Work Text:
When and How Should Companies Cater to Fandoms?
Background
For a long time, fandoms have provided a way for audience members to interact with movies, books, and more. Fandoms create their own art and stories relating to original works, and almost always do so for free.
Creators need to think about how a potential fandom would react to their work. In most cases, there is a simple situation: the creator makes a work, and then the fandom reacts, ending the game. However, larger creators with the potential to make many works need to consider the long term interactions between themselves and fandoms.
For the sake of this analysis, I am going to analyze a real-life game between fandoms and the company, Nintendo. At this point, it is necessary to note that a common activity in fandoms is “shipping,” which is the act of making content centered around putting two characters in a romantic relationship.
Questions
Should large companies, like Nintendo, cater to fandoms, and should they shut down the ships they inspire Fandoms to create content about? In what situations should Fandoms create more content about ships, and in what situations should Fandoms create less content about ships?
The Game, in Real Life
In the real outcome of this game, Nintendo started the game by making a movie trailer for “The Super Mario Bros. Movie” that caters to an existing, but small ship between Super Mario Bros. characters, Bowser and Luigi. In reaction, the fandom grew, and fandoms created a multitude of free content around the ship. However, when the movie itself came out, Nintendo shut down any dreams the fandom had of their favorite ship entering the company’s movie. For the sake of analysis, I will call this “making it cannon.” In return, fandoms responded with frustration, but also with more content. This content increased the feeling of community around the ship and also served to ‘correct the mistakes’ of the original creator, Nintendo.
Setting Up the Game
This is a complete information sequential game. There are two players: Nintendo and Fandoms. There are four times: Trailer Phase, Reaction Phase I, Movie Phase, and Reaction Phase II. Nintendo moves in Trailer Phase, followed by Fandoms in Reaction Phase I, followed by Nintendo in Movie Phase, and ending with Fandoms in Reaction Phase II, after which each player receives payoffs.
The terminal histories for Nintendo are {Cater, More Content, Cannon}, {Cater, More Content, Shut Down}, {Cater, Less Content, Cannon}, {Cater, Less Content, Shut Down}, {Not Cater, More Content, Cannon}, {Not Cater, More Content, Shut Down}, {Not Cater, Less Content, Cannon}, and {Not Cater, Less Content, Shut Down}. The terminal histories for Fandoms are {Cater, More Content, Cannon, More Content}, {Cater, More Content, Shut Down, More Content}, {Cater, Less Content, Cannon, More Content}, {Cater, Less Content, Shut Down, More Content}, {Not Cater, More Content, Cannon, More Content}, {Not Cater, More Content, Shut Down, More Content}, {Not Cater, Less Content, Cannon, More Content}, {Not Cater, Less Content, Shut Down, More Content}, {Cater, More Content, Cannon, Less Content}, {Cater, More Content, Shut Down, Less Content}, {Cater, Less Content, Cannon, Less Content}, {Cater, Less Content, Shut Down, Less Content}, {Not Cater, More Content, Cannon, Less Content}, {Not Cater, More Content, Shut Down, Less Content}, {Not Cater, Less Content, Cannon, Less Content}, {Not Cater, Less Content, Shut Down, Less Content}.
The payoffs for Nintendo are based on two parameters: the free advertisement from fandoms (which is equal to A>0 each stage Fandoms play More Content) and having a wide audience (which is equal to W1>0 if Nintendo plays Shut Down and equal to W2<0 if Nintendo plays Cannon).
The payoffs for Fandoms are based on three parameters. The first is the cost of making content (equal to C<0 for each stage it plays More Content and equal to a L>C for each stage it plays Less Content). The second is a community building payoff (equal to -L>B1>-C for each stage it plays Less Content, and equal to B2>-L>-C for each stage it plays More Content). The last payoff is an artistic payoff (equal to F = C for each time Nintendo plays either Cater or Shut Down, and 0 if Nintendo plays Cannon).
For the sake of simplicity in solving this game, I’ll assume that A = 100, W1 = 50, W2 = -50, C = -100, L = -50, B1 = 70, B2 = 150, and F = 100. That makes the payoffs look like this:
From here, I will work to find the subgame perfect Nash equilibrium. If necessary, I will delve into mixed strategies.
Image: https://docs.google.com/drawings/d/16pzQhQppFBbMt9GD5liYRNzTZ8cumc18vNrINZjJmfs/edit?usp=sharing
Fandoms move last, so they get to choose the final payoff. They will always choose the highest payoff. Here are their chosen strategies for Reaction Phase II.
Image: https://docs.google.com/drawings/d/11ZH_EIJ8i98Y4TZBYqXFkccxfFYXwGhdmJZgJMIGiB4/edit?usp=sharing
Nintendo moves before Fandoms, so they will choose the highest payoffs based on what it believes Fandoms will play. Here are their strategies for Movie Phase. From this, we can tell that Nintendo will always play Shut Down.
Image: https://docs.google.com/drawings/d/1HCdc93tyYjgFSJUkaZvuHqpNX5YtLMujQYdh3M0QbvA/edit?usp=sharing
I will move on to the next step, where Fandoms choose the strategy that will give them the highest payoff, considering Nintendo plays Shut Down. From this, we can tell that Fandoms will always play More Content.
Image: https://docs.google.com/drawings/d/1dw22mi6gtMQ63VJswT9xh48wP-gV__Jn5q4vs7H3eNw/edit?usp=sharing
Nintendo is the very first to move, so they get to choose which strategy will help them acquire the highest payoff considering all of the strategies Fandoms play. The payoff for Nintendo is the same regardless of whether it plays Cater or Not Cater. As such, in this game, Nintendo will play either with equal probability. However, Fandoms get a payoff that is 100 higher if Nintendo plays Cater. As such, it makes sense that in the real-life outcome, Fandoms were very excited that Nintendo chose to play Cater.
Conclusion
The Subgame Perfect Nash Equilibria for this game are: {Cater, More Content, Shut Down, More Content} and {Not Cater, More Content, Shut Down, More Content}. These equilibria will be played with .5 probability each.
It appears that for Fandoms, the decision of whether to make more or less content in Reaction Phase II should be based on what Fandoms played in Reaction Phase I. In general, Fandoms should choose to make more content in Reaction Phase I.
Of course, with different assumed values for cost of creation, benefit from advertising, and benefit from community building and artistic value, the outcomes will be different. This paper serves to provide a flexible setup for the game, as well as the process for solving the game in the presence of numeric payoffs.
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