indirect network effects and the product cycle video games in us 1994 2002 c3 matthewt clementsw hiroshiohashiz weexaminetheimportanceofindirectnetworkeffectsintheu s game market between diffusion of systems is analyzed by interaction console adoption decisions software supply estimation results suggest that introductory pricingisaneffectivepracticeatthebeginningoftheproductcycle expandingsoftwarevarietybecomesmoreeffectivelater wealsofinda degree inertia does not exist hardware this observation implies providers continue to exploit installed base users after demand has slowed i introduction many high tech products exhibit wherein value an individual increases with total number often these operate indirectly through for a complementary good forexample thevalue ofacdplayer depends onthevariety ofcds available variety as owners cd players other examples include dvd discs computer paper we estimate networkeffectsinthemarketforvideogamesystems asystemconsistsofa videogameconsole andgametitles theconsoleitself have any apart from facilitating use factors such price quality being equal consumer would prefer buy
