The Influence of Online Consumer Reviews on the Demand for Experience Goods: The Case of Video Games
Journal of the Association for Information SystemsPublished 31 December 2006
Feng Zhu, Xiaoquan Zhang
Citations83
SJR quartileQ1
SJR score3.12
SNIP2.36
Generate an AI Snapshot to get a quick, structured summary of this paper.
Study Snapshot
ObjectiveStudy objective
MethodsResearch methodology
PopulationPopulation studied
Sample sizeSample sizes
OutcomesStudy outcomes here
ResultsStudy results comes here
LimitationsResearch study limitations comes here
A concise AI-generated summary of the paper will appear here once you click Generate AI Snapshot.
TL;DR
The results indicate that online consumer reviews have a significant influence on the sales of the video games and suggest the importance of managing online word of mouth for firms, especially for their less popular products.
Abstract
We examine the effect of online consumer reviews on the sales of video games. An inherent problem in measuring the influence of reviews on demand is that products receiving good reviews tend to be of high quality, and it is difficult to determine whether the review or the quality is responsible for the high demand. To circumvent this problem, we consider video games that are developed for both PlayStation 2 and Xbox and take a differences-in-differences approach to a structural model of game demand. Our results indicate that online consumer reviews have a significant influence on the sales of the video games. On average, one point increase in the average rating is associated with 4% increase in game sales. Negative ratings have a larger impact than positive ratings. In addition, we find that online reviews are more influential for less popular games. These results suggest the importance of managing online word of mouth for firms, especially for their less popular products.
Keywords
Social SciencesBusiness, Management and Accounting
The Quarterly Journal of EconomicsA Simple Model of Herd Behavior
6,452 Citations1992Abhijit Banerjee
Journal of Marketing ResearchThe Effect of Word of Mouth on Sales: Online Book Reviews
5,939 Citations2006Judith A. Chevalier, Dina Mayzlin
The RAND Journal of EconomicsEstimating Discrete-Choice Models of Product Differentiation
3,033 Citations1994Steven Berry
Marketing ScienceUsing Online Conversations to Study Word-of-Mouth Communication
2,607 Citations2004David Godes, Dina Mayzlin
It is found that online conversations may offer an easy and cost-effective opportunity to measure word of mouth and it is shown that a measure of the dispersion of conversations across communities has explanatory power in a dynamic model of TV ratings.
Management ScienceFrictionless Commerce? A Comparison of Internet and Conventional Retailers
2,531 Citations2000Erik Brynjolfsson, Michael D. Smith
Journal of Industrial EconomicsSome Simple Economics of Open Source
2,386 Citations2002Josh Lerner, Jean Tirole
The extent to which labor economics, especially the literature on 'career concerns', and industrial organization theory can explain many of these projects' features is highlighted.
Management ScienceReducing Buyer Search Costs: Implications for Electronic Marketplaces
2,270 Citations1997J. Yannis Bakos
Journal of Service ResearchCustomer Satisfaction and Word of Mouth
2,104 Citations1998Eugene W. Anderson
Advances in applied microeconomicsTrust among strangers in internet transactions: Empirical analysis of eBay' s reputation system
1,814 Citations2004Paul Resnick, Richard Zeckhauser
Examination of a large data set from 1999 reveals several interesting features, including a high correlation between buyer and seller feedback, suggesting that the players reciprocate and retaliate.
Decision Support SystemsDo online reviews matter? — An empirical investigation of panel data
1,663 Citations2008Wenjing Duan, Bin Gu +1 more
The result shows that the rating of online user reviews has no significant impact on movies' box office revenues after accounting for the endogeneity, indicating that online user Reviews have little persuasive effect on consumer purchase decisions.
The Quarterly Journal of EconomicsWord-of-Mouth Communication and Social Learning
921 Citations1995Glenn Ellison, Drew Fudenberg
Management ScienceStrategic Manipulation of Internet Opinion Forums: Implications for Consumers and Firms
762 Citations2006Chrysanthos Dellarocas
Marketing ScienceDemand and Supply Dynamics for Sequentially Released Products in International Markets: The Case of Motion Pictures
679 Citations2003Anita Elberse, Jehoshua Eliashberg
MIT Sloan management reviewInnovation by User Communities: Learning From Open-Source Software
617 Citations2001Eric von Hippel
The ability of user communities to develop and sustain exceedingly complex products without any manufacturer involvement is remarkable, according to von Hippel, who identifies the conditions that favor user innovation and explores how circumstances evolve.
