Paid and Free Digital Business Models Innovations in the Video Game Industry

Abstract

Digitalization of distribution has led to the creation of a broad range of digital business models in the video game industry among them freemium, subscription, advertisement, free-to-play. What are the borders of each model and on what economic grounds can we compare them? This paper proposes an interdisciplinary approach based on microeconomics and on business models literature to provide insights into the components and the economic architecture in paid and free business models. This framework enables also to understand recent hybrid paid and free business models in the video game industry.

Keywords: free-to-play, pay-to-play, video games, business model, innovation

JEL Classification: L21, L82, M21, Z1