The Consumer & The Digital Market

Last time I wrote about the business and the strategic development of intellectual property over time. It is somewhat difficult to find a previous post that you could not relate to this subject, but recent posts about customer value, growing pains and feedback are close to the big picture here in a straightforward way.

Not so dissimilar to factories (see business, project, and the digital factory), markets are also a structure that repeats in a recursive way. Unlike the market for goods and services in the physical world, digital goods and services are generally not portable. Instead, digital space is carved up into many isolated fiefdoms. Accounts serve as proof of access rights to digital assets inside each fief. In today's world many people are exposed to this through mobile platforms such as the App Store and Play Store as well as storefronts elsewhere such as the digital marketplaces accessible by games consoles.

Anyone unfamiliar with digital marketplaces may be tempted to think that all they are more or less created equal, and in some respects that is true. There is significant overlap in how consumers access and review products and how producers are able to present them across various storefronts. If we look beyond the digital experience that these storefronts provide, we can see that these digital marketplaces are often part of a vertical integration with physical products (e.g. the App Store has limited exposure to the world outside of devices produced by Apple) and so the consumers in these digital marketplaces are effectively the audiences of those physical products. In practice, in the aggregate, consumers at storefront A often have different sensibilities to consumers at storefront B and may respond differently to identical digital products.

What drives these responses?

Many things. Advertising, other offerings within the market, and perception (of all of the business, the intellectual property and the digital product) across markets in digital space - which may include a significant number of people outside of the target audience.

In some cases, such as in the digital transformation of banking services, software is intended to replace the need for physical goods and services in which case there is a natural comparison between physical and digital offerings.

Establishing perception of value is one of the greatest challenges in contemporary software development, particularly in digital games where there is an abundance of content but also relatively easy access to black markets.

A high-profile instance of the influence of black markets has come up very recently with the announcement that remakes of the original Pokémon games will be available for the Nintendo Switch as part of a commemoration of the 30th anniversary of their release in Japan. These two games are most closely representative of product releases from 2004 for the Game Boy Advance which themselves were re-releases of the original games from 1996 for the Game Boy.

I mention these hardware platforms (or devices) to re-iterate the general concept of the Factory model of software development. While from the perspective of some commentators there is little to no differentiation between these digital products of 2026, 2004 and 1996 respectively, they are realised by substantially different digital factories, with different machinery, and different supply chains. Each incarnation serves to affirm (or reaffirm) an aspect of the intellectual property, and each incarnation is clearly a different project as the digital product is introduced (or reintroduced) to a different social context and at a different price point.

An examination of reviews of particular products in digital marketplaces can help to serve as proof that each of these layers contributes to the perception of value. A single entry in a franchise may attempt to differentiate itself enough from previous entries to the point that it alienates fans of the intellectual property, a criticism we might associate with the digital product. When there are many reviews claiming that the software has defects, we might associate this criticism with the factory. When a series of reviews are critical of the price, we may attribute this to the project. I've used the word may because tracing specific problems to a single layer can be challenging even with access to perfect information.

The broader point is that when consumers engage with digital products in a market, they are not engaging with the digital product in a vacuum. A model much closer to the truth is that they are engaging with the digital product as delivered by a digital factory, and the project and the business, as well as the broader set of digital markets across all digital fiefdoms, legitimate or otherwise.