Influences on the buying behavior of video games Bachelor thesis Dino Hoeven Studentnumber: 5965551 1 Amsterdam Business School UvA Abstract The purpose of this research is to show if there are any significant influences on the buying of video games. This research follows the psychological path people undertake when they buy something. First they get to know the product then they get intrigued by the product and finally this buying intentions will lead to buying the product. A significant influence is found by the first stage of the path. Both the experts critic score and the consumer evaluation score helps people to get to know the game. So what is written by others is important for potential buyers because of the information they derive from this. 2 Table of contents Introduction Page 1&2 Theoretical background Page 3-11 Introduction into the theory Page 3&4 Identifying the subject of video games Page 4-7 Online product reviews as word of mouth marketing Page 7&8 Bandwagon theory Page 8&9 Marketing channels Page 9&10 1. Friends Page 9 2. Blogs Page 9 3. Experts Page 10 4. Producer Page 10 5. Other media Page 10 Methodology Page 11-13 Results Page 14-17 Discussion Page 18 Conclusion Page 19 References Page 20&21 3 Introduction Infinity ward and Treyarch, maybe the two most important game developers for millions of people that play the game Call of Duty. Infinity Ward´s first title, Call of Duty won 90 Game of the Year awards and 50 Editor´s Choice Awards. It also continues to be among the highestrated games, according to Game Rankings; which is a website that collects review scores from both offline and online sources to give an average rating. The other game which also enjoyed massive commercial and critical success for Infinity Ward is Call of Duty 4: Modern Warfare. After Call of Duty 4: Modern Warfare Infinity ward continues to develop the game on November 10, 2009 this resulted in the release of Call of Duty: Modern Warfare 2. Infinty Ward’s sequel to Call of Duty 4: Modern Warfare and Call of Duty: Modern Warfare 2, earned over $550 million in sales in the first five days, with $310 millions of those sales made in the first 24 hours after the game’s release. These numbers of one example in the game industry show us that lots of sales revenues are made very short after the particular game is released. Important for game developers is therefore the perception by the potential buyers before the game is released. Maybe even more important is the ongoing perception of the already owners of the game with respect to the development of new versions of the game seen in the example of Call of Duty. Because these perceptions could lead to buy intentions of the newest version. Nowadays almost every way of communication takes place on the internet; e-mailing, facebook, twitter, blogs and forums. The internet stands apart from other media in enabling its "users" to interact. From this perspective, the internet will always be, at its core, a tool for interpersonal communication. Even the tagging, posting and sharing of popular videos on YouTube are fundamentally community-related pursuits. Facilitated by countless blogs, forums, chat rooms, and social networking sites, we now live in a 24-hour rolling, emotive, media world where we can satisfy our indelible need to feel a part of the events that imfold around us (Riegner, 2007). Therefore plays the internet a dominant role in this paper. 4 This paper is focusing on trying to find out whether online word of mouth marketing by game specialists or game experts have a significant influence on the overall perception of the game by other users of the game. this paper stated that there are three main steps in buying a game. first of all you get to know the game, then there are some different kind of influences that causes buying intentions and last actual buying the game. These three main steps together with the relationship with the experts opinion are formulated in three hypotheses ; a positive experts evaluation has a positive influence on the knowledge of the game, knowledge has a positive influence on the buying intentions of the game and these buying intentions will eventually lead to actual buying the game. these paper follows this three main steps and tries to find out whether these hypotheses are significant true or not. The methodology will explain what is done, who is asked and which formulas are used. After the methodology the results will be shown and explained. Furthermore there will be a conclusion which reveals the answer on the research question and whether the hypotheses are supported or not. 5 Introduction to the theory Many opinions are being expressed on the Web in such settings as product reviews, personal blogs, and news group message boards. People increasingly participate to express their opinions online. This trend has raised many interesting and challenging research topics (Soomin & Hovy, 2006). Internet and information technology are creating a new opportunity for consumers to share their product evaluations online (Avery, Resnick and Zeckhauser 1999). Online consumer reviews are common for many product categories such as apparel, books, electronics, games, videos, music, beverages and wine. Recent evidence suggests that consumer reviews have become very important for consumer purchase decisions and product sales A study by Forrester Research finds that half of those who visited the retailer sites with consumer postings reported that consumer reviews are important or extremely important in their buying decisions (Los Angeles Times, Dec. 3, 1999). Numerous marketing and diffusion studies have demonstrated that the more favorable information a potential adopter has received from peers, the