Platform Adoption in System Markets: The Roles of Preference Heterogeneity and Consumer Expectations

58 Pages Posted: 23 May 2015 Last revised: 8 Jun 2015

See all articles by Michael Steiner

Michael Steiner

University Witten/Herdecke

Nico Wiegand

VU Amsterdam

Andreas Eggert

University of Paderborn

Klaus Backhaus

University of Münster

Date Written: May 22, 2015

Abstract

Platform-based systems have become the dominant way to market consumer entertainment products. Video games are, for instance, distributed in digital data form, which can only be used on compatible hardware. Network effects drive the diffusion of such systems. This article provides insights into market heterogeneity and the role that expectations of the direct and indirect network effects plays in the game console market. The results of two empirical studies suggest that the console market is strongly fragmented and that the perceptions of network effects differ between the various target segments. The same holds for the importance of consumer expectations: For instance, hardcore gamers make predictions about the future software availability and incorporate these into their current adoption decision, while social gamers care more about the expected potential to interact with others. When introducing novel technologies, platform sponsors can benefit from improved targeting by, for example, providing software selectively, instead of large varieties early on. This study identifies the limits of go-to-market strategies derived from aggregate analyses when dealing with network effects and shows that behavioristic insights should complement them.

Keywords: Network effects, platform adoption, systems markets, expectations management, heterogeneity, video gaming

JEL Classification: M31, C83

Suggested Citation

Steiner, Michael and Wiegand, Nico and Eggert, Andreas and Backhaus, Klaus, Platform Adoption in System Markets: The Roles of Preference Heterogeneity and Consumer Expectations (May 22, 2015). Available at SSRN: https://ssrn.com/abstract=2609402 or http://dx.doi.org/10.2139/ssrn.2609402

Michael Steiner (Contact Author)

University Witten/Herdecke ( email )

Alfred-Herrhausen-Straße 50
Witten, D-58448
Germany

HOME PAGE: http://https://www.uni-wh.de/wirtschaft/lehrstuhl-marketing/

Nico Wiegand

VU Amsterdam ( email )

De Boelelaan 1105
Amsterdam
Netherlands

Andreas Eggert

University of Paderborn ( email )

Warburger Str. 100
Paderborn, D-33098
Germany

Klaus Backhaus

University of Münster ( email )

Am Stadtgraben 13-15
Muenster, D-48143
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
93
Abstract Views
1,236
Rank
415,149
PlumX Metrics