Engagement in platform markets: A (video) game changer?

Abstract

Empirical studies of two-sided platform markets, like the video game console industry, typically rely on software and platform sales data, thereby overlooking today’s managerial focus on engagement. This present research leverages a unique dataset tracking the daily engagement of over 14,000 users of Microsoft’s Xbox One and Xbox Series video game platforms to remedy this gap. We investigate how software development and release characteristics affect consumers’ engagement with software titles and the platforms on which they release. Our analysis finds that releasing software on subscription services is the strongest determinant of engagement, overshadowing established determinants like software quality or exclusivity. While superstar software and exclusive titles generate engagement, their relative importance is smaller compared to sales-based findings, reported in prior literature. Instead, franchises, non-superstars, and multihomed software perform much better on engagement than on sales, especially when included in a subscription service. These findings have important industry implications.