Research Economics and Management

With our research we focus on the themes of labor markets, aging, sustainability, innovation, market governance, banking, financial markets, entrepreneurship, marketing, and consumer behavior.

PhD Defense Mr. Drs. F.W.Th. Peters

Title: 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.
Supervisors: Prof. N.G. Noorderhaven, Prof. Duijsters

Frank Peters investigatedĀ the economic impact of collaboration in a two-sided platform market in the cultural industries. The dissertation attempts to find explanations for success in the cultural industries and (in particular) the consequences of cooperation with the platform provider. This is done by means of a quantitative study of games from the time that distribution took place by means of DVDs: the period 2001-2010. This is the first time that an integrated model for success in the video game industry has been developed.

Markets are increasingly becoming dominated by platforms: accommodation is booked via Booking.com, music via Spotify, video via Netflix, information via Google and second-hand products via E-Bay. In the video game industry, it is the console that brings buyers and suppliers together. In such a market structure the behavior of the platform influences the results of the provider of video games and vice versa. The results of this research are therefore interesting not only for video game industry but also for other platform markets in the cultural industries.

The cultural industry consists of the industries in which mass-production of cultural goods takes place. The film, music, TV and radio, fashion and game industry are examples. These industries have the following characteristics:

  • Extreme economies-of-scale: Production of the first copy is very expensive, reproduction is almost free;
  • An oversupply of creative work: production often takes place as a passion and leisure activity;
  • Presence of the "nobody knows" principle: Success cannot be predicted in advance, nor can it be explained retrospectively. Products are extremely divided into hits and misses so that only a small part of the offer is profitable.

Conclusions:

  • The success of a game depends on the activities of different actors: the game development studio, the publisher, and the console manufacturer. In that sense, game business is a multi-player game;
  • Although the "nobody knows" principle is present, there are factors that increase the chances of success: building on success from the past and larger production budgets lead to better games, which in turn sell better. Pre-release marketing (finding market segments where competition is limited and timing of the release) also leads to more successful games. This is more important than post-release marketing.
  • There are cross-platform effects: games released for multiple platforms also score better on the individual platforms.
  • Production of games based on success from other sectors (e.g., a game in a movie) is not a successful strategy.
  • Platforms are often very dominant in the market. Cooperation with a platform operator (through the sale of the studio or the conclusion of exclusive contracts) has a positive result on the revenue of a game, cooperation with an independent publisher does not have this. Platforms are a necessary evil that can be better embraced: cooperation leads to more successful releases.

The dissertation enriches management theory in the outlined context. It is concluded that:

  • Considerations for different forms of cooperation differ: for mergers transaction cost considerations, for exclusive contracts increasing opportunities for the future.
  • Platform operators have different motives for working with studios than independent publishers. In particular, platform operators mainly want to retain high-quality capabilities, independent publishers are looking for future differentiation options in particular.

Location: Cobbenhagen building, Auditorium (access via Koopmans building)


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When: 14 March 2018 16:00

Where: Route description Tilburg University campus