Competition-as-a-Service: How subscription bundles reshape platform competition and seller performance, joint with Johannes Loh.

Working paper (available upon request)

Digital platforms compete on both sides of the market, i.e., for consumers and sellers. A major recent development is the rise of subscription models that provide catalog-wide access for a fixed monthly fee. While subscriptions have transformed consumption, their competitive effects on products outside subscription platforms remain unclear. We examine how the entry of a major digital subscription service affects the performance of à la carte products on a competing transaction platform. Our empirical setting is the launch of Microsoft’s Game Pass for PC, a subscription service for video games. We show that as the subscription catalog expands, sales and user engagement decline for Steam games that are more exposed to competition from similar games offered in the subscription catalog. The adverse effects are particularly pronounced when the subscription catalog contains many high-quality or high-value titles. These findings suggest that subscription services exert powerful off-platform competitive pressures and reconfigure market dynamics following entry. The study contributes to our understanding of platform competition and seller performance by showing how access and pricing strategies on one platform affect rival ecosystems.