Strategic Category Migration: Responding to Category Splits on Online Platform

Product categorization has been considered to reduce search costs for buyers and enhance the discoverability of products for sellers. This study examines how digital goods suppliers can leverage platform-driven category splits to succeed in mobile application markets. In November 2015, a leading mobile app store split an existing category, establishing an additional taxonomy and allowing developers to voluntarily migrate their apps to this category. Using a quasi-experiment design, we find that migrated apps exhibited improved sales performance compared to non-movers. Notably, first- and second-movers showed significantly higher performance, while later followers experienced no substantial changes. These key findings contribute to the strategic categorization literature and offer valuable insights for both online platform participants and digital goods sellers.