Cristiana Vitale, 2013. "They Played the Merger Game: A Retrospective Analysis in the UK Videogames Market," Discussion Papers of DIW Berlin 1330, DIW Berlin, German Institute for Economic Research.
    13. José A. Novo‐Peteiro, 2023. "Product design with attribute dependence," Manchester School, University of Manchester, vol. 91(4), pages 361-385, July.
    14. Steven Berry & Alon Eizenberg & Joel Waldfogel, 2016. "Optimal product variety in radio markets," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 463-497, August.
    15. Argentesi, Elena & Buccirossi, Paolo & Cervone, Roberto & Duso, Tomaso & Marrazzo, Alessia, 2021. "The effect of mergers on variety in grocery retailing," International Journal of Industrial Organization, Elsevier, vol. 79(C).
    16. Chih-yi Chi, Woody & Wu, Shufen, 2006. "Intertemporal quality discrimination of a durable good monopolist," Economics Letters, Elsevier, vol. 92(2), pages 184-191, August.
    17. Yan, Xiaoming & Zhao, Wenhan & Yu, Yugang, 2022. "Optimal product line design with reference price effects," European Journal of Operational Research, Elsevier, vol. 302(3), pages 1045-1062.
    18. Christian Stummer & Dennis Kundisch & Reinhold Decker, 2018. "Platform Launch Strategies," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 60(2), pages 167-173, April.
    19. Julian Birkinshaw & Mats Lingblad, 2005. "Intrafirm Competition and Charter Evolution in the Multibusiness Firm," Organization Science, INFORMS, vol. 16(6), pages 674-686, December.
    20. Amit Basu & Sreekumar Bhaskaran, 2018. "An Economic Analysis of Customer Co-design," Information Systems Research, INFORMS, vol. 29(4), pages 787-804, December.

    More about this item

    Keywords

    Product entry; Non-price competition; Niche strategy; Video games;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jculte:v:42:y:2018:i:1:d:10.1007_s10824-016-9276-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.