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Vertical Integration, Exclusivity, and Game Sales Performance in the US Video Game Industry

Author

Listed:
  • Ricard Gil
  • Frederic Warzynski

Abstract

This article empirically investigates the relation between vertical integration and game performance in the US video game industry. For this purpose, we use a data set on video game monthly sales from 2000 to 2007. We complement these data with information on game developers and the timing of all mergers and acquisitions during that period allowing us to separate vertically integrated games from independent games exclusive to a platform. First, we show that integrated games are associated with higher sales and higher prices than independent games. Second, we find suggestive evidence that most of the difference in performance is due to better release strategies and selection in game quality. We show that post-release marketing strategies do not seem to add value to vertically integrated games. Finally, we also find that exclusivity is associated with lower demand and higher prices due to lower inherent quality and better release strategies, respectively. (JEL L22, L24, L25, L86).

Suggested Citation

  • Ricard Gil & Frederic Warzynski, 2015. "Vertical Integration, Exclusivity, and Game Sales Performance in the US Video Game Industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(suppl_1), pages 143-168.
    • Handle: RePEc:oup:jleorg:v:31:y:2015:i:suppl_1:p:i143-i168.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewu006
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    Citations

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    Cited by:

    1. Marissa Beck & Fiona Scott Morton, 2021. "Evaluating the Evidence on Vertical Mergers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(2), pages 273-302, September.
    2. Kim, Jin-Hyuk & Prince, Jeffrey & Qiu, Calvin, 2014. "Indirect network effects and the quality dimension: A look at the gaming industry," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 99-108.
    3. L. Aguzzoni & E. Argentesi & P. Buccirossi & L. Ciari & T. Duso & M. Tognoni & C. Vitale, 2013. "They Played the Merger Game: A Retrospective Analysis in the UK Videogames Market," Working Papers wp908, Dipartimento Scienze Economiche, Universita' di Bologna.
    4. Yuchen Zhang & Jingjing Li & Tony W. Tong, 2022. "Platform governance matters: How platform gatekeeping affects knowledge sharing among complementors," Strategic Management Journal, Wiley Blackwell, vol. 43(3), pages 599-626, March.
    5. Christopher S. Brunt & Amanda S. King & John T. King, 2020. "The influence of user-generated content on video game demand," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 44(1), pages 35-56, March.
    6. Haucap, Justus & Stiebale, Joel, 2023. "Non-price effects of mergers and acquisitions," DICE Discussion Papers 402, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Peters, Frank, 2018. "The business of video games is a multi-player game : Essays on governance choices and performance in a two-sided market in the cultural industries," Other publications TiSEM 886b3148-4bbb-4ea4-b666-0, Tilburg University, School of Economics and Management.
    8. Masakazu Ishihara & Eitan Muller, 2020. "Software piracy and outsourcing in two-sided markets," Quantitative Marketing and Economics (QME), Springer, vol. 18(1), pages 61-124, March.
    9. Parker, Owen N. & Mui, Rachel & Bhawe, Nachiket & Semadeni, Matthew, 2022. "Insight or ignorance: How collaborative history in a workgroup fits with project type to shape performance," Journal of Business Research, Elsevier, vol. 152(C), pages 154-167.
    10. Benjamin Engelstätter & Michael R. Ward, 2018. "Strategic timing of entry: evidence from video games," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(1), pages 1-22, February.
    11. Yi, Jisu & Lee, Youseok & Kim, Sang-Hoon, 2019. "Determinants of growth and decline in mobile game diffusion," Journal of Business Research, Elsevier, vol. 99(C), pages 363-372.
    12. Venkat Kuppuswamy & Carliss Y. Baldwin, 2012. "Risky Business: The Impact of Property Rights on Investment and Revenue in the Film Industry," Harvard Business School Working Papers 13-007, Harvard Business School, revised Aug 2012.
    13. Akifumi Ishihara & Ryoko Oki, 2021. "Exclusive content in two‐sided markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(3), pages 638-654, August.

    More about this item

    JEL classification:

    • 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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