Is there a first mover advantage in the market for Japanese video games systems?

The market for video games machines in Japan has evolved in a series of distinct and progressive generations, each displaying the characteristics of a standards war. In such a contest, a small number of incompatible products with similar technical specifications battle to dominate the market. Economic theory would suggest that position in the order of entry has an important influence on market performance, and that the mantle of first mover carries with it a strategic advantage that can be exploited by firms. This paper empirically examines the effect that a firm’s position in the order of entry into the market has upon its performance. Based on data supplied by a CESA survey on console ownership, an econometric model is constructed which tests the statistical significance of the relationship between the order of movement and market share. The results indicate that, in the market for Japanese video games systems, there are significant disadvantages associated with the first move and significant advantages associated with the second move.