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The Influence of the Adult Entertainment Industry on Technology Standards for Computer, Video, and Smartphone Applications
Abstract
The proliferation and diffusion of products that are based on technological standards, such as digital video discs, depends on gathering co-sponsors who provide complementary goods (such as films and games in the case of digital video discs) that are valued by the end users. Previous studies have documented how complementary goods are delivered through the creation of business ecosystems, informal agreements, and strategic alliances. Few of those studies, however, have addressed the nature of the complementary goods that are offered, or sponsors’ attitudes toward them. This study, which focuses on the impact of the adult entertainment industry on the spread of new technological standards, highlights the extent to which the sponsor of a new technological standard is willing to go to reach an agreement with a co-sponsor, despite the controversial nature of the goods being produced. A review of three case studies involving adult entertainment content for online, video, and smartphone applications shows that the main technology sponsor often has difficulty deciding how to deal with the availability of certain complementary goods. It also sheds light on how providers of complementary goods in any industry can gain acceptance from the main sponsor of a new technological standard.
... Other effects are visible when an innovation demonstrates to be influential in the history of product development. For instance, the birth of complementary products as an evidence of success is remarked by many scholars in the last few decades (McGee and Sammut Bonnici, 2002;Rainer and Strohmaier, 2014;Calcei and Ohana, 2017). As the impact of successful artefacts can be understood also as a technical, and not just as a market-related, breakthrough, many scholars associate the achievement of patent protection of commercialized products with the emergence of success (Nyström, 1985;Hart, 1993). ...
Although product design targets success, the achievement of success is rarely verified or insightfully explored because of difficulties in measuring this term. The present paper addresses design research by proposing a procedure to extrapolate success of products by means of the vast knowledge made available by the scientific literature and the Internet at large. The final achievements are constituted by an algorithm to perform information search about product success and a success scale to be used as an ordinal variable in a posteriori studies involving large numbers of products.
Expectation of both sales and profit acts as an incentive structure for complementors, such as software vender, record rebels, TV program studio and so on. Because this expectation changes along with the product lifecycle progress, complementors’ behavior tends to be undesirable for multi-sided platform operators. Thus multi-sided platform operators have to manage the quality and variety of complements developed by external companies in order to sustain their sound ecosystem and to keep them growing. Otherwise the moral hazard problems between multi-sided platform operators and complementors cause the market failure of multi-sided platform to destroy their ecosystem. In this paper, I illustrated the mechanism of the moral hazard problem occurring firstly. Secondly I discussed the methodology to control the complementors’ product development investment especially focusing on the price structure of platforms. At the last section I drew the limitation of the price structure control method from the discussion.
In industries characterized by network externalities, a single technology standard often rises to dominance, locking out competing technologies. This research demonstrates that despite "path dependency," it is possible to model the technology selection process and predict likely outcomes. This work extends previous work in network externalities by demonstrating that in addition to its "installed base" and the availability of complementary goods, a firm's learning orientation and timing of entry also play significant roles in its success.
This paper analyzes the behaviors of actors of several industries joining or leaving coalitions developed in the case of the business ecosystems of video formats. Our research relies on a cross-referenced analysis of the literature of standards with secondary data from Internet sites. The analysis shows that the nature and intensity of the links between firms have an impact on the success of a coalition and can lead firms to leave one coalition for another one.
Competition in the information age often takes the form of a standards war: a battle for market dominance between incompatible technologies. A company's success or failure can easily hinge on its ability to wage such a standards war. Standards wars are especially bitter in markets with strong network effects, where consumers place great value on compatibility and interconnection with each other. These markets tend to exhibit positive feedback and "tip" to a single winner. Based on a study of dozens of standards wars going back over 100 years, this article offers a "battle guide" for waging a standards war. After classifying standards wars and identifying seven key assets that firms can use to successfully establish a new technology, the authors recommend three tactics in standards battles: building alliances, exploiting first-mover advantages, and managing consumer expectations.
