The Strength of Direct Ties:Evidence from the Electronic Game Industry

We analyze the economic effects of a developer’s connectedness in the electronic gameindustry. Knowledge spillovers between developers should be of special relevance in this knowledgebasedindustry. We calculate measures for a developer’s connectedness to other developers atmultiple points in time. In a regression with developer, developing firm, publishing firm, and timefixed effects, we find that the number of a developer’s direct ties, i.e., common past experience, hasa strong effect on both a game’s revenues and critics’ scores. The intensity of indirect ties makes noadditional contribution to the game’s success....