In markets for entertainment media such as music, films, books or video games there is usually a steady influx of new products. We also observe strong fluctuations in consumer demand. Sales figures are often at their highest shortly after the release of a new product and then fall steadily leading to very short product life cycles.
Although prices in these markets vary over time, less variation is observed than might be justified by the differences in demand. Accordingly, firms make strategic decisions based on both the characteristics and the price of a product. Approaching the release date of a new product, a company facing strong competitive pressure may either adjust the price or move the release date. If product life cycles are short, delaying the release of a product until the competitive environment has improved might be a more attractive option than reducing the price. Therefore, we analyze the strategic release of products in the video games industry.
An empirical analysis based on recent data on video game sales shows that video games publishers are highly specialized with regard to dimensions of product differentiation such as game genre, gaming console or content for certain age groups. The analysis shows that consumers are more willing to substitute between games that share the same characteristics in terms of genre, gaming console, and content for certain age groups than between games featuring different characteristics. We also find evidence that release dates are adjusted strategically to avoid times when the market for games on a certain console is saturated.
Articles in Refereed Journals
Engelstätter, Benjamin and Michael R. Ward (2016), Strategic Timing of Entry: Evidence from Video Games, Journal of Cultural Economics Volume 62, Issue 1, 1-22. Download
Discussion and Working Papers
Engelstätter, Benjamin and Michael R. Ward (2013), Strategic Timing of Entry: Evidence from Video Games, ZEW Discussion Paper No. 13-117, Mannheim. Download
01.08.2011 - 31.12.2012
Prof. Dr. Benjamin Engelstätter
Prof. Michael R. Ward, University of Texas at Arlington, Arlington, TX, US