Speeding Horse Inc.,the 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 and games.
C) the transition of customers through product generations will become difficult.
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 and games. This can potentially increase customer loyalty and provide a smoother transition for customers to upgrade to the new consoles. It does not necessarily mean that the company is giving away its own installed base or complementary goods advantages to competitors, making the transition of customers through product generations difficult, or devaluing the existing value and utility of complementary goods of the previous generations.