Abstract

Online game is one of the fastest growing industries in Korea. It accounts for 5.8% of the world game market and one third of the world online game market. Korea’s online game market has two-sided market characteristic with very low switching costs. This paper is to study the various characteristics of two-sided market under low switching costs. We empirically investigate network externalities by using various variables in online game industry in Korea. We found the number of games available in a platform increased its market share, while the diversity of games and generality of games had no significant impacts. We also found that multi-homing increases an online platform’s market share when it is relatively new, but decreases market share when it becomes mature.

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