On Top of The Game? The Double-Edged Sword of Incorporating Social Features into Freemium Products

Strategic Management Journal, 43(6): 1182-1207

40 Pages Posted: 7 May 2019 Last revised: 6 May 2022

See all articles by Joost Rietveld

Joost Rietveld

UCL School of Management

Joe N. Ploog

University College London - UCL School of Management

Date Written: November 12, 2021

Abstract

Freemium products require widespread diffusion for their success. One way to do this is by incorporating social features (e.g., multiplayer functionality, virtual collaboration, ridesharing), which can generate network effects and result in a product becoming a superstar. However, social features can be a double-edged sword: When demand potential for freemium products is large, social features can significantly boost a product’s appeal resulting in more adoption, more usage, and more in-app purchases; but when demand potential is constrained, network effects might fall short and users may feel they are missing out on key aspects of the product. We test this on a sample of 9,700 digital PC games on Steam. Findings contribute to our understanding of network effects, freemium strategies, and superstar products in platform markets.

Keywords: social features; freemium; network effects; platform markets; product strategy; business models

Suggested Citation

Rietveld, Joost and Ploog, Joe Niklas, On Top of The Game? The Double-Edged Sword of Incorporating Social Features into Freemium Products (November 12, 2021). Strategic Management Journal, 43(6): 1182-1207, Available at SSRN: https://ssrn.com/abstract=3381541 or http://dx.doi.org/10.2139/ssrn.3381541

Joost Rietveld (Contact Author)

UCL School of Management ( email )

Level 38, One Canada Square, Canary Wharf
London, E14 5AA
United Kingdom

HOME PAGE: http://www.strategyguide.nl

Joe Niklas Ploog

University College London - UCL School of Management ( email )

One Canada Square
London, E14 5AA
United Kingdom

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