Product updates : attracting new consumers versus alienating existing ones

Are product updates — in terms of producers’ decisionto add new features “over-the-air” — an effective means in stimulating greater product demand and appeal? Our difference-in-differences analyses of a matched sample of 17,247 mobile apps in Google Play over a period of 24 weeks documents mixed consumer reactions. Whereas updatesattracted new consumers, existing consumers rated an app 1.1% worse than before the update and compared to a control group of not updated apps. Why did existing consumers react negatively to updates? Our data provides little support that economic reasoning — i.e., directcosts or learning costs imposed by the update — underlies these reactions. Instead, negativereactions appear—at least to a certain degree — as a behavioral phenomenon, as consumer reviews show an increased density of affective vocabulary after an update. We discuss the plausibility of a producer-side trade-off when it comes to updates: updates may stimulate newdemand but may alienate existing consumers.