more likely that individual is to adopt (Leonard Barton, 1985). But is this also the fact when this favorable information comes from experts. Can these experts be used as a marketing tool. Is this the reason why these so called experts exists. These are questions that this paper tries to answer. This paper focuses on the product category games which is an extremely fast growing and innovative branch. The games made by the developers are more and more close to reality. Nowadays the games are so real that aggressive behavior of players is directly linked to playing such a real game. These newer and better features of the games makes it for millions of people all over the world a thrill to play such a game. These new features are also one of many key points people speculate and talk about before and after they have played the game. this paper is trying to evaluate who is participating in these so called reviews, where do they talk about, is there a clear consensus between the different kind of people participating in such reviews or not. 6 Before these questions can be answered first we need a theoretical base on the particular subject. Online consumer product review is an emerging market phenomenon that is playing an increasingly important role in consumers’ purchase decisions (Chen & Xie, 2004). Online consumer reviews are a type of product information created by users based on personal usage experience, can serve as a new element of marketing communications mix and work as free “sales assistants” to help consumers identify the products that best match their idiosyncratic usage conditions (Chen & Xie, 2004). Moreover, with the growth of online participation, consumers exert greater influence over the products and brands considered for purchase (Riegner, 2007). Identifying the subject of video games In this paper the focus category is video games. This category video games is part of what they call online entertainment. Online entertainment is defined as movies, music, games, and television content or information that is available on the web (Riegner, 2007). From a marketing perspective, the relationship between word of mouth marketing and online entertainment is even more powerful when we consider how indistinguishable entertainment and media have become online. Take short online videos or movie trailers, for example: are they marketing or free diversions from the daily grind? is this the same with blogs and reviews? Can they be used by companies as a marketing tool too? Before we can answer this question we first want an answer the next question; what are video games and why do we play them? The literature defines videogames as electronic games that involves human interaction with a user interface to generate visual feedback on a video device (Hartman & Klimmt, 2002). The reason why we play games would be first of all for our entertainment, but now that video games play a more and more prominent role in our lives there should or could be more reasons for playing them. The game technology both hardware and software is making progress rapidly. New platforms such as Sony’s Playstation 3 allow for real life sensations in terms of visual and audio presentation. The latest software used by the producers of video games take advantage of technical improvements and offers vivid imagery that comes very close to reality. This tremendous technical improvements and the growing popularity of computer games, communication researchers and media psychologists have begun to investigate, next to 7 entertainment, factors that foster the experience and reason of playing these games (Hartman & Klimmt, 2002). Video games are by far the most interactive among the other new media. Now that we can play video games in a online mode where we can play among or against other users the opportunities to participate actively in a interactive way is certainly the characteristic that makes such games distinct from other entertainment offerings like books or movies. Therefore interactivity has got the potential of fascinating so many people so frequently and for so long durations next to the entertainment that they get of playing these video games. Furthermore there is a third reason why people play videogames. This reason is given by the literature that says that video games could play a role in learning things. This third reason is perchance the most interesting one because it’s possible implications. Good video games are like learning machines. They get themselves learned and learned well, so that they get played long and hard by a great many people. This is how they and their designers survive and perpetuate themselves. If a game cannot be learned and even mastered at a certain level, it won’t get played by enough people, and the company that makes it will go broke. Good learning in games is a capitalist-driven Darwinian process of selection of the fittest. Of course, game designers could have solved their learning problems by making games shorter and easier, by “dumbing” them down. But most gamers don’t want short and easy games. Thus, designers face and largely solve an intriguing educational dilemma, one also faced by schools and workplaces: how to get people, often young people, to learn and master something that is long and challenging and enjoy it, to boot (Gee, 2003). Beyond using the learning principles that good games incorporate, schools, workplaces, and families can use games and game technologies to enhance learning. Motivation is the most important factor that drives learning. When motivation dies, learning dies and playing stops. Cognitive science has had a hard time defining motivation, though one definition is a learner.s willingness to make an extended commitment