On top of the game? The double-edged sword of incorporating social features into freemium products

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On top of the game? The double-edged sword of incorporating social features into freemium products

Rietveld, J; Ploog, JN; (2022) On top of the game? The double-edged sword of incorporating social features into freemium products. Strategic Management Journal 10.1002/smj.3362. (In press). Green open access

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Abstract

Freemium products require widespread diffusion for their success. One way to do this is by incorporating social features (e.g., multiplayer functionality, virtual collaboration, ridesharing), which can generate network effects and result in a product becoming a superstar. However, social features can be a double-edged sword: When demand potential for freemium products is large, social features can significantly boost a product’s appeal resulting in more adoption, more usage, and more in-app purchases; but when demand potential is constrained, network effects might fall short and users may feel they are missing out on key aspects of the product. We test this dynamic on a sample of 9,700 digital games on Steam. Findings contribute to our understanding of network effects, freemium strategies, and superstar products in platform markets.

Type:	Article
Title:	On top of the game? The double-edged sword of incorporating social features into freemium products
Open access status:	An open access version is available from UCL Discovery
DOI:	10.1002/smj.3362
Publisher version:	https://doi.org/10.1002/smj.3362
Language:	English
Additional information:	Copyright © 2021 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial License (http://creativecommons.org/licenses/by-nc/4.0/), which permits use, distribution and reproduction in any medium, provided the original work is properly cited and is not used for commercial purposes.
Keywords:	freemium, network effects, platform markets, product strategy, business models
UCL classification:	UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of Engineering Science > UCL School of Management
URI:	https://discovery.ucl.ac.uk/id/eprint/10138499