The effects of installed base innovativeness and recency on content sales in a platform-mediated market

Abstract

Buying behavior in the video game market can be conceptualized as a two-stage process where users first purchase a console and then purchase content for that console. As a result, the sales of consoles and content in this market are interdependent and together form a platform-mediated market. Established research on platform-mediated markets has highlighted the effects of installed base size (or the number of consumer who have adopted the platform) on content sales. In other words, how does the number of console users impact sales of content designed for that platform? Here, we extend the research on installed base effects on content sales by examining two characteristics of installed bases: installed base innovativeness and recency. Installed base innovativeness is defined by the proportion of the installed base that adopted the platform early in the platform product’s lifecycle. Installed base recency is defined as the proportion of the installed base that adopted the platform in recent weeks. We find that installed bases with higher innovativeness or higher recency purchase more content than less innovative or lower recency installed bases. We also find that installed base recency has a larger positive effect on content sales when an installed base is less innovative. These results suggest that content sales depend on more than just installed base size. In fact, there may be opportunities to increase content sales by releasing new content not just when the installed base is at its largest, but also when the installed base is considered more innovative and recent.