This chapter examines how incumbent firms respond to the industrial pricing dynamics with the adjustment of their own pricing strategies so as to create and sustain their market share dominance. The empirical context of this chapter is the strategic behavior of online game operators (i.e. the companies who operate online games) in the Chinese online game market, one of the most active markets in the world with strong network effects. This chapter introduces Velu’s business model theory in the market with strong networks. Further, in this research, the authors extend Velu’s research by challenging some of his propositions by a careful observation of pricing dynamics in the Chinese online game industry since 2000 and how dominant and non-dominant incumbent firms adjust their pricing strategy. In the Findings Part, this paper explains why acquisition is regarded by main dominant game operators as the most effective way to complement their pricing model revolution.
|Title of host publication||Electronic globalized business and sustainable development through management|
|Subtitle of host publication||Strategies and Perspectives|
|Editors||Patricia Ordóñez de Pablos|
|Place of Publication||New York|
|Publisher||IGI Global Publishing|
|Publication status||Published - 2011|