Vertical Integration And Innovation In Creative Industries: Evidence From The Video Game Industry

Through the development of new intellectual property, creative industries contribute significantly to the economy. However, research on the effects of vertical integration on intellectual property in these industries is limited. Therefore, this paper focusses on the effects of integration in the video game industry, where publishers acquire developers on a large scale. This paper is an assessment of the effects of integration on the development time and quality of intellectual property. The analysis uses a dataset containing information about integration in the video game industry from different sources, and a web scrape of critic and user scores from Metacritic. This paper finds, using an OLS-regression, that integration is positively related to the quality of intellectual property. Moreover, integration does not harm nor improve efficiency or the quality of radical innovations. Hence, this paper argues in favor of less restrictive policy for integration in creative industries.