2020 Volume 12 Issue 1 Pages 59-73
Nintendo chosen high cost structure to keep software quality by eliminating small company. This led to lack of their software variety then they lost their market share in late 1990’s. Certain platform operators harm their ecosystem under the rational strategic decision like this. Hence, this paper discusses the conditions that cause platform operators to harm their ecosystem, as a preparation of developing the long-term platforms’ competitive strategy. Two types of complements with one-way indirect network effect are considered in this paper, namely, durable and non-durable complements. Durable complements hold a negative indirect network effect to another side like smartphone handsets or PCs. Too much variety of hardware charges big optimizing cost to software developers. Under these conditions, if two platform operators intend to maximize their market share, they decide to decrease the diversity of one type of complement. Thus, we should carefully develop the platforms’ profit structure for exploiting the potential of multi complements’ markets simultaneously.
