The Transformation of the Distinctiveness in Incumbent Platforms

- The Changes in User’s Engagement Behavior in the Case of “mixi” -

Abstract

In recent years, there have been several cases where incumbent platforms (PFs), which should be able to take advantage of network effects, have lost their dominant position in the market. This paper examines the logic of incumbent PFs declining their market position and the key management issues involved by focusing on user engagement behavior in PFs at the leadership stage. Specifically, the following conclusions are argued through a case study of “mixi”, as a PF in the information market. The PF will increase the number of users and complementors by improving and adding functions, backed by network effects. In that case, the PF, because of its dominant position, will take homogenizing actions towards their competitors. However, such management policies will change the distinctiveness of the engagement behavior of the users of the PF in question, which in turn will transform the distinctiveness of the PF that it originally possessed. This is one factor that will reduce the market position of the PF, which had been in a dominant position.