A study of digital platform dynamics

Abstract

"This thesis examines the evolution of platform dynamics over time. The dissertation focuses on a long-standing gap in platform research – the lack of an understanding of the evolutionary dynamics of platform activities. The dissertation attempts to address this gap by studying the activities of two video platforms – Amazon Prime Video and Netflix in India. The research uses a natural language processing technique known as Structural Topic Modelling. We employ this technique on the media coverage of Amazon Prime Video and Netflix in India. Using independent labellers, we inductively identify topic categories across time and study their prevalence. Additionally, we leverage the benefits of structural topic modelling and identify the linkages between these topics. Using the Cluster Louvain method, we identify communities of topics and study the evolution of topics and communities over time. The results indicate the similarities and differences in the platform strategy of Amazon Prime Video and Netflix over time. Both platforms seem to focus on similar objectives – building a consumer base to build and enhance network effects. Additionally, the evolutionary dynamics suggest similarities in the relationship between the platform and its complementors over time. Both platforms depend more on complementors to attract consumers and create value. Over time, platforms change this relationship to appropriate value for themselves by relying on producing original content. This results in an expansion of firm scope over time. The difference between the two platforms arises in the mechanisms to achieve these objectives. Netflix chooses to build network effects at a global level and accordingly ally with partners in allied industries to this effect. Netflix also preferred to push global content over building domestic content. Amazon Prime Video chose to rely on domestic partners and heavily favoured domestic content. Amazon Prime Video also leveraged its other platforms x | P a g e to drive subscribers across different platforms. Thus, both platforms adopted different governance mechanisms in their choice of complementors and the nature of their relationship with them. External data suggests that Amazon Prime Video performed better than Netflix in India during the study period. The findings highlight the importance of platform governance in platform strategy. We argue that platform governance is the fulcrum of strategy and forms the basis of evolutionary dynamics in platforms. Our framework argues that Platform governance influences value creation and is responsible for the state of network effects. Additionally, platform governance influences firm scope and value appropriation. Thus, we argue that platform governance rather than network effects must be considered the distinguishing factor of platform success."