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In digital industries, platform-based business models make openness and control key strategic levers shaping innovation, ecosystems, and competitive advantage. This study examines how platform strategies shift between openness and control over time, using video game platforms as a historically leading context. Through a comparative case analysis of four platforms: Nintendo's Family Computer, Valve's Steam, Apple's App Store, and the Epic Games Store, the study identifies how governance transitions are structurally shaped. The analysis is guided by a Five-Factor Framework encompassing technological, economic, institutional, competitive, and ecosystem dimensions emphasized in prior research. Findings reveal that platform governance emerges not from managerial intent alone, but from the multi-causal alignment of structural forces across these dimensions. Openness fosters distributed innovation and developer diversity, while control ensures quality, security, and monetization. Hybrid configurations such as selective openness and strategic re-control appear as adaptive responses to asymmetrical factor alignment. Building on these insights, the paper proposes the Dynamic Openness and Control Theory, which conceptualizes governance as a pendulum-like movement shaped by structural configurations. The comparative evidence demonstrates that the video game platforms pioneered governance mechanisms such as licensing, modular openness, digital distribution, and selective exclusivity from the 1980s onward, establishing precedence for similar dynamics observed in mobile operating systems, cloud infrastructures, fintech platforms, ride-hailing services, and generative Al ecosystems. This framework contributes to platform strategy and innovation management by integrating historical precedence with cross-industry applicability.
Abstract
In digital industries, platform-based business models make openness and control key strategic levers shaping innovation, ecosystems, and competitive advantage. This study examines how platform strategies shift between openness and control over time, using video game platforms as a historically leading context. Through a comparative case analysis of four platforms: Nintendo's Family Computer, Valve's Steam, Apple's App Store, and the Epic Games Store, the study identifies how governance transitions are structurally shaped. The analysis is guided by a Five-Factor Framework encompassing technological, economic, institutional, competitive, and ecosystem dimensions emphasized in prior research. Findings reveal that platform governance emerges not from managerial intent alone, but from the multi-causal alignment of structural forces across these dimensions. Openness fosters distributed innovation and developer diversity, while control ensures quality, security, and monetization. Hybrid configurations such as selective openness and strategic re-control appear as adaptive responses to asymmetrical factor alignment. Building on these insights, the paper proposes the Dynamic Openness and Control Theory, which conceptualizes governance as a pendulum-like movement shaped by structural configurations. The comparative evidence demonstrates that the video game platforms pioneered governance mechanisms such as licensing, modular openness, digital distribution, and selective exclusivity from the 1980s onward, establishing precedence for similar dynamics observed in mobile operating systems, cloud infrastructures, fintech platforms, ride-hailing services, and generative Al ecosystems. This framework contributes to platform strategy and innovation management by integrating historical precedence with cross-industry applicability.
Keywords: Platform Strategy, Openness and Control, Video Game Platforms, Five-Factor Model, Comparative Analysis
Introduction
The expansion of platform-based business models has brought renewed attention to how structural design decisions affect patterns of innovation, value creation, and strategic advantage. In digital content industries, particularly video games, platform strategies often revolve around how openness and control are configured, shaping who can participate, how value 1s created, and how ecosystems evolve (Gawer & Cusumano, 2014; Boudreau, 2010). During the 1980s and 1990s, closed platform models (such as Nintendo's licensing system) prevailed, emphasizing control over software quality, branding, and distribution. These strategies safeguarded quality and reputation. By the 2000s, however, the rise of open platforms like Valve's Steam and Apple's App Store led to increased accessibility for indie developers, faster content cycles, and the proliferation of user-generated innovation (O'Donnell, 2014). This shift redefined how innovation was sourced and scaled in the industry. Yet from the late 2010s onward, renewed tendencies toward control, such as Steam's moderation reforms, Apple's monetization constraints, and Epic Games Store's selective exclusivity, signaled a strategic rebalancing. Platform governance appears to swing between openness and control in response to changing conditions, rather than being anchored in fixed ideals. Despite its significance, the oscillation between openness and control remains undertheorized. Prior studies tend to isolate specific factors, such as pricing models or governance rules, without theorizing their interactions. Thus, we lack a framework explaining how openness and control shifts occur structurally.
