We study how complementors respond to the competitive dynamics between platform owners and complementors, specifically in relation to the decision of the platform owner to enter a game genre with a first-party complement (FPCP). We hypothesize that first-party complement provision has a negative effect on the number of subsequent newly released third-party complements, because of the increased within-genre competition. However, this negative effect will be mitigated if the genre has recently experienced a loss of common pool resources, as indicated by an increase in multihoming-to-other-platforms complements. This is because first-party complements help re-establish the platform’s distinctiveness and thus its attractiveness for complement providers. Our analysis of the US video game industry from 1995 to 2005 offers general support for these hypotheses. Additionally, we provide an extensive set of robustness and supplemental mechanism analyses and explore complementors’ long-term reactions to FPCP, revealing that their responses depend on the extent of common pool resource depletion and the frequency of FPCP.