Examines the factors driving the selection of a dominant design in markets characterized by a single technology architecture. Considers the importance of entry timing, observing that markets characterized by network externalities demonstrate marked path dependency effects. Develops hypotheses concerning the installed base and complementary goods, learning orientation and time of entry. Reports on a study of technological lockout using survey, interview and archival data, examining the drivers of technology selection across fourteen different product categories. Finds that the process of technology selection can be modelled, despite the complexity of technology trajectories and the effects of random influences. Adds that technology standards are driven by a firm's learning orientation and timing of market entry as well as by network externality drivers such as installed base and complementary goods.
This paper evaluates the joint impact of exclusive channels and revenue sharing on suppliers and retailers in a hybrid duopoly common retailer and exclusive channel model. The model bridges the gap in the literature on hybrid multichannel supply chains with bilateral complementary products and services with/without revenue sharing. The analysis indicates that, without revenue sharing, the suppliers are reluctant to form exclusive deals with the retailers, thus, no equilibrium results. With revenue sharing from the retailers to the suppliers, it can be an equilibrium strategy for the suppliers and retailers to form exclusive deals. Bargaining solutions are provided to determine the revenue sharing rates. Our additional results suggest forming exclusive deals becomes less desirable for the suppliers if revenue sharing is also in place under nonexclusivity. In our extended discussion, we also study the impact of channel asymmetry, an alternative model with fencing, composite package competition, and enhanced price-dependent revenue sharing.
The paper shows that in the presence of network externalities, consumers adopt conventional technologies too early; the waiting option for a newly emerging technology is not exercised enough. This problem is aggravated when the new technology is provided by a single producer with market power because any positive value created via waiting by current consumers will be ex post appropriated by the monopolist. Therefore, the monopolist's power to extract surplus operates against his own interests in this dynamic setting. The paper also shows how the producer of a new technology can partially overcome the problem of too little waiting by using licensing as a commitment device.
This book introduces upper-level undergraduates, graduate students, and researchers to the latest developments in network economics, one of the fastest-growing fields in all industrial organization. Network industries include the Internet, e-mail, telephony, computer hardware and software, music and video players, and service operations in the banking, legal, and airlines industries among many others. The work offers an overview of the subject matter as well as investigations about specific industries. It conveys the essential features of how strategic interactions between firms are affected by network activity, as well as covering social interaction and its influence on consumers' choices of products and services. Virtually no calculus is used in the text, and each chapter ends with a series of exercises and selected references. The text may be used for both one- and two-semester courses.
Declining demand in later stages of product lifecycles challenges managers. Especially in system markets, content providers must decide whether to publish new content in late lifecycle stages or wait for the next system generation. This study investigates whether content providers can compensate for declines in demand for a system by relying on the benefits offered by a large installed base in later lifecycle stages. Drawing on extensive market data from the video game industry – an underresearched but economically and culturally relevant category of the entertainment sector – this study examines ways to achieve such compensation. The data analyses show a negative association between the age of a system generation and content sales. However, an online multiplayer feature can counteract this negative effect by exploiting the large installed base and providing consumers with additional social value through direct network effects. These findings should help managers position their products more successfully in the late lifecycle stages of a particular system generation.
The outcome of battles between competing interface formats shapes technology fields and implies success or failure for the companies involved. Recently, this journal published a paper, which proposes a new framework of factors that impact the outcome of such battles. We apply this framework to three format battles: for wired connectivity in home applications, for wireless connectivity in home applications, and for multi-channel sound. The framework appears to be more complete than earlier frameworks, and therefore provides a better understanding of interface format battles. Firms can use this framework to make more accurate forecasts about the winner, if any, of a format battle, and can adjust their strategies by exploiting certain factors to enhance their chances of success.
