This document discusses how platform ecosystems evolve over time through changes in platform design, governance strategies, and the exogenous evolution of users and developers. As platforms grow larger, they gain bargaining power over developers and provide less overall support. Late adopters on platforms have lower risk tolerance and preference for novelty compared to early adopters. The number of developers entering platforms increases over time, reducing the average potential market for each new app or game. This affects how developers create, capture, and distribute value on platforms over the lifecycle. Strategies are discussed for how developers and platform owners can address these evolutionary dynamics.
1. Standard wars and competition in technology platformsJoost Rietveld
First slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform competition and discusses why there's often one dominant firm or product in technology battles.
More info: http://www.strategyguide.nl/teaching/
Fifth slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform market structures by looking at superstar and long-tail market distributions in platform ecosystems.
More info: http://www.strategyguide.nl/teaching/
Third slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform governance and discusses the delicate subject of value creation and value capture in platform ecosystems.
More info: http://www.strategyguide.nl/teaching/
Strategies for superior market performance of games and appsJoost Rietveld
Slide deck on platform market analysis and strategic positioning for (serious) games and app developers. Prepared as a master's level guest lecture at the University of Groningen (July-'18).
Second slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of two-sided platform markets and discusses their underlying economics, which have proven Nobel prize worthy.
More info: http://www.strategyguide.nl/teaching/
Sixth slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of the sharing economy and focuses on how sharing economy platforms create value and compete with traditional markets (e.g., Uber vs. Taxis).
More info: http://www.strategyguide.nl/teaching/
SOFTWARE PLATFORM STRATEGY @The 5th International Symposium on Operations Man...FusionDesign Inc.
SOFTWARE PLATFORM STRATEGY with deep integration of complementary technologies
-A case of enterprise integration system -
@The 5th International Symposium on Operations Management and Strategy 2015
1. Standard wars and competition in technology platformsJoost Rietveld
First slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform competition and discusses why there's often one dominant firm or product in technology battles.
More info: http://www.strategyguide.nl/teaching/
Fifth slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform market structures by looking at superstar and long-tail market distributions in platform ecosystems.
More info: http://www.strategyguide.nl/teaching/
Third slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of platform governance and discusses the delicate subject of value creation and value capture in platform ecosystems.
More info: http://www.strategyguide.nl/teaching/
Strategies for superior market performance of games and appsJoost Rietveld
Slide deck on platform market analysis and strategic positioning for (serious) games and app developers. Prepared as a master's level guest lecture at the University of Groningen (July-'18).
Second slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of two-sided platform markets and discusses their underlying economics, which have proven Nobel prize worthy.
More info: http://www.strategyguide.nl/teaching/
Sixth slide deck of six for Master's level course on Competitive Strategies Within and Between Platform Markets. This lecture introduces the concept of the sharing economy and focuses on how sharing economy platforms create value and compete with traditional markets (e.g., Uber vs. Taxis).
More info: http://www.strategyguide.nl/teaching/
SOFTWARE PLATFORM STRATEGY @The 5th International Symposium on Operations Man...FusionDesign Inc.
SOFTWARE PLATFORM STRATEGY with deep integration of complementary technologies
-A case of enterprise integration system -
@The 5th International Symposium on Operations Management and Strategy 2015
Product Lines and Ecosystems: from customization to configurationAdaCore
Digitalization is concerned with a fundamental shift in value delivery to customers from transactional to continuous. For R&D this requires adopting processes such as DevOps and continuous deployment. Systems engineering companies using platforms need to adjust their ways of working and be cognisant of the role of the ecosystem surrounding them to capitalize on this transformation. The keynote talk will discuss these developments and provide industrial examples from Software Center, a collaboration between 17 large, international companies and five universities with the intent of accelerating the digital transformation of the European software intensive industry.
Print Money Like Mark Zuckerberg: Understanding Platform EconomicsAndreas Goeldi
Everybody wants to build a platform – the term has become inflationary in startup and innovation circles. That’s understandable because successful platforms are amongst the most profitable and most rapidly growing businesses in the world.
However, building a successful platform is exceedingly risky and difficult. A thorough understanding of platform economics is key (that’s one of the things Mark Zuckerberg excels at, BTW).