This study addresses that gap by proposing a Five-Factor Analytical Framework that synthesizes insights from platform strategy, digital innovation, and ecosystem research. It identifies five structural dimensions: technological, economic, institutional, competitive, and ecosystem, that jointly shape platform evolution. These dimensions are selected based on their repeated significance in prior research, not arbitrary preference. By analyzing four major platforms: Nintendo, Steam, App Store, and Epic Games Store, this study traces how different configurations among these factors lead to distinct openness and control dynamics.
Building on this, the study introduces the Dynamic Openness and Control Theory, which conceptualizes platform transitions as multi-causal, adaptive responses to structural alignments. This theory provides a transferable model for understanding governance dynamics across digital platform industries beyond gaming.
Five-Factor Perspectives on Platform Openness and Control
This section presents an integrated framework for analyzing the dynamics of openness and control in platform strategy, grounded in prior research. The framework consists of five interrelated dimensions: technological, economic, institutional, competitive, and ecosystem. These dimensions have been consistently identified and defined as structural factors in the fields of platform strategy and digital innovation studies, through multiple peer-reviewed academic articles and theoretical models (e.g., two-sided market theory, modularity theory, institutional complementarity, network-based competition strategy, and ecosystem structure theory). They have been recognized across comparative studies and case analyses covering different industries and time periods. Building on this accumulated body of scholarship, this study systematically reviews the relevant literature to clarify how each dimension has been positioned in theory and how it has been treated in empirical research.
The technological dimension defines the scope and flexibility of participation. Baldwin & Clark (2000) emphasize modularity and system architecture as enablers of scalability, while Zittrain (2008) highlights generativity, the capacity for unforeseen innovation through openness. These technological conditions directly influence the economic mechanisms that structure participation. The economic dimension concerns incentives and value distribution. Rochet & Tirole (2003) show how pricing affects multi-sided markets, while Eisenmann et al. (2006) demonstrate how revenue-sharing and developer rewards impact participant diversity. These incentives operate within institutional boundaries that define legitimacy and compliance. The institutional dimension sets what 1s permissible. Gillespie (2010) examines governance rules, while Basole & Karla (2011) analyze how regulations and norms coordinate actors. Institutional frameworks shape competitive strategies by constraining or enabling openness. The competitive dimension captures positioning relative to rivals and market structures. Shapiro & Varian (1998) discuss differentiation and entry barriers, while Cusumano et al. (2019) emphasize adaptation to market change. Competitive context, in turn, influences the structure and governance of the ecosystem. Finally, the ecosystem dimension integrates partner alignment (Adner, 2017) and participation governance (West & O'Mahony, 2008). It reflects relationships between developers, users, and complementary providers, embodying the combined effects of the other four dimensions and shaping the longterm balance between openness and control.
Together, these five dimensions operate as a mutually reinforcing system, producing shifts in openness and control as structural outcomes. Table 1 summarizes the framework, which underpins the following research questions:
RQ1: What structural factors drive the shifts between openness and control in platform strategies within video game platforms?
RQ2: How do transitions in platform openness and control influence the modes of innovation in video game platforms (particularly in terms of key actors, types, and speed)?
RQ3: Can the openness and control pendulum, as observed in video game platforms, be generalized to other industries, and what implications follow for broader platform evolution?
These research questions emerge directly from the five-factor framework, ensuring that the methodology (Chapter 3) and empirical analysis (Chapter 4) are explicitly grounded in the theoretical structure established here.
