The Effects of Using Existing Brands in Platform Ecosystems

Abstract

In platform ecosystems, the complementors' product brand management could have significant effects on both the innovation management and evolution of platform ecosystems. By contrast, use of existing product brands could have long-term negative effects on platform ecosystems: generation of excessive bias in sales results among complementary goods and reduce variety, decrease of the possibility of radical innovation caused by suppression of the creation of new brands. This study tested how facilitating existing brand use influences these indicators, through an empirical agent-based simulation using a dataset of Japanese video game markets. The results showed that although there are positive effects of using existing brands to acquire a large installed customer base, there are also some negative effects. This study indicated that the influence of the facilitation of brand management is largely determined by the platform owner’s capability for development of complementary goods. When the platform owner is capable of being a market leader in software development, the facilitation of existing brands may have negative effects for these two indicators, even if the brand facilitation is implemented in conjunction with complementors. By contrast, when brand facilitation is implemented by platform owners without market leader capability, these two factors are improved.