to engage in a new area of learning (Gee, 2003). Since good videogames can be highly motivating to many people, we can learn from this videogames how motivation is created and sustained. In computer and video games, players engage in .action at a distance,. much like building and remotely manipulating a imaginary you. Research suggests that such fine-grained action at a distance actually causes humans to feel as if their bodies and minds have stretched into a new space (Clark 2003), a highly motivating state. This is not something what books and movies , can do. The more a player can manipulate a game character and make decisions that has an 8 impact on the character, the more the player invests in the character and the video game at a deep level. This investment and affiliation with the video game character appears to be the strongest foundation of a users motivation in sticking with and eventually mastering a game (Gee, 2003). In a sense, all learning involves .playing a character. In a biology classroom, learning works best if students think, act, and value like biologists. Games can show us how to get people to invest in new identities or roles, which can, in turn, become powerful motivators for new and deep learning in classrooms and workplaces. These reasons given by the literature are reasons why people would play video games. The literature also shows us a negative side of playing video games. Video games have become one of the favorite activities of American children. A growing body of research is linking violent video game play to aggressive cognitions, attitudes, and behaviors (Gentile, Linch, Linder & Walsh, 2004). Research on exposure to television and movie violence suggests that playing violent video games will increase aggressive behavior. Further research to this matter shows that there is a significant relation between aggressive behavior and playing violent video games (Anderson & Bushman, 2001). In this case it is important that we know what we are talking about, because there could be many different notions of what aggressive behavior includes. Aggressive behavior is behavior intended to harm another individual who is motivated to avoid that harm. It is not an effect, emotion, or aggressive thought, plan, or wish. This definition excludes accidental acts that lead to harm, such as losing control of an auto and accidentally killing a pedestrian, but includes behaviors intended to harm even if the attempt fails, such as when a bullet fired from a gun misses its human target (Anderson & Bushman, 2001). The second definition that’s important in this matter is the definition of violent video games. First the definition of violence on itself is given. Violence refers to extreme forms of aggression, such as physical assault and murder. All violence is aggression, but not all aggression is violence Anderson & Bushman, 2001). Video games as mentioned earlier are part of what the literature call new media. This new media can be seen as violent when this it meets this definition given by Anderson and Bushman. Violent media are those that depict intentional attempts by individuals to inflict harm on others. An “individual” can be a nonhuman cartoon character, a real person, or anything in between (Anderson & Bushman, 2001). 9 Research shows us that there is a positive relation between playing violent video games and showing aggressive behavior. Although video games are designed to be entertaining, challenging, and sometimes educational, most include violent content. Recent content analyses of video games show that 89% of games contain some violent content (Gentile, Linch, Linder & Walsh, 2004), and that about half of the games include serious violent content towards other game characters. Therefore, among the games being purchased and played by youth, a majority contain violence. The popularity of video game violence has spurred much research on the possible harmful effects on children and adolescents. More negative literature about playing video games is that playing video games could have a negative influence on the school performances of those how play (Gentile, Linch, Linder & Walsh, 2004). This is not a matter of the content of the video game, but this is a matter of how much time is spend on playing video games. The same literature that says that playing video games helps people with their learning also mention the negative side of spending too much time playing videogames. Online product reviews as word of mouth marketing The use internet as a venue for voicing opinions, complaints and recommendations on products and firms has been widely reported in the popular media. However little is known how consumers use these reviews and if they subsequently have any influence on evaluations and purchase intentions of products and retailers (Chatterjee, 2001). Research on word of mouth effects provides plenty of evidence that a satisfied customer may tell some people about his experience with a company or product, but a dissatisfied one will tell everybody he meets. Virtual communities with active members who provide evaluations and opinions on products and firms now provide a venue to tell the world and represent one of the fastest growing phenomena on the Web (Armstrong and Hagel 1996). It is not surprising therefore, that providing consumers a venue to voice their opinions, recommendations and complaints and monitoring this word-of-mouth activity has become a business. Some firms may pay (in cash, points, recognition) consumers for their contributions (Chatterjee, 2001) since they can be used as marketing instrument. For this reason it is not a surprise that the literature use this definition for online reviews; Online consumer review is an