Serious strategy for the makers of fun: Analyzing the option to switch from pay-to-play to free-to-play in a two-stage optimal control model with quadratic costs

Andrea Seidl, Jonathan P. Caulkins, Richard F. Hartl and Peter Kort

European Journal of Operational Research, 2018, vol. 267, issue 2, 700-715

Abstract: This paper addresses the problem of a video game producer who starts out with a subscription-based business model but considers when, if ever, to switch to a free-to-play model, which price discriminates between typical users, who play for free, and heavy users who pay for acquiring extra features. The videogame producer has the possibility to advertise the game, where advertising costs are quadratic. Furthermore, he can influence the outflow of players by pricing.

Keywords: OR in entertainment; Optimal control; Multi-stage modeling; History-dependence; Video games business model (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:267:y:2018:i:2:p:700-715

DOI: 10.1016/j.ejor.2017.11.071

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