Competing with Superstars: Does Exclusive Third-Party Content Discourage Complementary Innovation?

We study how the introduction of exclusive third-party applications affects competing complementors’ innovation strategies in platform ecosystems. In this study, we exploit the exclusive entry of Super Mario Run into the complementary app market of Apple’s iOS App Store in Autumn 2016 as a quasi-experiment. We collect monthly time-series data throughout the observation period. We find that complementors show heterogeneous innovation behavior after the entry. First, we demonstrate that affected complementors with a similar market position as the entrant follow a competition strategy for update releases in the affected niche market. Complementors who do not hold a similar market position reduce the number of updates for existing products in the affected niche market following a differentiation strategy. Finally, independent of the complementor’s market position, affected complementors follow a differentiation strategy for new app releases, increasing the number of new app releases in other categories