Methodology and Analytical Framework
This chapter outlines the research design, methodology, and analytical framework employed in this study. Building on the five-factor model of platform openness and control introduced in the previous chapter (summarized in Table 1), the analysis proceeds through a comparative case study approach. This method allows for systematic examination of how variations in technological, economic, institutional, competitive, and ecosystem factors shape shifts in openness and control over time. To address the research questions presented in the previous section, this study employs an abductive case study approach (Yin, 2018). Rather than testing predefined hypotheses, the research builds theoretical insights through iterative engagement with empirical data. This approach is suitable for analyzing complex strategic phenomena embedded in specific institutional and technological contexts-such as shifts between openness and control in platform governance. The video game industry was selected as the focal domain due to its high degree of digitization, dynamic platform evolution, and pronounced variation in governance strategies. Within this context, four major platforms were chosen for comparative analysis based on theoretical sampling principles. The cases were selected not for representativeness, but for their analytical relevance to the phenomenon of interest and their potential to illuminate diverse configurations of the five structural dimensions.
The first case, Nintendo's Family Computer (1983-), exemplifies a closed platform model characterized by strict licensing, hardware control, and institutional gatekeeping. In contrast, Valve's Steam (2003-) represents a pioneering open platform model that emphasized digital distribution, user participation, and economic accessibility. The third case, Apple's App Store (2008-), initially embraced openness but progressively adopted tighter institutional and economic control mechanisms over time. Finally, the Epic Games Store (2018-) offers a hybrid model combining openness with selective control.
The analysis draws upon the Five-Factor Framework introduced at the end of the previous chapter. This framework disaggregates platform governance into five structural dimensions: technological, economic, institutional, competitive, and ecosystem-related factors, allowing for systematic cross-case comparison. Fach case 1s analyzed by tracing how shifts in these factors interact to shape openness and control transitions. Data for each case were collected from a combination of primary and secondary sources, including platform documentation, developer interviews, academic studies, and industry reports. Comparative analysis focuses on identifying causal configurations, clarifying how specific factor alignments lead to distinct strategic orientations such as open, closed, or hybrid.
By applying this framework, the study aims to generate explanatory insights into the dynamic processes of platform governance and innovation structuring. While not exhaustive of the industry, the four cases were intentionally selected for their theoretical relevance, historical impact, and diversity in governance trajectories, providing a controlled yet meaningful basis for crosscase comparison.
Empirical Analysis
(1) Nintendo: A Control-Oriented Strategy with the Family Computer (1983-)
In the early 1980s, the home video game market faced a severe crisis of consumer trust and market collapse, commonly referred to as the "Atari Shock" (Sheff, 1993). In response, Nintendo launched the Family Computer (Famicom) in 1983 and implemented a tightly controlled platform strategy. This included a rigorous licensing system and centralized control over distribution and content approval, aiming to restore order and credibility to the market.
Technologically, this control was enabled by the introduction of the 10NES lockout chip, which physically prevented the use of unauthorized software, allowing Nintendo to manage both hardware and software integration (Kline et al., 2003). Economically, the company-maintained brand value and stabilized revenue through quality assurance, wholesale price control, and restrictions on game release volumes (Altice, 2015). Institutionally, Nintendo developed internal content guidelines and a formal review system, including the "Nintendo Seal of Quality," to address the absence of formal regulation and internalize reputational risk (Consalvo, 2006). In terms of competitive environment, while rivals like Sega existed, Nintendo leveraged its market dominance to reinforce exclusivity rather than respond aggressively to competition (Kent, 2001). From an ecosystem perspective, Nintendo forged exclusive agreements with selected thirdparty developers, fostering a curated ecosystem of high-quality titles (O'Donnell, 2014). This enabled the platform to exert tight control over content distribution and ensure consistent user experience.
Through the alignment of all five structural factors, technological, economic, institutional, competitive, and ecosystem-related, toward increased control, Nintendo's strategy exemplified a closed platform model designed to restore trust, ensure quality, and stabilize profitability in the early home console market. Comparable platforms include Sega Master System (1985), NEC PC Engine (1987), and later Sony PlayStation (1994) and Microsoft Xbox (2001), all of which incorporated licensing and content control mechanisms inspired by Nintendo's model.
