Disruption in platform-based ecosystems

What is it about?

We study intergenerational platform-technology transitions as instances of potentially disruptive innovation at the ecosystem level. Examining the launch of 12 platform technologies in the U.S. videogame industry covering three console generations from 1993 until 2010, we show that incumbents introducing next-generation platform technologies with advanced capabilities increase the challenges of developing complements for the platform technology, steepening complementors’ learning curves and disrupting the very same complementors that platform owners need to thrive in the next-generation competition. We find that, because of these struggles, platforms with advanced capabilities but high complement-development challenges show a pattern of defection of complementors toward rival, less challenging platforms. Our study extends mainstream disruptive-innovation theory to the context of platform-based ecosystems by offering a systemic view that accounts for disaffection on the part of technology complementors—rather than end users—as the main reason for disruption.

Featured Image

Why is it important?

It helps understand the change in market leadership in platform markets subject to strong network externalities; contexts where it is generally understood (according to extant theory) that once platform leadership emerges it is hard to dislodge because of self-reinforcing network externalities acting as potent isolating mechanisms. We document different changes in platform leadership over the industry evolution of videogames, and explain the mechanisms.

Perspectives