Review of Network EconomicsSome Empirical Aspects of Multi-sided Platform Industries
536 Citations2003David S. Evans
A survey of businesses in these industries shows that multi-sided platform businesses devise entry strategies to get multiple sides of the market on board and devise pricing, product, and other competitive strategies to keep multiple customer groups on a common platform that internalizes externalities across members of these groups.
RePEc: Research Papers in EconomicsTHE INFLUENCE OF EXPERT REVIEWS ON CONSUMER DEMAND FOR EXPERIENCE GOODS: A CASE STUDY OF MOVIE CRITICS -super-*
524 CitationsDavid Reinstein, Christopher M. Snyder
The Review of Economic StudiesCompetition Between Networks: A Study of the Market for Yellow Pages
518 Citations2004Marc Rysman
Econometric TheoryVariance Components Structures for the Extreme-Value and Logistic Distributions with Application to Models of Heterogeneity
439 Citations1997N. Scott Cardell
AIS Electronic Library (AISeL) (Association for Information Systems)The Impact of Online Recommendations and Consumer Feedback on Sales
405 Citations2004Pei-Yu Sharon Chen, Shinyi Wu +1 more
The results indicate that more recommendations indeed improve sales at Amazon.com; however, consumer ratings are not found to be related to sales, and it is found that recommendations work better for less-popular books than for more-popular books.
Journal of Industrial EconomicsINDIRECT NETWORK EFFECTS AND THE PRODUCT CYCLE: VIDEO GAMES IN THE U.S., 1994-2002*
403 Citations2005Matthew T. Clements, Hiroshi Ōhashi
Estimation results suggest that introductory pricing is an effective practice at the beginning of the product cycle, and expanding software variety becomes more effective later, and a degree of inertia in the software market that does not exist in the hardware market.
The Journal of Economic PerspectivesThe Economics of Technology Sharing: Open Source and Beyond
400 Citations2005Josh Lerner, Jean Tirole
Marketing ScienceThird-Party Product Review and Firm Marketing Strategy
394 Citations2005Yubo Chen, Jinhong Xie
The RAND Journal of EconomicsSeasonality in the U.S. motion picture industry
330 Citations2007Liran Einav
Journal of Consumer ResearchPopular Appeal Versus Expert Judgments of Motion Pictures
317 Citations1999Morris B. Holbrook
Journal of Media EconomicsPredicting the Performance of Motion Pictures
290 Citations1994Scott Sochay
Journal of Media EconomicsPredicting financial success of motion pictures: The '80s experience
277 Citations1989Barry R. Litman, Linda S. Kohl
California Management ReviewTechnological Leapfrogging: Lessons from the U.S. Video Game Console Industry
250 Citations2003Melissa A. Schilling
Journal of Applied EconometricsEstimating market power in a two‐sided market: The case of newspapers
240 Citations2007Elena Argentesi, Lapo Filistrucchi
Information Systems ResearchSelf-Selection and Information Role of Online Product Reviews
203 Citations2008Xinxin Li, Lorin M. Hitt
A model is developed that examines how idiosyncratic preferences of early buyers can affect long-term consumer purchase behavior as well as the social welfare created by review systems and provides an explanation for the structure of product ratings over time.
Digital Culture
190 Citations2004Charlie Gere
This revised and expanded second edition of Digital Culture, taking account of new developments such as Facebook and the iPhone, Charlie Gere charts in detail the history of digital culture, as marked by responses to digital technology in art, music, design, film, literature and other areas.
International Journal of Industrial OrganizationIdentifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine
82 Citations2009Pierre Dubois, Céline Nauges
SSRN Electronic JournalUsing Online Reviews as a Proxy of Word-of-Mouth for Motion Picture Revenue Forecasting
59 Citations2004Chrysanthos Dellarocas, Neveen Awad +1 more
Evidence is provided for the claim that online ratings can be considered as a useful proxy for word-of-mouth about movies in forecasting motion picture revenues by developing a motion picture revenue-forecasting model that incorporates the impact of both publicity and word of mouth.
Toulouse 1 Capitole Publications (Université Toulouse I Capitole)Identifying the Effect of Unobserved Quality and Experts' Reviews in the Pricing of Experience Goods: Empirical Application on Bordeaux Wine
9 Citations2010Pierre Dubois, Céline Nauges