SteamOS - Predicting future success with two sided markets theory

Objectives of this study: The objective of this thesis was to find out if it would be possible to predict success of upcoming SteamOS platform that is built by Valve. We used models from two sided markets theory and focused especially on examining what would be critical masses for each side of this platform in case. Computer and video games have been previously used as examples of two-sided market theory, where researchers have studied the likelihood of success of a platform based on its relative strengths to other actors in the market. However, SteamOS is a new way of distributing operating systems and games, having an existing potential clientele as well as billions of units of potential hardware units to be deployed to free of charge. We also conducted a survey to find out how game developers perceived this new platform. Academic background and methodology: The academic base of this research is focused on two-sided market theory that has been utilized in analyzing various industries. Several different models in analyzing and predicting two-sided markets are presented and examples of two-sided markets are explored. The purpose of the literature review is to provide a better under- standing of the theories and critical drivers of platform adoption in a multi-sided platform market. The empirical part of the research consists of analyzing the survey results of 106 respondents from the gaming industry to find the current stance of developers to SteamOS and find the critical aspects of SteamOS that possibly drive developer adoption of the platform. Findings and conclusions: The findings of this thesis were three-fold: First, we found that two-sided market theory is an appropriate method to analyze the potential success of a gaming plat- form. This theory states that reaching critical mass on one side of the network is imperative for platform success. Secondly we discovered that the developer side of the ecosystem is generally positively inclined towards SteamOS. The survey respon- dents felt that SteamOS presents an attractive business opportunity in the future, but only a minority of the respondents had actually dedicated significant resources to it at this stage. Our third finding was that Valve needs to attract triple A game developers to the platform in order to attract the gamer side to the platform as well. This could be done through increased promotion or subsidizing the developer side. In conclusion, our findings show that SteamOS at the moment is seen as a poten- tial market disruptor, but few actors are willing to be the driving force of platform adoption and Valve needs to dedicate serious resources to building the ecosystem