The effect of online customer reviews on purchasing decisions: the case of video games

1
The effect of online customer reviews on
purchasing decisions the case of video games

• Marc Bourreau
• Télécom Paris et CREST-LEI
• http//www.enst.fr/egsh/bourreau/

2
Motivation

• The consumption of experience goods requires the
  acquisition of information about the quality
  (horizontal and/or vertical) of the goods.
• In traditional (offline) markets, consumers get
  information from mass media (push) or friends or
  family (word-of-mouth, WOM).
• Online WOM experience communities where
  consumers share views about experience goods.
• Could experience communities substantially modify
  the way experience goods are sold/purchased?

3
More specific questions

• What is the impact of online word-of-mouth on
  sales/purchases of experience goods?
• What are the relative effects on sales/purchases
  of the different information channels
  (offline/online prescription, offline/online
  word-of-mouth)?

4
The data

• We analyze the purchases of video-games, with
  data at the individual level.
• Data were obtained through an online
  questionnaire carried out between June 18 and
  July 5, 2004, on a leading French web site about
  video games.
• Data include information about demo, taste for
  videogames, use of experience communities
  (reading/writing reviews), etc. 50 questions.
• 9,503 answers to the questionnaire focus on
  7,024 students

5
The respondents

• Mainly male (93)
• Connected to the Internet (86 with broadband)
• New Internet uses P2P (65), online forums
  (52).
• Fans of video-games
• 86 have 2 game platforms or more, 31 have 4
  platforms or more platformPC,console,
• 46 play network games once a week or daily.
• 36 purchase between 6-10 games a year, 20 11 or
  more.

6
Information channels

• Prior to purchasing video games, do you get
  information from
• Internet site specialized on video games 93
• Offline video games magazine 61
• Friends (word-of-mouth) 60
• Trial version (demo) 48
• General information on the Internet 8
• Pirate copy 6

7
Participation to the experience community / read

• 35 read comments often or very often, 45
  sometimes, and 20 never.
• Motivation
• 54 read user comments to get a different opinion
  than that of the editorial
• 42 read particularly comments when the opinion
  of the editorial seems contestable.
• 76 find comments useful (at least sometimes).

8
Participation to the experience community / write

• 44 of the respondents posted a comment (61
  between 1 and 5, 20 posted 11 comments or more).
  
• Motivations to post a comment
• Promote high-quality games 36
• Share gaming experience 22
• Correct unfair review 19
• Develop community 12
• Help others 10
• Seek discussion with fans 2

9
Econometric analysis

• Which variables influence the number of video
  games purchased per year?
• We estimate the following equation
• yi xi b wi a ei
• yi of games purchased
• xi individual control variables (sex, age, city
  size, internet connection type, income-related
  variables).
• ei unobserved individual characteristics
• b and a parameters to be estimaed

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Preliminary results

• Female (significant only for agegt19)
• Connect cybercafé (significant for agelt19)
• Group purchases P2P Second-hand (sign.
  for agegt15)
• Information from magazine
• Information from friends (offline WOM) - (sign.
  for agegt15)
• Consult forum (sign only for agegt15)
• Play network games for 15-19
• Forum participation
• XBOX gt GameCubegt PS2 gt PC