Platform selection by software developers: Theory and evidence

This paper analyzes platform selection (affiliation) by game developers in the Japanese home video game industry. We develop an elementary model of affiliation by software developers and propose the hypothesis that wider availability of game titles for a platform positively inclines game developers to affiliate with that platform when releasing new game titles. Then, using data for Japan, we estimate a multinomial logit model that includes both the attributes of game developers and the characteristics of platforms, and find evidence supporting this hypothesis. Overall, the findings suggest that game developers expect the indirect network effect to apply, and the prospect of future growth matters to them when deciding with which platform to affiliate.