Profiting from innovative user communities: How firms organize the production of user modifications in the computer games industry

Lars Bo Jeppesen

No 2004-03, IVS/CBS Working Papers from Department of Industrial Economics and Strategy, Copenhagen Business School

Abstract: Modding – the modification of existing products by consumers – is increasingly exploited by manufacturers to enhance product development and sales. In the computer games industry modding has evolved into a development model in which users act as unpaid “complementors” to manufacturers’ product platforms. This article explains how manufacturers can profit from their abilities to organize and facilitate a process of innovation by user communities and capture the value of the innovations produced in such communities. When managed strategically, two distinct, but not mutually exclusive business models appear from the production of user complements: firstly, a manufacturer can let the (free) user complements “drift” in the user communities, where they increase the value to consumers of owning the given platform and thus can be expected to generate increased platform sales, and secondly, a manufacturer can incorporate and commercialize the best complements found in the user communities.

Keywords: Innovation; modding; user communities; software platform; business model (search for similar items in EconPapers)
JEL-codes: L21 L23 O31 O32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-ino
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