Platform Competition in the Video Game Console Industry: Impacts of Software Quality and Exclusivity on Market Share

Abstract

This study examines impacts of the complementary products on platform competition, in the context of video game consoles. Using 10-year panel data, the results demonstrate that high-quality software has a disproportionately significant effect on hardware demand. The high-quality exclusive software is an important factor affecting consumers' utility, and it tends to be developed in hardware manufacturers' vertically integrated subsidiaries. In addition, this study also identifies that high-quality multi-homing software plays a role in platform growth in a platform's later stage.