emerging independent product information resource with growing popularity and importance. It has generated considerable 10 attention in practitioners and popular presses. To better understand the fundamental role of this new information channel in the market place and its strategic implications to online marketers (Chen & Xie, 2004). Chen & Xie discussing to different type outcomes of online reviews. it can offer seller created seller-created product information to consumers via its website or other traditional communication channels such as advertising, and offer consumer-created product information by allowing consumers to post their comments on the seller’s website or blogs or other review channels (Chen & Xie, 2004). The difference between these two types of information is first of all the writer of this information and second the purpose and the credibility of the information that is given. Consumer-created information is likely to be more credible than seller-created information because credibility of information is often positively related to the trustworthiness of the information source (Chen & Xie,2004). While seller-created product information is more likely to be product-oriented since it often describes product attributes in terms of technical specifications but the purpose of the information is to convince people to buy or play. When these two types of information get together you have intended word of mouth marketing which can be in direct favor of the seller. When the two types getting together and the participants have seller related instructions while they pretend to be consumers. Bandwagon theory The bandwagon effect is a well documented form of group thinking in behavioral science and has many applications. The general rule is that conduct or beliefs spread among people, as fads and trends clearly do, with "the probability of any individual adopting it increasing with the proportion who have already done so". As more people come to believe in something, others also "hop on the bandwagon" regardless of the underlying evidence. The tendency to follow the actions or beliefs of others can occur because individuals directly prefer to conform, or because individuals derive information from others. Both explanations have been used for evidence of conformity in psychological experiments (Henshel & Johnston, 1985). 11 The bandwagon effect is when individuals make rational choices based on the information they receive from others. The more they know the more they can tell other people and the more they become close with the subject. This way of getting intrigued with the subject is also what happens when people get to know something about video games. they wanted to know more and their buying intentions are getting higher and eventually these higher buying intentions will lead to actual buying the game, because they want to know where they were so intrigued by. Nowadays there are lots of different ways to get information about something you want to get to know. For instance television, radio, internet with blogs or social media. This paper discusses five of the most important ways to get information from to get to know everything you want to know about video games. Friends Friends are the most common and easiest way to get information from if you want to know something about something. Friends are people you choose by yourself because you do have something in common. Because of this kind of relationship with these friends you most of the time share the same interests. In the case of video games there probably will be a positive relation between what friends say about the game and what u think about the video game in particular. Blogs A weblog is defined as a web page with minimal to no external editing, providing on-line commentary, periodically updated and presented in reverse chronological order, with hyperlinks to other online sources. Blogs can function as personal diaries, technical advice columns, sports chat, celebrity gossip, political commentary and video game experiences or all of the above (Drezner, 2004). 12 These blogs are used by gamers to share their insights in all different kind of video games. These members of this blogs are not particular your friends but these members all talk about the same subject. Almost every video game has its own blog. Experts Literature explains experts as so called opinion leaders. Within any given social system, relatively few individuals can be identified who lead opinion formation among their peers on a given topic the ones they do are so called experts (Leonard Barton, 1985). Not everything these opinion leaders say is easily adopted and not and it’s not clear in information by these experts is critical to eventually buy something (Leonard Barton, 1985). Producer Every video game has its own producer. A team of people that make the game as they like it. This producer knows everything about the game but their information will only be positive because they made it. Other media By other media this paper includes television commercials and other marketing channels that the producer of the game uses to inform you about the video game. Because of the direct marketing relationship this also will only show you the positive aspects of the video game. By combining all these information channels you get a big platform of information about the subject video games. The bandwagon effect will in this case be from bigger influence, because of the bigger knowhow that people derives from these different channels. More channels lead to more and different information. All this information will intrigue people to know more and eventually to buy the video game because they want to experience it by their self. This