Success Entry Of Nintendo 's Wii Video Game Console

3291 Words Oct 18th, 2014 14 Pages
The existing strategic management literature assumes that the success or failure of competing platform based firms is determined by the relative importance of platform quality, indirect network effects and consumer expectations. This paper examines the role of a first party content as a tool of coordination in platform-based markets. Previous papers have handled first party content by either assuming that it is qualitatively identical to third party content or simply abstracted away from the issue by assuming that it doesn’t exist. I develop a basic, theoretical model which introduces the possibility of a firm disadvantaged in platform quality, installed base size and expectations to overcome a successful incumbent into the industry. I demonstrate the applicability of my theory by examining the success entry of Nintendo’s Wii video game console into the home console market, which was able to overtake the industry leader at the time, Microsoft, despite having an installed base disadvantage, low consumer expectations and lower platform quality than its competitors, something that is impossible to explain using existing theoretical frameworks.
First-party applications, in the context of a two-sided market, are applications produced by the provider of a platform, rather than independent, third-party developers. An application is any good or service whose usage is enabled by the adoption of the platform. The platform and the application are complementary goods. Examples…

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