When a software provider releases its software to a platform, it is important to decide not only which platform to choose but also how to release it. This paper investigates a videogame publisher’s strategic decision to provide its videogame titles to each game platform. Specifically, this paper focuses on a game publisher’s outsourcing decision regarding its game releases. Combining transaction cost theory with theories concerning modularity and network effects, the paper examines the determinants of a game publisher’s make-or-buy decision. Then, this paper empirically tests the impact of each determinant with the videogame titles data from 1991 to 2002. The results give a foundation for future research issues regarding the application of transaction cost theory to the context of modular system architecture and network-based competition, which are the key characteristics of the IT industry, and call for new determinants of the make-or-buy decision.
Yoo, Byunggon, "Outsourcing Game Software: A Longitudinal Study of Make or Buy Decisions in US Videogame Industry" (2005). AMCIS 2005 Proceedings. 412.