Open systems strategy enables a sponsor to diffuse its technology and promotes standardization in an industry. However, this strategy has been studied in high-tech settings. We hypothesize that, in a non-high-tech industry, a sponsor giving access to its technical knowledge may impact industry structure. Based on a survey of the US tabletop role-playing game (RPG) industry, our results highlight that the introduction of an open system in a sector creates an entry induction phenomenon and that these new entrants adopt more readily the open system than incumbents. Moreover, the average size of the firms in the industry decreases due to vertical specialization.
…Sample and Data: For the purpose of this study we have compared the structure of the RPG sector before and after the introduction of the d20 open license. Our comparison is between the 2-year periods of 1998–99 (before the introduction of the d20 license) and 2000–01 (after the introduction of the d20 license). These periods can legitimately be compared, as the US market segment encompassing RPG products did not witness a drastic evolution over these 4 years. 8 After collecting qualitative data on the industry from RPG publications (Comics and Games Retailer, D20 Magazine, Dragon Magazine) and Internet websites (D20 Reviews, Game Manufacturers Association, Game Publishers Association, GameSpy, Gaming Report, RPGA Network, RPGNow, RPG Planet, Wizard’s Attic), we established an exhaustive list of the 193 active US companies publishing RPGs and compiled a database comprising 3 firm variables: age, size (number of employees), and technological system adopted (the open system vs. proprietary systems). These data were collected from company websites. We collected information
…Results: We hypothesized that the introduction of an open system in an industry would favor the arrival of new entrants (Table 1). Hypothesis 1 was strongly supported by our chi-square analysis. The 2000–01 period saw 78 new entrants into the RPG sector, with only 20 new entrants in the 1998–99 period (c2 = 12.35, statistically-significant at the 0.01 level). Of the 78 new entrants in the 2000–01 period, 51 adopted the d20 license (Table 2). This proportion was markedly greater than for incumbents, strongly supporting Hypothesis 2 (c2 = 17.89, statistically-significant at the 0.01 level). New entrants were found to adopt the new open system more readily than incumbents. These new entrants were essentially players and former freelancers operating within the sector who saw the d20 as an opportunity to avoid the prevailing development costs and switching costs for players, and so decided to launch their own company.
It should be noted that some firms, both new entrants and incumbents, coupled the open system with development of their own proprietary game’s rules of play. Moreover, 27 new entrants did not adopt the d20 license. This figure corresponds roughly to the number of new entrants during the 1998–99 period (ie. 20). This confirms that the 2 periods (1998–99 and 2000–01) are comparable and that no exogenous variable has drastically modified the economic context of the industry. We can then attribute the new entries in the RPG industry in 2000–01 to the introduction of the d20 license per se.
We hypothesized that the diffusion of an open system into an industry should lead to a decrease in the average size of companies in that industry.
Our ANOVA result strongly supports this hypothesis (F = 8.739, statistically-significant at the 0.01 level). Indeed, even though RPG companies have traditionally been very small, their average size became even smaller after the diffusion of the d20 system (reducing from an average of 5.02 down to 2.76 employees).
