Vertical Integration, Exclusivity and Game Sales Performance in the US Video Game Industry
AbstractThis paper empirically investigates the relation between vertical integration and video game performance in the US video game industry. For this purpose, we use a widely used data set from NPD on video game monthly sales from October 2000 to October 2007. We complement these data with handly collected information on video game developers for all games in the sample and the timing of all mergers and acquisitions during that period. By doing this, we are able to separate vertically integrated games from those that are just exclusive to a platform. First, we show that vertically integrated games produce higher revenues and sell more units at higher prices than independent games. Second, we explore the causal effect of vertical integration and find that, for the average integrated game, most of the difference in performance comes from better release and marketing strategies that soften competition and not from ex-ante differences in video game quality. We also find that exclusivity is associated with lower demand. Our estimates suggest that consumers value vertical integration features in their games between 4 and 34 dollars per game.
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Bibliographic InfoPaper provided by NET Institute in its series Working Papers with number 10-06.
Length: 35 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
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Web page: http://www.NETinst.org/
vertical integration; exclusivity; video games; developer; publisher; platform.;
Other versions of this item:
- Gil, Ricard & Warzynski, Frederic, 2009. "Vertical Integration, Exclusivity and Game Sales Performance in the U.S. Video Game Industry," Working Papers 09-19, University of Aarhus, Aarhus School of Business, Department of Economics.
- Gil, Ricard & Warzynski, Frédéric, 2009. "Vertical Integration, Exclusivity and Game Sales Performance in the U.S. Video Game Industry," MPRA Paper 21049, University Library of Munich, Germany, revised Dec 2009.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
- L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
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