(2) Valve: Pioneering Platform Openness with Steam (2003-)
Launched in 2003, Valve's Steam platform revolutionized game distribution by replacing traditional boxed sales with digital delivery over the internet (Nieborg & Poell, 2018). From the outset, Steam was designed as an open platform that encouraged creative participation from both developers and users.
Technologically, the spread of broadband enabled features such as patch delivery, mod sharing, cloud saving, and user reviews, fostering decentralized development and user-driven innovation (Postigo, 2007). Economically, Steam introduced a self-publishing model where developers retained 70% of revenues, significantly lowering entry barriers and fueling rapid growth in the indie game sector (Parker et al., 2017). Institutionally, early content policies were minimal, with simplified approval processes and broad freedom of expression, resulting in high content diversity (O'Donnell, 2014). In terms of competitive environment, Steam faced few serious competitors at launch, allowing Valve to expand its market share with little external pressure (Johns, 2006). The exclusive distribution of Valve's own titles, such as Half-Life 2, further accelerated the platform's early adoption. From an ecosystem perspective, Steam developed a participatory infrastructure through user reviews, tagging, community forums, and the Steam Workshop for mod sharing (Kerr, 2017). In addition, Steamworks SDK offered technical support and tools that energized the developer community and encouraged collaborative development.
As a result of these combined factors, Steam evolved into a low-barrier, innovation-friendly environment, exemplifying the characteristics of an open platform where user and developer contributions co-shaped the ecosystem. Other comparable platforms include GOG Galaxy (2008), itch.10 (2013), and Unity Asset Store (2010), which similarly emphasized openness, indie participation, and user-generated content as core strategic levers.
(3) Apple: The Re-Control Process of the App Store (2008-)
Launched in 2008, Apple's App Store was initially designed as an open platform, allowing virtually anyone to publish apps. However, over time, the platform underwent a gradual process of recontrol, marked by stricter review standards, content regulation, and monetization constraints (Evans, 2011). This shift was shaped by the interplay of multiple structural factors.
Technologically, Apple's 108 was architected as a highly integrated, closed system. The platform enabled centralized control over app review, distribution, and updates, reinforcing Apple's ability to govern the entire app lifecycle (Gillespie, 2010). Economically, Apple institutionalized revenue centralization by mandating in-app purchases and imposing a 30% commission. This limited developers' flexibility in monetization and increased platform dependence (Cutolo & Kenney, 2021). Institutionally, in response to growing social and regulatory pressures, Apple introduced strict content guidelines, security standards, and compliance protocols. In terms of competitive environment, while Google Play emerged as a rival, Apple adopted a differentiation strategy by foregrounding safety, quality control, and curated app experiences, legitimizing tighter control as a value proposition (Cusumano et al., 2019). From an ecosystem perspective, the surge in lowquality or fraudulent apps prompted Apple to strengthen developer vetting, increase the frequency of guideline updates, and reinforce oversight mechanisms to maintain ecosystem integrity (Basole & Karla, 2011).
As a result, the App Store transitioned from its early openness to a closed, highly regulated mobile platform model, shaped by overlapping technological, economic, and institutional pressures. It has since become a prototypical example of a modern, control-centric platform strategy. Similar mobile platforms include Google Play (2008), Amazon Appstore (2011), and Huawei AppGallery (2011), which vary in governance intensity and openness depending on their institutional and regulatory contexts.
(4) Epic Games Store: Selective Openness and Control (2018-)
Launched in 2018 as a direct challenge to Steam's market dominance, the Epic Games Store, operated by Epic Games and best known for its popular online game Fortnite, adopted a hybrid strategy combining developer-friendly policies with selective exclusivity agreements (Kerr, 2021).
