UCL School of Management is delighted to welcome Joost Rietveld, Rotterdam School of Management, to host a research seminar discussing ‘Platform strategy: Managing ecosystem value through selective promotion of complements.’
Platform sponsors typically have both incentive and opportunity to manage the overall value of their ecosystem. Through selective promotion, a platform sponsor can reward successful complements, bring attention to underappreciated complements, and influence the consumer’s perception of the ecosystem’s depth and breadth. It can use promotion to induce and reward loyalty of powerful complements producers, and it can time such promotion to both boost sales during slow periods, and reduce competitive interactions between complements. We develop arguments here about whether and when a platform sponsor will selectively promote individual complements, and test our arguments on data from the video game industry (2007-2011). We find that platform sponsors do not simply promote “best in class” complements; they strategically invest in complements in ways that address complex tradeoffs in ecosystem value.