New research shows creating a physical version of a digital product can undermine the qualities that made the original desirable.

Imagine Nike releases a virtual sneaker.

It’s scarce. It changes colour. Let’s say it glows when you run in VR, leaves animated footprints behind you, or does other stuff no physical shoe possibly could.

People want it partly because of what it can ONLY be and do in a digital world.

Then let’s say Nike decides to capitalize on its popularity.

And they make the shoe REAL.

You’d assume that would make the virtual version even more desirable.

New research suggests it can do the exact opposite.

Across multiple studies, researchers found that introducing a physical counterpart can zap consumers’ willingness to pay for the original digital product.

They call it “cross-format dilution.” 

The effect is so interesting because it appears when the digital product possesses desirable attributes unique to its format.

Put a physical version beside it and consumers start comparing the two. Those extraordinary digital attributes become less prominent in how they see the original.

Basically, its uniqueness gets watered down.

That runs against an assumption many product creators make:

If customers want something, give them more ways to have it.

Physical versions of virtual products. Or consumer versions of professional products. Or cheaper versions of premium ones. Maybe brand extensions into adjacent categories.

Hey, each is a new opportunity to sell, right?

But now we know each can also change how customers perceive what you already sell.

One of the ideas I explore throughout I Need That is that the attributes product creators value aren’t necessarily the ones creating desire in customers.

That makes understanding the source of desirability particularly important before extending a successful product.

If Nike’s hypothetical virtual sneaker succeeds because people absolutely love the design, producing a physical version could expand the opportunity beautifully.

BUT if teens only love it because it can do stuff a physical Nike never could, making it real changes the equation.

The research found that when digital products lacked desirable digital-specific attributes, the dilution effect disappeared. 

That distinction is the useful bit.

Before extending a successful product, identify exactly what customers value about the version they already have.

You could discover that a limitation you’re eager to eliminate is part of what makes the product so special.

If you’d like help creating and marketing products people feel compelled to buy, the product marketing consultants at Graphos Product can help.