Working Paper Series, Department of Industrial Economics & Strategy, Copenhagen Business School
No 04-3:
Profiting from innovative user communities: How firms organize the production of user modifications in the computer games industry
Lars Bo Jeppesen
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; (follow links to similar papers)
JEL-Codes: L21,; L23,; O31,; O32; (follow links to similar papers)
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