Pricing Model Dynamics in the Chinese Online Game Market

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Author(s): Qun Ren (Bournemouth University, UK)and Philip Hardwick (Bournemouth University, UK)
Copyright: 2011
Pages: 12
Source title: Electronic Globalized Business and Sustainable Development Through IT Management: Strategies and Perspectives
Source Author(s)/Editor(s): Patricia Ordóñez de Pablos (Universidad de Oviedo, Spain), Miltiadis Lytras (CTI, Greece), Waldemar Karwowski (University of Central Florida, USA)and Rongbin W.B. Lee (Hong Kong Polytechnic University, Hong Kong)
DOI: 10.4018/978-1-61520-623-0.ch010

Keywords: Business & Management / Business Science Reference / Global Business

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Abstract

This chapter examines how incumbent firms respond to the industrial pricing dynamics with the adjustment of their own pricing strategies so as to create and sustain their market share dominance. The empirical context of this chapter is the strategic behavior of online game operators (i.e. the companies who operate online games) in the Chinese online game market, one of the most active markets in the world with strong network effects. This chapter introduces Velu’s business model theory in the market with strong networks. Further, in this research, the authors extend Velu’s research by challenging some of his propositions by a careful observation of pricing dynamics in the Chinese online game industry since 2000 and how dominant and non-dominant incumbent firms adjust their pricing strategy. In the Findings Part, this paper explains why acquisition is regarded by main dominant game operators as the most effective way to complement their pricing model revolution.

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Pricing Model Dynamics in the Chinese Online Game Market

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