Platform internationalization

May 15th, 2019

Arjan Roovers

Online platforms allow entrepreneurs to frog leap past entry barriers towards more rapid or even instant internationalization (Loane, 2012; Oviatt & McDougal, 1994). The mobile gaming industry seems to leverage this opportunity presented by platforms especially well based on their 40% share of the global app revenues in 2016 (Statista, n.d.). Current platforms like Google Play and Apple’s App Store have gathered the critical mass required to generate the coveted network effects (Boudreau, 2012) attracting hordes of developers with hordes of users and vice versa. To illustrate, in May 2016 alone, over 48,000 new apps were launched in Apple’s App store (Perez, 2017). Simultaneously, software developers have increasingly found it difficult to earn a return on their efforts (Boudreau, 2012). Hence, the competition effect on established platforms seems to outweigh the market size effect faced by developers.

As opposed to traditional games, mobile games are exclusively distributed online (Bowman, Jöckel & Dogruel, 2015). In addition, the mobile gamer is characterized as casual, looking for an easy to learn but hard to master game with quick engagement (Bowman, Jöckel & Dogruel, 2015). Furthermore, the mobile gamer seems to invest very little time and energy in selecting an app to download and may suffer from paralysis of choice due to the overwhelming amount of available games (Schwartz, 2009). Thus the access to globally dispersed foreign markets provided by platforms far from guarantees user adoption.

Besides the importance of specific choice behaviours, the context in which these behaviours are portrayed matters too. Cultural, administrative, geographic and economic (CAGE) circumstances affect cognitions, perceptions and consequently behaviours (Voinea & van Kranenburg, 2017; de Jong, 2015). Thus, while platforms help clearing level one: the entry barriers posed by CAGE distance (Ghemawat, 2007), they do not clear level two which is about overcoming user adoption barriers stemming from CAGE distance (Shaheer & Li, 2018). This distance remains relevant because apps like mobile games are often made in one context and aim to satisfy the needs of a specific context. The concept or design of a game may therefore be less attractive or misunderstood in more distant contexts (Shaheer & Li, 2018).

Distance is a rather widely used concept in multiple bodies of literature, but it may be misleading without noting a hidden assumption (Shenkar, 2001). Distance implies symmetry as the distance from country A to country B is the same as the distance from country B to A. No evidence has supported this notion for cultural distance however (Shenkar, 2001). This suggests that not all dyadic CAGE distances are created equal. Consequently, the effects of CAGE distance on user adoption may differ for different levels of market development. For example, lesser developed markets are characterized by ambiguity and often occur in spaces with less developed regulatory institutions. Several digital innovations such as AirBnB and Uber have been able to leverage the ambiguity of their industry definition to avoid the regulation that their more traditional counterparts face. This has aided their advances throughout several markets (Anwar, 2018). Limited or lax regulation may therefore facilitate user adoption of digital innovations like mobile gaming. In particular, regulation regarding loot boxes that is emerging in some western countries could hamper the economic viability of a mobile game. These loot boxes can be purchased with real world currency and offer a very small chance of obtaining a very good item. The argument in favour of regulating this highlights the similarities to gambling. Absence of this regulation may therefore be favourable for the economic viability of a mobile game. Moreover, markets depend on the social structure of actor relationships. In lesser developed markets, there often is considerable ambiguity. As a response to reduce the ambiguity, more emphasis is placed on these social relationships (McKague, Zietsma & Oliver, 2015). These social relationships may be crucial in these markets to overcome the user adoption barriers posed by CAGE distance through user feedback or co-creation for example.

In other words, while firms may have found ways to frog leap entry barriers through online platforms, making the landing stick in any given host country is not an ordinary challenge.