Does streaming service help or hurt game companies?

Abstract

With the fast development of technologies, the gaming industry becomes more and more diverse, profitable, and competitive. With the unprecedentedly growing gaming industry, the game streaming industry also expands and develops constantly. The previous research agrees that game streaming tends to benefit the game companies by increasing game’s popularity, either directly through promotionally demonstrating game contents to the audiences, or indirectly through benefiting game’s word-of-mouth. However, they did not consider that game streaming may also hurt the game companies. For instance, the streaming audiences may feel less interested and motivated to play the games after watching the game streaming because the game streaming may spoil too much game contents, which is known as the cannibalization effect. As a result, in order to accurately express and reflect the potential cannibalization effect of game streaming, this research needs to study and consider the relationships between game streaming, game’s popularity, and word-of-mouth of the games in a big picture jointly. In short, this research quantifies these three areas of interest and studies their interactions between each other. Firstly, this research uses the Vector Autoregression model which allows for the simultaneous treatment of game’s popularity, game streaming, and word-of-mouth regarding each game instance. However, this research expects that the existence of cannibalization effects depends on the game categories, including “single-player” and “multi-player” which the first model is not able to capture. Therefore, this research proposes a Linear Mixed- Effects Regression model, which can better incorporate such a moderation effect of game categories as well as other game characteristics. After relevant hypothesis testing, our results show that although game streaming in general helps to improve game’s popularity, we observe an obvious existence of the cannibalization effect of game streaming for “single-player” games. Besides, this research also reflects on the implications of the results. For instance, this research recommends game companies to strengthen positive reviews of the games to increase game’s popularity, because the result also suggests a strong positive effect of word-of-mouth on game’s popularity, especially when the game genre is “Racing”.