In many industries, success does not depend exclusively on price, quality, and functionality. In the multi-sided video game market, the install base (direct network externality) and availability and compatibility of games (indirect network externality) are also crucial. This simulation is based on the MIT Sloan case study Sony’s Battle for Video Game Sumpremecy.
Students play the role of senior management at a video game hardware platform producer, seeking to maximize profits. Students set prices for their gaming console and royalty rates for game designers as they try to simultaneously grow their install base and grow the ecosystem of complementary products and games.
Facilitators can adjust settings to focus on particular scenarios, including timing of competitor entry into the market, strategies used by the competitors, and costs of migrating games between platforms. Competitors are played by the computer based on settings chosen by the facilitator.
- Experience the challenges of strategic competition in multi-sided markets
- Understand the impacts of direct and indirect network externalities
- Strategic Competition
- Multi-sided Markets
- Direct and Indirect Network Externalities
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