This presentation provides an introduction to platform economics and covers major topics such as network effects, winner-takes-all effects, growth mechanisms and strategies for complementors
Standards Battles and Design DominanceFadli Luthfi
2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Don't get Ubered. What Every Strategist Needs to Know About Digital CompetitionApigee | Google Cloud
Bryan Kirschner, Apigee
Annabelle Gawer, University of Surrey
Tech giants like Amazon and Apple. Start ups like Uber. Or resurgent Fortune 500s. Learn the key attributes that differentiate digital disruptors from those at risk of disruption themselves.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
OTT Platform Development Cost And Features In India.docxSuganya Mathivanan
Over-The-Top (OTT) platforms has transformed the entertainment industry, offering users a wide range of digital content anytime, anywhere. In India, the recognition of OTT platforms has skyrocketed in the latest years, fueled by means of increasing internet penetration, low cost statistics plans, and the call for personalised and on-demand content. This article targets to provide an outline of the development cost and key functions concerned in constructing an OTT platform in India.
A look at the shifting architecture of embedded systems (particularly in light of IoT and wearables), how ecosystems are built and how the industry is evolving
The simplified electron and muon model, Oscillating Spacetime: The Foundation...RitikBhardwaj56
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
Product Lines and Ecosystems: from customization to configurationAdaCore
Digitalization is concerned with a fundamental shift in value delivery to customers from transactional to continuous. For R&D this requires adopting processes such as DevOps and continuous deployment. Systems engineering companies using platforms need to adjust their ways of working and be cognisant of the role of the ecosystem surrounding them to capitalize on this transformation. The keynote talk will discuss these developments and provide industrial examples from Software Center, a collaboration between 17 large, international companies and five universities with the intent of accelerating the digital transformation of the European software intensive industry.
Print Money Like Mark Zuckerberg: Understanding Platform EconomicsAndreas Goeldi
Everybody wants to build a platform – the term has become inflationary in startup and innovation circles. That’s understandable because successful platforms are amongst the most profitable and most rapidly growing businesses in the world.
However, building a successful platform is exceedingly risky and difficult. A thorough understanding of platform economics is key (that’s one of the things Mark Zuckerberg excels at, BTW).
This presentation provides an introduction to platform economics and covers major topics such as network effects, winner-takes-all effects, growth mechanisms and strategies for complementors
Standards Battles and Design DominanceFadli Luthfi
2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
Don't get Ubered. What Every Strategist Needs to Know About Digital CompetitionApigee | Google Cloud
Bryan Kirschner, Apigee
Annabelle Gawer, University of Surrey
Tech giants like Amazon and Apple. Start ups like Uber. Or resurgent Fortune 500s. Learn the key attributes that differentiate digital disruptors from those at risk of disruption themselves.
By 2014, there were 6.6 billion mobile phone subscriptions in the world, and of those, 2.3 billion had active mobile broadband subscriptions that would enable users to access the mobile web.a Mobile payment systems offered the potential of enabling all of these users to perform financial transactions on their phones, similar to how they would perform those transactions using personal computers. However, in 2015, there was no dominant mobile payment system, and a battle among competing mobile payment mechanisms and standards was unfolding. In the United States, several large players, including Apple, Samsung, and a joint venture called Softcard between Google, AT&T, T-Mobile, and Verizon Wireless, had
developed systems based on Near Field Communication (NFC) chips in smartphones. NFC chips enable communication between a mobile device and a point-of-sale system just by having the devices in close proximity.b The systems being developed by Apple, Samsung, and Softcard transferred the customer’s information wirelessly and then used merchant banks and credit card systems such as Visa or MasterCard to complete the transaction. These systems were thus very much like existing ways of
using credit cards but enabled completion of the purchase without contact.
OTT Platform Development Cost And Features In India.docxSuganya Mathivanan
Over-The-Top (OTT) platforms has transformed the entertainment industry, offering users a wide range of digital content anytime, anywhere. In India, the recognition of OTT platforms has skyrocketed in the latest years, fueled by means of increasing internet penetration, low cost statistics plans, and the call for personalised and on-demand content. This article targets to provide an outline of the development cost and key functions concerned in constructing an OTT platform in India.
