Positive Demand Spillover of Popular App Adoption: Implications for Platform Owners’ Management of Complements

Abstract

As platform owners interact with end users and complementors, their demand-side characteristics and performance affect the overall value creation of ecosystems. This research investigated how the emergence of popular complements on a mobile communication platform impacts the usage of other complements by the platform’s end users and how platform owners can benefit from such demand spillovers. Using individual user-level app usage data, we empirically demonstrated how the presence of a popular app alters the demand structure of a platform through changes in the usage of other apps operating within it. The findings reveal that popular app adoption by users increases the app usage, excluding the usage of popular apps, only within the platform offering a popular app, supporting the existence of positive spillovers from popular complement adoption on a platform. Such positive within-platform spillovers occur through the increased usage of both existing and new apps, with stronger positive spillovers for new apps. These findings imply that platform owners can reap benefits by coordinating the launch of new complements and the promotion of less-known counterparts to end users with the emergence of a popular app. All these results shed light on how platform owners can manage their complements and create value from popular complements.