Bug Fixes or New Features: Version Release Management for Free and Paid Game Apps

Abstract

This paper seeks to understand how the release of functional and non-functional version up-dates can drive user engagement with an app and how the impact differs for free and paid mobile game apps. We use text-mining to differentiate between functional version updates, which focus on the functionality of an app, such as introducing new features, and non-functional version updates that seek to improve the quality of an app by addressing performance-related issues. We view that user expectations for the release of functional and non-functional version updates would differ for free and paid apps, which, in turn, will lead to different effects on user engagement. This research consists of two studies. Study 1 draws from longitudinal, observational data to examine the differ-ential effects of continuous product improvement through the release of functional/non-functional version updates for free/paid apps. Based on version-level difference-in-differences (DID) and dai-ly app-level panel data analyses, we found that the impact of the release of version updates on user engagement is contingent on the type of version update and the associated monetization model of mobile apps. Study 2 is a controlled experiment that sheds light on user beliefs associated with functional/non-functional version updates for free/paid apps. Our findings indicate that app version release management plays a salient role in an app’s marketplace success through enhancing user engagement and the optimal release planning is contingent on the monetization model of the app and the associated user expectations and valuation models.

Keywords: mobile applications, version update management, free and paid products, daily active users

JEL Classification: M15,P16,O32