A look at the shifting architecture of embedded systems (particularly in light of IoT and wearables), how ecosystems are built and how the industry is evolving
The simplified electron and muon model, Oscillating Spacetime: The Foundation...RitikBhardwaj56
Discover the Simplified Electron and Muon Model: A New Wave-Based Approach to Understanding Particles delves into a groundbreaking theory that presents electrons and muons as rotating soliton waves within oscillating spacetime. Geared towards students, researchers, and science buffs, this book breaks down complex ideas into simple explanations. It covers topics such as electron waves, temporal dynamics, and the implications of this model on particle physics. With clear illustrations and easy-to-follow explanations, readers will gain a new outlook on the universe's fundamental nature.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Safalta Digital marketing institute in Noida, provide complete applications that encompass a huge range of virtual advertising and marketing additives, which includes search engine optimization, virtual communication advertising, pay-per-click on marketing, content material advertising, internet analytics, and greater. These university courses are designed for students who possess a comprehensive understanding of virtual marketing strategies and attributes.Safalta Digital Marketing Institute in Noida is a first choice for young individuals or students who are looking to start their careers in the field of digital advertising. The institute gives specialized courses designed and certification.
for beginners, providing thorough training in areas such as SEO, digital communication marketing, and PPC training in Noida. After finishing the program, students receive the certifications recognised by top different universitie, setting a strong foundation for a successful career in digital marketing.
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Introduction to AI for Nonprofits with Tapp NetworkTechSoup
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A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
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A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
Thesis Statement for students diagnonsed withADHD.ppt
4. Complementor competition
1. Platform Competition and
the Product Lifecycle
Competitive Strategies Within and Between Platform Markets
Lecture 4
Joost Rietveld | University College London (UCL)
2.
3. Watch Dogs’ first month unit sales
2.22
4.15
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Seventh Generation (IB = 167m) Eighth Generation (IB = 17m)
Unitsales(millions)
Ubisoft’s Watch Dogs sold nearly twice as many copies in its
first month on eight generation platforms than it did on
seventh generation platforms, despite the nearly ten times
larger user-base on seventh generation platforms.
4.
5. Platforms evolve over time
• Platform ecosystems are dynamic entities that change over time
(Gawer & Cusumano, 2014). Besides endogenous platform evolution
in the form of changes in platform design and governance strategies,
platform ecosystems coevolve through the exogenous evolution of
end-users and complementors (Tiwana et al., 2010):
• Platforms as regulators
• Platforms as products
• Platforms as markets
• Platform evolution not only affects competition between platforms, it
importantly affects competition within platforms
6. Platforms as regulators
• As platforms grow their user-bases and stock of “killer-apps” over
time, they become increasingly less reliant on new complementors
• Over time platforms gain bargaining power over complementors:
• Necessity to invest in complementors goes down
• Propensity of competing with complementors goes up
• Amplified by complementors’ relative over-entry
• These dynamics are moderated by the platform’s business model:
• Some platforms have end-users as money-side (e.g. Apple iOS, Netflix)
• Some platforms have complementors as money-side (e.g. consoles, Steam)
7. Evolution of governance frameworks
Figure adapted from Johns, 2006; p170.
Platform governance evolution:
• Early on, platforms need complementors to
solve “chicken and egg” problem, resulting in
strong overall support (subsidies, marketing,
selective promotion, contractual terms)
• As platforms evolve and user-base grows,
overall dependency on complementors goes
down and so does platforms’ support
• Support for complementors becomes more
directed later in platform lifecycle, mostly
benefitting a select group of highly reputable
complementors with high quality products
8. Case in point: Apple’s iOS
Overview of governance changes:
2009 Allow for in-app purchases
2010 Allow for in-app advertising
2012 Implement matching of consumers and apps
through Editor’s Choice, Top Charts, Free App of
the Week, and Genius
2013 Enable user reviews for apps
2014 Offer consumers 14 days no-questions asked
refunds on app purchases
2015 Search algorithm optimization improving
matching of popular apps (e.g., taxi Uber)
2016 Introduce paid search results
9. Platforms as products
• Early platform adopters differ from late platform adopters:
• Early platform adopters have a higher willingness-to-pay for innovations than
late platform adopters
• Early platform adopters have a higher preference for novelty and display
lower risk aversion than late platform adopters
• Early platform adopters search deeply and independently for innovations
while late platform adopters search locally and socially
• When a new/next generation platform is introduced to the market,
some consumers (mostly early platform adopters) will migrate
• Complementary goods are contingent adoption decisions
10. Evolution of user-base composition
Early adopters of a technology display
qualitatively different characteristics from
late adopters (Rogers, 2003):
• Early adopters adopt new technologies
(such as platforms) first
• Early adopters have a greater willingness to
pay (heavy vs. light users – McPhee, 1963)
• Early adopters are less risk averse
• Early adopters have a stronger preference
for novelty (innovation)
• Early adopters “dig deep” for new
information about the innovation
• Early adopters are often the first to migrate
to a next generation platform
11. PS3 SKU
timeline
2006: PlayStation 3 launches with 20/60 gb models no
peripheries included in box
2007: 60 gb bundle with two controllers and two games
included (Motorstorm & Resistance)
2008: 80 gb bundle with one game (Metal Gear Solid 4) and
dual shock controller included
2009: 160/320 gb new ‘PS3 Slim’ hardware bundles with one
controller included
2010: 320 gb ‘Move’ bundle with Move hardware, one game
(Sports Champion) and one controller included
2012: 500 gb new ‘Super Slim’ hardware model with one
controller and 1yr PS+ subscription included
Despite constantly lowering the price for PlayStation
3, Sony packed their stock keeping units (SKUs) with
increasingly greater functionality. Furthermore, the
functionality changed (e.g., type of games, hardware).
