Sunday, 26 May 2013
Video game history
paper with Elie Ofek of Harvard Business School a few years ago. We argue that the answer lies in the nature of the advantage that 'being a leader' buys for the firm. When advantage means 'higher return on R&D spending' then a dominant firm tends to invest more and, as a result, likely remain the leader. However, if the advantage simply means a 'loyal set of locked-in customers', then the leader has an incentive to lay back, which generally makes it lose its dominant position. The Economist article correctly points out that the nice pattern on the infographics might be changing. The reason is that gaming increasingly moves to the Internet and is increasingly dominated by social gaming. Does this mean that hardcore action games, based on consoles will disappear? Probably not. But growth may slow down and this might also change the industry dynamics.