Abstract:
Although User-Generated Content (UGC) metaverse markets exhibit structural features that platform theory associates with network effects-driven concentration, empirical evidence on whether, and how, such concentration emerges in this context remains scarce. As a preliminary empirical investigation, this paper takes VRChat as the leading exemplar of a UGC metaverse, where avatars and compatible outfits are produced by independent creators and traded on external e-commerce, and examines how outfit creators allocate production effort across the avatar landscape over time. We propose a UGC metaverse network effects framework distinguishing direct and indirect network effects, and analyze the top 100 avatars from 2023 to 2025 using two complementary diagnostics: the Herfindahl-Hirschman Index as a creator-level static descriptor, and an avatar-level power-law regression of later on initial outfit stock as a dynamic descriptor of cumulative advantage. We document a divergence: although the static creator-level distribution remained stable despite a more than threefold market expansion, the avatar-level growth elasticity shifted significantly across year-pairs (Vy = 0.20, paired bootstrap 95% CI [0.06, 0.35], p = 0.003), rising from y = 0.81 in 2023 - 2024 (95% CI [0.66, 0.95]) to y = 1.01 in 2024 - 2025 (95% CI [0.99, 1.03]). The 2023 - 2024 estimate lies significantly below 1, consistent with a sublinear regime in which mid-tier avatars closed the gap with incumbents; the 2024-2025 estimate is essentially at the proportional-growth threshold. Within this preliminary scope, the shift is consistent with weakening avatar-level catch-up dynamics; it does not demonstrate increased creator-level concentration. [...] |