Abstract for: Growth and Competition Dynamics of Online Game Market in Taiwan

In recent years, Taiwan government has offered incentives and supportive policies such as tax reduction with a hope to foster the development of domestic online game industry. However, domestically developed online games are failed to dominate the online game market. Over seventy percents of the market share is occupied by foreign games, especially those from Korea. In this paper, a system dynamics model is built to explore the growth and competition dynamics of the online game market. The model shows that multiple reinforcing feedback loops and limited market size together led to the rapid but temporal market growth. The market reached its limit so quickly that Taiwan’s domestic game developers lost the opportunity to grow because of unavoidable time delays in R&D capacity expansion and game development and commercialization process. The online game case shows that market growth and R&D expansion that contrast sharply in lead times could cause tough barriers that are far beyond late entrants’ abilities to conquer, even governmental support might hardly be useful.