Speeding Horse Inc.,a leader in the video game console market,is making its new generation consoles backward compatible with its previous games.This means that:
A) it is giving away its own installed base or complementary goods advantages to competitors.
B) it is providing a significant incentive to the owners of its previously developed consoles to buy the new console.
C) the transition of customers through product generations will become impossible.
D) a large range of complementary goods of the previous generations, mainly the games, will lose its existing value and utility.

Question

Quizplus · Accepted Answer

By making the new generation consoles backward compatible with its previous games, Speeding Horse Inc. is providing a significant incentive to the owners of its previously developed consoles to buy the new console. This is because they will not have to give up their existing games library, which will work on the new console. Therefore, this strategy can potentially increase sales of the new console as well as the company's overall revenue.