phenomena is also explained in the signaling theory. The signaling theory is useful for describing behavior when two parties in particular individuals have access to different 13 information or different information platforms. Typically, on one hand the sender, must choose whether and how to communicate or signal that information, and on the other hand the other party, the receiver, must choose how to interpret the signal (Connelly a.o.,2011). Methodology To find an answer on the research question: can online word of mouth marketing by game specialists or game experts have a significant influence on the overall perception of the game by other potential users of the game, this paper did some deductive research. This means that on the base of earlier research and theories hypotheses has been made and tested. To test the above-mentioned hypotheses in a cross-sectional research is been held, using a survey as data gathering method. The survey will provide the necessary quantitative data that is needed to test the sustainability of the established hypotheses. The survey method is chosen because of its inexpensive and highly efficient nature.A free online program was used to build up the survey, facilitating ease of use in the gathering and treating of the data. This survey is shared in one week time by approximately 100 potential respondents on social media platforms with eventually 18 useful respondents. The respondents were informed about the fact that this survey is part of a research that completes a bachelor thesis at the Amsterdam Business School. Furthermore the respondents were informed about the fact that these data would only be used for this research for completing the bachelor thesis. First of all the respondents were asked to fill in their demographics including gender, age, education. In this survey they were asked about their video game experiences and in particular about their top five favorite video games. because not all of the 18 respondents did complete the questionnaire for five video games the total amount of different videogames were 39. The important information derived from the survey is the information that follows the path of the three main hypotheses; a positive experts evaluation has a positive influence on the knowledge of the game, knowledge has a positive influence on the buying intentions of the game and these buying intentions will eventually lead to actual buying the game. 14 Hypothesis 1; “a positive experts evaluation has a positive influence on the knowledge of the game”. This hypothesis is tested by asking the respondents to give the nature of its information source which provides them the knowledge about that particular game. I know this video game by information I got from friends. I know this video game by information I got from blogs. I know this video game by information I got from experts. I know this game by information I got from the producer of this particular game or previous video games. Ik know this game by information I got from other media like television commercials. The information derived from these questions is providing an insight were people get familiar with video games. In the survey it was possible to give more than one source of information for each different game. Hypothesis 2; “knowledge has a positive influence on the buying intentions of the game”. This hypothesis is tested by asking almost the same questions. I derive my buying intentions of the game because of the information I got from friends. I derive my buying intentions of the game because of the information I got from blogs. I derive my buying intentions of the game because of the information I got from what experts say about the game. I derive my buying intentions of the game because of the information I got from the producer of the game or its sequels. I derive my buying intentions of the game because of the information I got from other media like television commercials. 15 Hypothesis 3; “and these buying intentions will eventually lead to actual buying the game”. Again the distinction in nature is important for testing this third hypothesis. To analyze this hypothesis the next questions has been asked the respondents. I eventually buy this video game because of the buying intention I derived from information I got from friends. I eventually buy this video game because of the buying intentions I derived from information I got from blogs. I eventually buy this video game because of the buying intention I derived from information I got from experts. I eventually buy this video game because of the buying intention I derived from information I got from the producer of this video game or previous versions of this game. I eventually buy this video game because of the buying intention I derived from information I got from other media including television commercials With analyzing these hypotheses this research want to find a path or some kind of influences of the different channels. As mentioned above the respondents are free to give more answers for that particular game they were asked about. To analyze these hypotheses a path model analysis is done. A path model analysis is used to describe the directed dependencies among a set of variables. This analysis will show if there is any relation between these three steps. Important information that’s add in the analysis are the critic score of the experts and the consumer evaluation score. 