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Intertemporal Demand Spillover Effects on Video Game Platforms

Management Science · Academic Paper · 1 Oct 2020 · Empirical research · Paywalled · Editor's rating: No stars

A hit game on a platform boosts sales of other games in later months, revealing a habit-formation dynamic that platforms can exploit through timed releases and subscription bundling.

Summary

Haviv, Huang and Li study demand spillovers among games on console video game platforms. They find that a 1% rise in sales for one game raises sales of other games the following month, an effect consistent with habit formation that keeps players engaged with the platform. The finding helps explain why platforms run sales events and subscription services offering free games, since these can generate spillover demand across the broader game

Editor's opinion

Narrow platform-economics mechanism paper (video game sales spillover), not a firm-strategy lever.

Key concepts

Indirect network effects · intertemporal spillovers · console video game platforms

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