Technologically, Epic Games Store leveraged its ownership of Unreal Engine, enabling deep integration between game development tools and the platform ecosystem. However, the store itself relied on conventional infrastructure, offering limited differentiation in user-facing features (Nieborg, 2021). Economically, Epic Games Store introduced a highly favorable revenue split of 88% to developers and 12% to Epic Games Store, contrasting with Steam's 30% cut. This aggressive incentive aimed to attract a wide spectrum of developers, from indie creators to major studios (Alexander, 2019). Institutionally, Epic Games Store maintained discretionary control over content curation. Its opaque review processes and flexible publishing standards reflected a recontrol-oriented design, allowing the platform to exercise selective gatekeeping (Musil, 2020). In terms of competitive environment, Epic Games Store adopted a strategy of aggressive differ- entiation. Leveraging 1ts flagship IP Fortnite, the company pursued studio acquisitions and time-limited exclusivity deals to rapidly gain market attention. While effective in the short term, these tactics have raised concerns about the platform's ability to foster long-term cocreative relationships (Myers & Dhanani, 2021). From an ecosystem perspective, Epic Games Store lacked the participatory infrastructure seen in Steam, such as user reviews, mod distribution, and community features, limiting the development of a user-driven innovation ecosystem (Johnson, 2020).
In sum, the Epic Games Store represents a hybrid platform model: outwardly promoting openness through economic incentives, while embedding strong institutional and competitive controls. This case illustrates the strategic coexistence of selective openness and recontrol, offering valuable insight into the flexible configurations possible in contemporary platform governance. Other comparable cases include Microsoft Store for PC (2012), Ubisoft Connect (2009), and EA Origin (2011), which also combine proprietary ecosystems with selective openness in distribution strategies.
(5) Comparative Causal Configuration Summary
To enhance causal clarity and highlight the structured interplay among factors across the four cases, the following table summarizes the triggering factors, mediating interactions, and strategic outcomes observed in each platform (Table)
These comparative patterns illustrate that platform governance transitions were not arbitrary nor solely actor driven. Instead, they followed identifiable causal configurations whereby specific structural pressures triggered mediating interactions across multiple factors, ultimately producing distinct strategic orientations. This reinforces the study's core proposition that openness and control in platform strategy emerge from dynamic, multi-factorial causal mechanisms rather than isolated decisions. Such configurations emerged not from isolated factors, but from observed sequences and the mutual reinforcement of interacting dimensions in each case. While this study does not quantify the causal strength, it identifies recurrent structural logic across cases, forming the basis for theoretical generalization.
These findings also highlight how hybrid governance forms, such as Epic Games Store's strategy, emerge not as static compromises but as structurally induced responses to asymmetrical factor alignment. This reinforces the pendulum framework by illustrating how multi-factorial imbalances can result in transitional or adaptive strategic states.
These comparative findings form the empirical basis for addressing the three research questions (RQ1-RQ3) outlined in Chapter 2. Building on the comparative findings in Section 4-5, the analysis now turns to RQ3 (introduced in Chapter 2), which asks whether the openness and control dynamics identified in video game platforms can be generalized to other industries. Ecosystem relations play a critical role by mediating how technological foundations and economic incentives translate into actual participation, while embedding institutional and competitive factors 1n a sustainable trajectory. In this way, the five structural dimensions jointly shape distinctive governance trajectories across cases.
Discussion
This section reflects on the findings of the empirical analysis and addresses the three research questions (RQ1-RQ3), exploring the structural dynamics of platform openness and control in the video game industry and their theoretical implications.
RQ1. What structural factors drive the shifts between openness and control in platform strategies within video game platforms?
In addressing this question, the analysis reveals that platform governance 1$ not shaped by any single factor, but emerges from the structural interplay among five key elements: technology, economy, institutions, competition, and ecosystem. The contrast between Nintendo's integrated, control-oriented model and Steam's open structure driven by technological advancement and economic incentives illustrates how aligned configurations of these factors determine strategic direction. Moreover, hybrid cases like Epic Games Store suggest that asymmetrical interactions among the five factors can produce transitional or intermediate strategies. These insights recast openness and control not as binary choices, but as structural outcomes shaped by multi-factor alignment. Hybrid configurations, such as those observed in Epic, represent adaptive forms within pendulum dynamics-emerging from asymmetrical pressure across factors.
