Same-side network effects exist when users gain or lose value from other users of the same type, such as people on a messaging app or players in an online game. They are also called direct network effects.
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Types of same-side network effects
- Positive: more users of the same type make the product more valuable, as with more friends to message.
- Negative: more users of the same type make it worse, through congestion or competition, as with sellers competing for the same buyers.
Key factors
- Who joins. Users gain most from people they actually know or interact with, so local and social clusters matter more than total size.
- Congestion. Past a point, extra users slow the service, crowd spaces or compete for attention.
- Multihoming. If users can easily use several networks at once, being the biggest network matters less.
- Frequency of use. Products used often show their network value quickly, while rarely used ones build it slowly.
Examples
Signal. In January 2021, after WhatsApp announced changes to its privacy terms, millions of people moved to the messaging app Signal. Sensor Tower counted 17.8 million Signal downloads in the week to 12 January. Each person who moved made Signal more useful to their contacts, a positive same-side effect.
Arrowhead Game Studios. Arrowhead’s game Helldivers 2 became a surprise hit in February 2024. More players meant more people to team up with, but its servers could not cope, and the studio capped concurrent players at about 450,000. Extra players then made the game worse for everyone, a negative same-side effect from congestion.
Frequently asked questions
What is the difference between same-side and cross-side network effects?
Same-side effects run within one group, such as players helping other players. Cross-side effects run between groups, such as buyers attracting sellers.
Are same-side effects always positive for social networks?
No. More users bring more contacts but also more noise, spam and unwanted attention. Many people get most value from a small group they know.
How do platforms reduce negative same-side effects?
By adding capacity, ranking and filtering content, limiting how often users can post or contact others, and splitting large groups into smaller spaces.
Do same-side effects make markets tip?
They can. Strong positive same-side effects push users towards the network their contacts use, especially when using two is a hassle.
Full guide: Network effects: why they matter
Related concepts
Cross-side Network Effects
Network Effects
Network Externalities