Research Papers

Abstract

App developers adopt diversification strategy with their app-offerings to improve market performance and gain more revenue. The success of this strategy depends on different factors such as app category characteristics and competitive dynamics. As mobile app platforms are characterized by the presence of both positive and negative network effects, competition within an app category (i.e. category concentration) and the popularity of an app category, are expected to play a strong role in influencing apps’ performance. In this study, we focus on how category concentration and category popularity interact and influence the outcome of developers’ diversification. We find that releasing app in a category with higher category concentration will have a negative impact on an app’s performance, and that category popularity has a positive influence on an app’s performance. Considering the interaction between these two factors, we find that the negative influence of category concentration overwhelms the positive impact of category popularity. Implications for app developers are discussed.

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