Game Developer (2b/3): How Can Strategic Alliances Enhance Learning and Boost Financial Performance?

Drawing on empirical evidence, we analyse how collaborative partnerships leverage complementary assets to foster innovation, cultivate internal learning, and achieve sustainable competitive advantage.

.credits: T.L.J.Broekhuizen

‘’We find that, while the alliance required ‘’DVGD’’ to share with the publisher a substantial fraction of the value appropriated by the game, the alliance strategy resulted in greater absolute financial performance and relative market performance compared to the self-publishing strategy.‘’

‘’Since an identical game was involved in both instances, we argue that the differences in performance can be traced to specialised complementary assets required for successful commercialization.’’

(T.L.J.Broekhuizen et al., 2013)

Even though the performance results are not in favour of the individualistic approach, there are several scenarios where partnering up may not be the right choice. There are multiple benefits and risks that need to be considered for a thorough evaluation of both approaches.

Choosing an alliance approach offers multiple benefits, as demonstrated by the performance results. While the content producer had to forgo substantial value to the publisher (10-15%, approximately 15k€), it ultimately came out ahead. The total value created by combining complementary resources generated higher profits and additional intangible benefits. This evidence supports the synergistic value creation perspective proposed by Teece (1986, 2010) and Dyer and Singh (1998).

Commercialising an innovation without complementary assets or external resources is nearly impossible. Activities such as distribution, service, or manufacturing often depend on strategic partners and third-party providers. In this case study, complementary assets might include financial capital, marketing expertise, distribution networks, and industry contacts. Therefore, it is crucial to access these resources, consider potential drawbacks, and develop appropriate strategies or business models for collaboration.

In order to create and execute the best strategies, it is necessary to balance the benefits, which will be comprehensively discussed in the final article of the Game Developer series, with the possible risks and limitations associated with interactive value chains, networks, international alliances, and strategic partnerships.

This balancing act can be performed using best practices and tailored through portfolio management and overall alliance strategy. Moreover, the ability to effectively manage strategic partnerships could potentially become a source of sustainable competitive advantage for your organisation.

If the company has a well-developed absorptive capacity, it could reap invaluable benefits and potentially reduce dependence on strategic partners in the future. This is a key takeaway from this case study. The appropriateness of a strategic partnership depends on the specific situation of the firm—such as industry, life-cycle stage, and existing resources—and its ability to create, exploit value, and learn from the partnership.

What lessons can be drawn from this case study, and how can organisations apply them??

How concerned should one be about negative side effects??

Do the benefits always outweigh the drawbacks of

partnering with a publisher??

How does your organisation promote continuous learning and adaptation from strategic partnerships to maintain a competitive edge??

What are the specialised complementary assets

in creative industries??

Part III.

References

Broekhuizen, T. L. J., Lampel, J., & Rietveld, J. (2013). New horizons or a strategic mirage? Artist-led-distribution versus alliance strategy in the video game industry. Research Policy, 42(4), 954-964.
Dyer, J.H.; Singh, H. (1998). The relational view: Cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review 23(4): 660-679.
Lampel, J., Lant, T., Shamsie, J., 2000. Balancing act: learning from organizing practices in cultural industries. Organization Science 11 (3), 263–269.
Teece, D.J. (1986), “Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy,” Research Policy, 15(6): 285–305.
Teece, D.J. (2010), “Business Models, Business Strategy and Innovation,” Long Range Planning, 43(2/3): 172–194.