16 Results As mentioned above a total of 18 respondents out of the approximately 100 potential respondents, filled out the questionnaire. By using all of these 18 respondents 39 data points were gathered. The results of the path model analyses show the following outcomes. First the outcomes will be shown in a table and after showing these outcomes the results will be evaluated. In table 1.1 the different influences on knowing the video games are shown with their results. Estimated standardized P value regression weights Gender and its effect on 0,266 *** 0,115 0.112 0,288 *** 0,555 *** knowing the video game Age and its effect on knowing the video game Experts critic score and its effect on knowing the video game Consumer evaluation score and its effect on knowing the video game Table 1.1 influences on knowing the video game. 17 In this table above we can see that gender has a positive effect on knowing the game. Age has also some kind of effect on knowing the game but this effect is not significant. Furthermore the table shows us that the experts critic score and the consumer evaluation score both has their influence on the knowing about the game, but if we continue the table we see that the expert critic score and also the consumer evaluation score not directly influence the buying intentions nor the actual buying of the video game. Estimated standardized P value regression weights Knowing about the game and 0,276 0,022 0,019 0,845 0,133 0,144 0,072 0,459 0,195 0,073 its influence on the buying intentions of the video game Gender and its influence on the buying intention of the video game Age and its influence on the buying intentions of the video game. Expert critic score and its effect on the buying intentions of the video game Consumer evaluation score and its influence on the buying intention of the video game Table 1.2 influences on the buying intentions of the videogame None of the above listed influences are of an significant influence. But knowing about the game has a certain kind of influence on the buying intentions of the video game. The 18 bandwagon effect as mentioned earlier clarifies this influence because people get intrigued by knowledge. Estimated standardized P value regression weights Gender and its influence on 0,139 0,047 0,018 0,784 0,126 0,066 0,123 0,144 0,765 *** 0,104 0,233 the actual buying of the video game Age and its influence on the actual buying of the video game Experts critic score and its influence on the actual buying of the video game Consumer evaluation score and its influence on the actual buying of the video game Buying intentions and its influence on the actual buying of the video game Knowing about the game and its influence on the actual buying of the video game 19 Table 1.3 influences on the actual buying of the video game Buying the game Knowing the game Gender Age Gender Experts critc score Buying intentions Age Gender Age Experts critic score Consumer evaluation score Experts critic score Consumer evaluation score Consumer evaluation score Figure 1 diagram of influences on eventually buying the game This figure shows us the influences with the color as an indicator of the significances. The color green is an indicator for the positive significant influence. The color blue is an indicator for having some kind of influence but not a positive significant influence. The color red is an indicator for having no influence at all. The figure shows us a clear view of the research that is done and shows as mentioned earlier the influences with the color as an indicator of the significances. 20 Discussion In this research the influences on the actual buying of video games are tested with the moderators the experts critic score and the consumer evaluation score. Previous research and literature has given this research a clear and good ground to build from. Numerous marketing and diffusion studies have demonstrated that the more favorable information a potential adopter has received from peers, the more likely that individual is to adopt (Leonard Barton, 1985). Also previous research has shown us that the literature about videogames can be positive and negative and the influence of these perceptions of videogames on the actual buying of the game. Furthermore research on word of mouth effects provides plenty of evidence that a satisfied customer may tell some people about his experience with a company or product, but a dissatisfied one will tell everybody he meets. Virtual communities with active members who provide evaluations and opinions on products and firms now provide a venue to tell the world and represent one of the fastest growing phenomena on the Web (Armstrong and Hagel 1996). With the bandwagon and signaling theory the results of this research can be strengthen. The more the people know about something and in this matter videogames the more they want to know about it. This snowball effect has a positive influence on the buying intentions of people known by the literature. This research shows a slightly incomplete overview about this subject in the whole research. For a more generalized and complete overview the research has to count far more participants in the survey held in this research. 21 Conclusion This research shows even though the number of respondents and data points that there is a influence on the information people get from the expert critics. What other people say and what experts say about a certain type of game have a influence on the knowhow of people about the game. We have seen that the experts critic and the consumer evaluation are moderators on what people know about the game. These moderators help the people to get to know the game. by knowing the game people want more to know as in the bandwagon and signaling theory. Eventually they know enough and are intrigued enough so that the buying intentions are so high that they buy the game to experience by themselves where they got so intrigued from. 22 References Kim, S.M. and Hovy, E. 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