Experience Goods and Delayed Price Discovery: Evidence from Information Frictions in Game Releases

This study investigates whether financial markets efficiently incorporate information related to new product releases in industries where fundamental signals become available only after consumer engagement. Analyzing 49 commercial game launches by 13 publicly listed publishers in South Korea from 2001 to 2024, the research examines short-term return and volatility patterns around the official release date. In contrast to the pre-announcement drift in macroeconomic contexts, there is no evidence of abnormal price or volatility movements prior to launch, which is consistent with the limited informativeness of pre-release marketing for experience goods. Instead, stock prices display a significant negative return and a marked increase in volatility on the day following the launch, rather than on the launch day itself. This pattern corresponds to the delayed emergence of verifiable performance indicators, such as app store revenue rankings and early user-generated content, which typically appear only after consumer interaction with the product. These results indicate that price discovery for digital experience goods is influenced by industry-specific information frictions, which leads to delayed and discontinuous market adjustments. The study contributes to the literature by showing that ex-ante price discovery does not generalize across industries and by emphasizing the critical role of post-release signal timing in shaping event-driven asset price dynamics.