RQ2. How do transitions in platform openness and control influence the modes of innovation in video game platforms (particularly in terms of key actors, types, and speed)?
Building on these findings, the governance design of platforms signifi- cantly influences nature, speed, diversity, and agency of innovation. In open platforms like Steam, low entry barriers and feedback-rich environments foster decentralized and emergent innovation, aligning with theories of evolutionary search (Fudenberg & Levine, 1998). Conversely, platforms like App Store and Epic Games Store, with stricter institutional controls, channel innovation toward selective, standardized outputs under economic and regulatory constraints. This duality underscores that platforms serve not only as sites of innovation but also as regulatory regimes that structure the very mode of innovation. Thus, the openness and control spectrum should be reframed as a normative institutional choice that shapes the design of innovation itself.
RQ3. Can the openness and control pendulum, as observed in video game platforms, be generalized to other industries, and what implications follow for broader platform evolution?
Importantly, the comparative chronology shows that video game platforms, beginning with the Family Computer in 1983 and later Steam in 2003, preceded other digital platform sectors by more than two decades. Mobile operating systems such as 10S (2007-) and Android (2008-), cloud infrastructures like AWS (2006-) and Azure (2010-), fintech platforms including Square (2009-) and Stripe (2010-), ride-hailing services such as Uber (2010-) and Grab (2012-), and generative АТ ecosystems like OpenAI (2015-) and Meta's LLaMA (2023-) all emerged afterward. This temporal precedence reinforces the argument that the video game industry functioned as a structural forerunner, pioneering governance mechanisms later adopted across broader platform economies.
In addressing this question, the proposed framework has cross-industry applicability. Theoretical generalization 15 therefore possible: similar oscillations between openness and control have appeared in these subsequent industries. These sectors have become critical elements of modern social infrastructure, yet the comparative evidence indicates that the pendulum-like dynamics observed in the video game industry carry chronological precedence. The model shows how strategies are shaped by internal structural dynamics, not merely managerial choices. While contextual variations (e.g., regulatory conditions, user base, or complementary assets) affect how these forces manifest, the model offers a translatable framework grounded in comparative logic rather than simple analogy. The key contribution lies in theorizing the "openness and control pendulum" not merely as a metaphor, but as a dynamic causal structure that bridges platform strategy, innovation theory, and institutional design.
Conclusion
This study has examined how platform governance in video game platforms has evolved through dynamic interactions between openness and control. By analyzing four representative cases- Nintendo's Family Computer, Valve's Steam, Apple's App Store, and the Epic Games Store-through a Five-Factor Framework, the research shows that governance shifts emerge not from managerial discretion alone but from the multi-causal alignment of technological, economic, institutional, competitive, and ecosystem factors. Openness fosters innovation and diversity, while control ensures quality, legitimacy, and monetization. Hybrid forms appear as adaptive responses to asymmetrical pressures across these factors.
The comparative evidence highlights the chronological precedence of video game platforms. From the 1980s onward, mechanisms such as licensing, modular openness, digital distribution, and selective exclusivity were pioneered in gaming and later reappeared in mobile operating systems, cloud infrastructures, fintech platforms, ride-hailing services, and generative Al ecosystems. This trajectory positions video game platforms as structural forerunners in the evolution of digital platform governance.
Nevertheless, this study has limitations. Its scope is confined to four historical cases, which constrains quantitative generalization. Future research should extend the framework across more industries and incorporate longitudinal and micro-level analyses. By integrating historical precedence with crossindustry applicability, this study offers the Dynamic Openness and Control Theory as a generalizable framework, contributing to platform strategy, innovation management, and the study of digital ecosystems, and advancing a broader understanding of digital platform evolution.
Note: Each dimension interacts with others through mediating mechanisms. For example, modularity can influence incentives, institutions can shape competition, and ecosystem relations often reflect the combined effects of the other dimensions. These interactions are elaborated in Sections 2 and 4.
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