We empirically examine the effects of industry consortia on the coordination of innovation strategies of the members. Our analyses utilize membership data from 32 consortia in wireless telecommunication technology subfields from 2000 to 2005 and prior art citations in standards-essential patents. We find that connections among firms in informal technically-oriented consortia significantly increase the likelihood that firms cite each other’s patents in subsequent patents essential for the UMTS wireless telecommunication standard. Inventions that are likely to become part of the UMTS telecommunication system tend to build on inventions by firm peers who were members in the same consortia, controlling for patent or firm fixed effects, technology class, and other characteristics. Consortia may enhance productivity of invention and increase the incentives to invest in R&D by internalizing potential externalities. They may also enhance efficiency of standardization by facilitating the interaction of committee and market processes. Consortia thus structure and constrain the process of innovating standardized technologies. This is problematic if consortia are not truly accessible for all the relevant parties. Policymakers thus need to balance these effects. For managers, the results show that participation in a variety of technical consortia enables influencing peers’ innovation strategies related to compatibility standards.Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.
This book discusses how compatibility standards may be used to ensure business success. It provides a framework for standards strategy and policy, together with a series of case-studies which interpret the economics of standards in practical settings. The book considers the problems of establishing a new standard in the market and winning standards contests. It studies the questions of how to maintain the profitability of a standard and how to compete within an established standard. It combines the strategic analysis with an evaluation of standards policy, and suggests ways in which markets and policy intervention may effectively be used together. Cases include contests for standards for video cassette recorders, digital audio tapes, personal computers, open computer systems, high-definition television, and Telepoint cordless phones. Standards have long been seen as a technical problem, yet in a large number of industries they are central to business strategy and technical aspects are only part of the effort needed for product success. They imply very different strategies and policies than for conventional products.
The reactions of 1,5,9-triethyl-1,5,9-triphosphacyclododecane, [12]aneP3Et3, with first-row transition metal halides MCl3 [M = Ti (1), V (2), and Cr (3)] or their THF adducts are reported. The oxidation of 2 gives the complex ([12]aneP3Et3)V(O)Cl2 (4). This is the first example of a phosphane ligand that is trans to a vanadyl moiety. Also reported are VIII (5) and CrIII (6) complexes of the pendant ether macrocycles [12]aneP3(C2H4OEt)3 and 12[ane]P3(C3H6OMe)3 respectively. The complexes 1−6 have been characterised crystallographically and represent a rare class of phosphane complexes of these metals. The paramagnetic d1 compounds are characterised by EPR and ENDOR spectroscopy, simulation of which gives valuable structural information of these species in frozen solution. With [12]aneP3Et3, NbIII and NbIV chlorides give air-sensitive materials which could not be fully characterised although by comparison with compound 4, EPR and ENDOR spectroscopy indicate the principal oxidation product to be ([12]aneP3Et3)Nb(O)Cl2 (7). (© Wiley-VCH Verlag GmbH, 69451 Weinheim, Germany, 2002)
Today, the mobile phone industry witnesses important changes, shifting from a value chain to a burgeoning business ecosystem. This paper deals with the relationships that are at the very core of mobile OS ecosystems for IMTs (smartphones and PDA): Microsoft-OS, Symbian-OS, Palm-OS and RIM-OS over the period 1998–2006. Our study confirms that an ecosystem’s borders are unclear. More than half of our sample’ relationships are shared by at least two different ecosystems. The ecosystems we studied do not differ in terms of exclusive relationship which suggests that coopetitive strategies are particularly relevant in mobile platforms war.
In many high-tech industries, the emergence of new digital technologies allows companies to develop converters to overcome technology incompatibility. In this paper, we analyze the effects of converter introduction on the adoption process of competing, incompatible technologies in the presence of network externalities. Converter introduction may accelerate, extend or reverse the technology lock-in process. We determine which conversion options are profitable for weak as well as for dominant incumbents, depending on the timing of converter introduction and the degrees of conversion. We find that the optimal strategy for weak incumbents is to introduce full one-way converters early. For dominant incumbents, the optimal conversion option is to provide two-way converters with partial compatibility for the users of the competing network at a later introduction time. We illustrate our analytical results with numerical examples.
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