The Marketing subject group regrets that this seminar has been cancelled.

Esma Koca, Post-Doctoral Researcher, Imperial College Business School

Competition against other players is one of the key reasons why consumers enjoy playing video games. Winning increases consumer’s self-esteem and satisfaction, awards various digital prizes and achievements, and improves reputation in the online community. Losing has the opposite effect. Consumers’ natural desire to win has created an opportunity for firms to successfully sell add-on products that give the buyers a competitive advantage against those who have not bought the add-on. Such add-on products are often called “pay-to-win” add-ons. In this paper, we investigate the pricing of a pay-to-win add-on, as well as its design in terms of its competitive power – the degree to which the add-on gives a competitive advantage to its buyers. Furthermore, we study the impact of the pay-to-win add-on on the pricing and design of the base product. We find that selling a pay-to-win add-on may not be optimal when consumers’ sensitivity to losing is low. However, when the firm is better off by selling the pay-to-win add-on, making the add-on more powerful allows the firm to charge a higher price for it. Nevertheless, we show that the firm may prefer to limit its power to alleviate the competitive disadvantage of consumers who do not buy the add-on and convince them to buy the base product. Selling the pay-to-win add-on also influences the firm’s optimal pricing and design of the base product. In particular, the firm decreases the base product price and may even sell it as a freemium. Interestingly, as the firm reduces the price of the base product, it may increase its quality. Finally, we demonstrate that the firm’s ability to include cosmetic features in the add-on gives the firm an incentive to increase the strength of the pay-to-win add-on, ie, cosmetic, and competitive aspects of the add-on have a complementary relationship.

There will be a light lunch served in the Common Room at 12:00, preceding the seminar.

Speaker bio

Esma Koca is a post-doctoral researcher and a senior teaching fellow in the Analytics, Marketing and Operations group at Imperial College Business School. She received her PhD from the Analytics and Operations department at Imperial College Business School.

Her broader research lies at the interface of analytics, marketing, and operations. She currently focuses on digital economics, especially consumer behaviour in the digital economy, platform strategy, and digital innovation, using the tools from game theory and analytics. She is also researching healthcare applications and have taken part in Imperial College’s COVID-19 Response Team in 2020-2021. Her research has appeared in Management Science, Nature and POM.

For more information, please get in touch with Luke Slater.

House icon Address

Lecture Theatre 2 (Cambridge Judge Business School)
Trumpington St
Cambridge
CB2 1AG

Clock icon Date & time

Date: 18 November 2022
Start Time: 12:30
End Time: 14:00

People icon Audience

Open to: Members of the University of Cambridge

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Event location


Trumpington St
Cambridge
CB2 1AG

Event timings

Date: 18 November 2022
Start Time: 12:30
End Time: 14:00