About

When positive network effects are important to the value of a product, consumers may delay adoption until others have adopted. Understanding the size of the "early adopter" and "bandwagon" demographics is critical to optimizing a firm's pricing, advertising, and promotions. I invert the social influence / social threshold model from Young (2009) to transform a noisy diffusion curve into a nonparametric estimate of the distribution of consumers by adoption threshold, which can be used to inform marketing for future comparable titles. As an example, the results for the fourth game in the "Counterstrike" series are shown, exhibiting a point mass of early adopters and a second peak of bandwagon adopters peaking at 116k users, consistent with a highly-anticipated sequel that nevertheless relies on multiplayer and community features.

Combining my previous work on reliability growth analysis and social diffusion, I explore a new startup model in the video game industry where consumers buy "early access" to unfinished games: consumers provide revenue, report bugs, signal interest to the developer and share word-of-mouth before the game's formal release. I measure changes in customer experience over time using forum posts and product reviews, I use developer patch notes as a proxy for continued developer investments in improving product quality, and I use sales estimates to gauge the impact on firm profits. My goal is to model how some early access titles enter into a "virtuous cycle" where early sales lead to increased patching, a better product, better word-of-mouth, and even more sales, while others enter a "vicious cycle" of declining sales, persistent bugs, and negative word-of-mouth. The ultimate goal will be to help marketplaces like Xbox Live, PSN, and Steam improve policies to encourage innovative independent projects while protecting consumers from "abandonware."