RSM 1153 (Strategy II) Session 5: Strategy in Two-Sided Markets Case: Responding to the Wii

Reading: Strategies for Two-Sided Markets, HBR (on portal)

Assignment Questions for the Case: 1. Explain why the home video game industry is a two-sided market? What are the two sides? Explain how cross-side network effects operate in this industry. Explain how same-side network effects operate in this industry? Explain how network effects create payoff inter-dependencies. 2. What seem to be the important determinants of success for a videogame system? Think about factors that seem to determine success (or failure) across many different technological generations. 3. In what way(s), is the current video game generation different than the earlier generations? In particular, is the market structure of the industry different now than it was in the 8-bit generation? What might account for the difference in market share? 4. How should Sony respond to the success of the Wii?