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League of Legends

League of Legends is a massively multiplayer online video game played by millions of people around the world. Each player has a choice of using a wide array of over 100 characters to use in any match. These characters could both be bought with real or in game money. Each character also comes with a series of “skins”, which change the look of the model of that character. They don’t impact gameplay very much and can only be purchased with real money.

An interesting topic of discussion is the negative network effect of people purchasing skins. For example if the game releases a new skin for a character, each player (who buys skins) has a lot of interest in buying a skin for a character that they like. The main interest is arguably not only the look of the skin to the player themselves, but rather the bragging rights that come with owning that skin, while not many others do. However, as time passes by, more and more players buy that skin and the skin might become very common, which in turn lowers the value of that skin to the player who bought it in the beginning. This is a perfect example of a negative network effect, as more people use or have something, the lower their value for the item becomes.

The company that created and operates League of Legends is counteracting this in a very interesting way, while at the same time making a good profit. To keep the negative network effect to a minimum, they sometimes release limited edition skins which are only available for purchase during a certain short period of time. This not only gets more people to buy up those skins faster, but also keeps the buyers happy as they know that in a while they will be one of only a few owners of those skins.

 

Link:

http://na.leagueoflegends.com/

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