Both allowed Sony to better serve late adopter
consumers who hadn’t yet purchased a PS3.
12. Platforms as markets
• Most platform complements have very short lifecycles (e.g., months)
whereas most platforms have much longer lifecycles (e.g., years)
• The lifecycle of a complement is thus embedded into the larger
lifecycle, and evolution, of the platform it’s launched on
• Unlike traditional industries (e.g., Klepper, 1996), complementor
entry is easy and marginal costs are low to non-existing
• Complementor competition is further affected by:
1. Stock vs. flow effects (e.g., Kickstarter vs Steam)
2. Category crowding (e.g., games vs dance on Kickstarter)
3. Platform attrition (e.g., apps on iOS)
13. Evolution of platforms and industries
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
0 1 2 3 4 5 6 7 8 9 10 11
Numberoffirms
Firmentry
Time (years from industry founding)
Firm entry
Number of firms
In a traditional production industry, the number of new
entrants first increases and later decreases. Furthermore,
owing to scale advantages and consolidation there is
significant attrition resulting in an overall decline in the
number of firms later in the industry lifecycle.
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
0
500
1000
1500
2000
2500
3000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Numberofpublishers
Publisherentry
Publisher entry
Number of publishers
In a digital platform, such as Valve’s Steam (shown below), the number
of new entrants increases over time as facilitation by the platform and
indirect network effects make it attractive to enter (late). Furthermore,
since there is virtually unlimited shelf space and zero marginal
production costs, there is very little attrition leading to an exponential
growth in the number of firms later in the platform lifecycle.
14. Combining demand and supply shifts
• As the platform gains popularity, complementors keep joining
• Complementors’ average market potential is ultimately determined
by the interplay between supply and demand on the platform:
𝐴𝑝𝑝 𝑚𝑎𝑟𝑘𝑒𝑡 𝑝𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑡 =
𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑖𝑛𝑠𝑡𝑎𝑙𝑙𝑒𝑑 𝑏𝑎𝑠𝑒𝑡
𝐶𝑢𝑚𝑢𝑙𝑎𝑡𝑖𝑣𝑒 𝑎𝑝𝑝 𝑠𝑡𝑜𝑐𝑘 𝑡
• Complementors seem inert to changes on the demand-side (Clements
& Ohashi, 2005), leaving relatively fewer consumers for every
complement as the platform evolves (Rietveld & Eggers, 2017)
15. Case in point: Apple iOS apps
• Worldwide iOS devices
exceeded 1bn in 2015
• Does not control for repeat
device purchases
• Stock of apps in 2015: 1.6m
• Developers’ app market
potential grew from 100 to 750
between 2009 and 2014
• However, their app market
potential been in decline since!
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
0
100
200
300
400
500
600
700
800
900
q3-2008 q3-2009 q3-2010 q3-2011 q3-2012 q3-2013 q3-2014 q3-2015
Numberofapps
iOSdevices-to-apps
Number of apps
iOS devices-to-apps ratio
From 2014, the number of apps on Apple’s iOS started growing
faster than the sales of iOS devices resulting in relatively fewer
potential consumers for every app released. (source: Rietveld, 2018)
16. What are the implications for complementors?
How does this affect value creation, value distribution, and value capture?
