From praise to polarization: the role of controversial reviews in shaping consumer behavior in the PC game market

Understanding search frictions and their impact on market shares is crucial for devising effective business strategies in digital marketplaces. This study introduces a novel controversy metric to proxy search frictions, linking three interconnected research areas: search frictions’ relationship with market share, price signaling by reputable developers, and cross-review controversy’s impact on consumer behavior. Focusing on the PC game industry on the Steam platform, we apply panel data regression analysis to reveal that search friction, as captured by cross-review controversy, exhibits an inverted-U impact on market shares, challenging traditional models. Contrary to prevailing assumptions, our research shows that established publishers do not consistently use price premiums to signal quality. Furthermore, cross-review controversy diminishes the perceived helpfulness of reviews, potentially leading to purchase deferrals. While the volume of reviews and negative sentiments are moderated by controversy, positive comments remain largely unaffected. This research provides insights into how quality signals and user-generated content shape market outcomes in digital marketplaces and highlights how an optimal level of search frictions can maximize market shares, enhancing understanding of information processing and marketing strategies in markets for experience goods.