17. Recap: Platform evolution
• Platform ecosystems are dynamic entities that evolve over time
• We identified three platform-specific evolutionary dynamics:
1. Evolution of governance mechanisms
• Platforms reduce their dependencies on complementors over time
• Overall decrease in complementor support, favoring the few over the many
2. Evolution of user-base composition
• Over time, more and more end-users enter the platform
• Late adopters, however, have lower WTP, are risk averse, and search less deeply
3. Evolution of complementor competition
• New entry increases over time, little attrition (no shake-outs)
• Later, complementors often enter with greater ferocity than end-users
18. Evolutionary aspect Value creation Distribution of value Value capture
Governance Drop in overall governance
support leads to a reduction in
value creation for
complementors
Directed governance towards
reputable complementors with
high quality products leads to a
skewed value distribution for
complementors
Drop in governance,
threat of platform entry
and absorption, lead to a
reduction in value capture
for complementors
Demand-side shifts Lower WTP, risk aversion, and
migration to next platform lead
to a reduction in value creation
for complementors
Risk and novelty aversion drive
late adopters to a small group of
hits, enhancing the skew in value
distribution for complementors
Lower WTP and migration
to next platform lead to a
reduction in value capture
for complementors
Complementor
competition*
Increase in available
complements leads to an
average decrease in value
creation for complements
Surviving early entrants benefit
from economies of scope and
learning which enhance the skew
in value distribution for
complementors
Drop in average prices due
to increased competition
lead to a reduction in
value capture for
complementors
* The extent of complementor competition on value creation, distribution and capture depends on 1) the ratio of end-users to complements –app market
potential- and 2) whether there are stock (e.g., iOS App store) or flow (e.g., Kickstarter) effects to complementor participation.
Platform evolution affects how complementors create and capture value
19. Stylized facts about complementor value
1. On average, complementors create less value over time
• The effect is amplified when entry occurs in the same category
• The effect is amplified for very innovative complements
2. The distribution of value over complementors increasingly skews
• In favor of hit complements by reputable complementors
• In favor of incrementally innovative complements
3. The incentive to innovate for complementors goes down
4. It becomes harder for complementors to capture value
5. The above are amplified when complementors are subsidy-side
20. Watch Dogs revisited
2.22
4.15
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Seventh Generation (IB = 167m) Eighth Generation (IB = 17m)
Unitsales(millions)
Ubisoft’s Watch Dogs sold nearly twice as many copies in its
first month on eight generation platforms than it did on
seventh generation platforms, despite the nearly ten times
larger user-base on seventh generation platforms.
21. Watch Dogs was released towards the very end of the seventh generation gaming consoles
(and at the beginning of eighth generation consoles) meaning that:
• These platforms had lowered their overall support for game publishers and focused support
only on absolute hit games (e.g., GTA V)
• These platforms were heavily populated with late adopter consumers, and early adopters had
already partly migrated to eighth generation platforms
• These platforms were rife with competition as the stock of games had grown substantially
while many new games were still coming out at the same time
• Watch Dogs was a very innovative game (based on a new intellectual property). Demand for
innovation was much higher on eighth generation platforms.
22. Implications for Complementors
• Look beyond the size of the platform user-base by taking into
consideration compositional contingencies and migration
• Anticipate the shift from early to late adopters, apply divergent
strategies across the platform lifecycle (Rietveld & Eggers, 2017):
• Early on: Focus on throwing gravel by launching a wide variety of innovative
complements in new categories. Apply a product proliferation strategy
• Later on: Focus on throwing rocks by investing constraint resources in a
limited set of familiar complements that extend earlier efforts
• Enter and innovate in relatively under-populated complementor
categories in otherwise crowded platforms (Boudreau, 2012)
23. Implications for Platform Owners
• Deploy governance strategies that foster innovation on the
complement-side (Gawer & Cusumano, 2014)
• Subsidized production, exclusivity, selective promotion
• Implications when end-users are money-side:
• Align governance strategies cyclically with changing demand-side (e.g., Apple)
• Pursue a strategy that facilitates blockbuster complements
• Implications when complementors are money-side:
• Deploy counter-cyclical governance strategies to halt these dynamics
• E.g., regulate pricing, restrict entry, promote innovation (e.g., Nintendo)