Vol.:(0123456789) 1 3 Journal of Business Ethics https://doi.org/10.1007/s10551-022-05137-7 ORIGINAL PAPER Do LGBTQ‑Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video Game Industry Petr Parshakov 1 · Iuliia Naidenova 1 · Carlos Gomez‑Gonzalez 2 · Cornel Nesseler 3 Received: 18 November 2021 / Accepted: 26 April 2022 © The Author(s), under exclusive licence to Springer Nature B.V. 2022 Abstract This paper empirically examines how consumers react when a company marks a product with a gay label. The company under scrutiny is one of the largest video game developers in the world, and the labeled product is a popular video game character. We use a regression discontinuity design to exploit the quasi-experimental setting. The main finding was significant drop in demand for this character and a return to previous levels after approximately 3 months. Possible mechanisms and dynamics were explored by analyzing demand for other characters and by surveying consumers. The results are consistent after performing robustness checks based on grid search, subsampling, and placebo tests. Keywords LGBTQ-inclusive policy · Consumer behavior · Discrimination Introduction Advances in lesbian, gay, bisexual, transgender, and queer (LGBTQ) rights such as marriage, civic participation, and workplace equality set the strategic agenda of most devel- oped countries. Same-sex marriage became a reality in many countries after the Netherlands passed the first law in 2001. 1 In many places, serving in the military is no longer deter- mined by sexual orientation or gender identity; renowned brands publicly support LGBTQ projects; and inclusive workplaces are becoming the rule in organizations world- wide (Stonewall, 2021). Firms and organizations implement LGBTQ-inclusive policies that take many forms, some of which attract research attention (Anteby & Anderson, 2014; Chintrakarn et al., 2020; Creed et al., 2002; Cunningham & Nite, 2020; Day & Greene, 2008; Kaplan, 2006; King & Cortina, 2010; Pichler et al., 2018; Theodorakopoulos & Budhwar, 2015). This research analyzes the impact that LGTBQ-inclusive meas- ures and anti-discrimination policies in the workplace have on outcomes such as firm performance, employee retention, and recruitment. Our study aims to contribute to this litera- ture by analyzing how LGBTQ brand positioning influences consumer behavior. Specifically, we investigate the change in demand after the implementation of an LGBTQ-inclusive policy in the video game industry. This industry is growing rapidly and attracts many con- sumers from an early age. Video games greatly impact the audience. Positive effects are associated with better social well-being when playing video games with others (Halbrook et al., 2019). However, research often finds harmful effects regarding addiction (Van Rooij et al., 2010), the objectifica- tion of women (Behm-Morawitz & Mastro, 2009; Gestos et al., 2018), and violence and aggression (Adachi & Wil- loughby, 2016; Carnagey et al., 2007; Dill & Dill, 1998). We consider this setting to analyze the consequences of socially responsible behavior of a video game developer. Specifically, we identify a quasi-experimental setting in 2019 after Overwatch, a team-based video game developed and published by Blizzard Entertainment, declared one of the game characters as gay. On January 8, 2019, a spokesperson announced via Twitter that one of the game’s shooting charac- ters, Soldier:76, was gay (Chu, 2019a). This LGBTQ-friendly news was actively discussed in social networks and media, * Petr Parshakov pparshakov@hse.ru 1 HSE University, Perm, Russia 2 University of Zurich, Zurich, Switzerland 3 Norwegian University of Science and Technology, Trondheim, Norway 1 Research examines the economic impact of same-sex marriage in specific states/regions and find positive associations, e.g., Zhu and Smieliauskas (2021). P. Parshakov et al. 1 3 including business news sources such as Business Insider (Webb, 2019). By analyzing the demand for Overwatch characters at 63 points in time, we traced the dynamics of the demand (pick rate) for Soldier:76 before and after the LGBTQ labeling. The pick rate is our dependent variable and represents how often a character is chosen. This variable reflects clean consumer behavior patterns within the video game setting. Using a regression discontinuity design (RDD), we found that the pick rate of Soldier:76 significantly decreases after the announce- ment compared to all the other characters. The effect is quite substantial but rather short lived. This change in consumer behavior does not have long-term effects, which generates implications for firms interested in promoting LGBTQ rights through product branding. To corroborate that the results are consistent, we performed a series of robustness checks including grid search, subsam- pling, and placebo tests. Firms also have different products available for LGBTQ labeling and do not use their whole collection for this purpose. To understand the mechanisms behind consumer behavior and the decision-making process of companies, we examine the same-skill characters available for selection and perform further analyses. Additionally, we perform a survey asking Overwatch players about their views in order to gain further insight into the situation with respect to Soldier:76. Our empirical study adds to the narrow body of literature concerning the influence that LGBTQ-inclusive policies have on firm value (Pichler et al., 2018), innovation (Hossain, et al., 2020), and credit ratings (Chintrakarn et al., 2020). Our study also contributes to the literature on consumer responses to cor- porate social responsibility (CSR). This literature mainly relies on consumer satisfaction and purchase intention, but to date, has not considered LGBTQ-related factors (Deng & Xu, 2017; Palihawadana et al., 2016; Tian et al., 2011). Our empirical strategy and the quasi-experimental setting allow us to link changes in LGBTQ firm strategies to consumer responses in demand and infer a causal relationship that results from a pub- lic company announcement. The paper is organized as follows: Related Literature and Hypotheses reports the findings from previous studies related to LGBTQ-inclusive policies, corporate social responsibility measures, firm performance, and consumer behavior. Data and Methods describe the research design and the methodological approaches. Results present the findings and discusses possible interpretations and implications. Concluding Remarks sum up and conclude the paper. Related Literature and Hypotheses Corporate Social Responsibility Corporate social responsibility measures are aimed at con- necting the lines of action of organizations with desirable outcomes in society (Bowen, 1953). There is no consensus in the CSR literature as to whether CSR activities should be aligned with the company’s financial performance (Wang et al., 2020). Good CSR practices have the poten- tial to enhance firm performance and, under certain condi- tions, even compensate for firm weaknesses, such as poor corporate ability (Berens et al., 2007). Most empirical studies on CSR focus on factors that help align CSR activities with financial performance. Hill- man and Keim (2001) suggest that building relationships with the main stakeholders—consumers, employees, and suppliers—is key to enhancing firm performance. Research examines the impact of CSR on particular stakeholders such as consumers (e.g., Chernev & Blair, 2015; Inoue et al., 2017; Lee & Shin, 2010) and employees (Onkila & Sarna, 2021). Overall, the findings are mixed (Barauskaite & Streimikiene, 2020; Cavaco & Crifo, 2014; Tang et al., 2012). We identify two main theoretical frameworks dealing with this issue. From a stakeholder theory perspective, Free- man (1984) discusses CSR and the complex relationship between firms and stakeholder groups. The performance of the firm can be positively affected if, for example, there is consumer demand for CSR (McWilliams & Siegel, 2001). Consumer-focused studies show that CSR can positively affect a company’s reputation and consumer loyalty (Osakwe & Yusuf, 2020; Stanaland et al., 2011; Walsh & Bartikowski, 2013), strengthen the willingness of consumers to engage in positive word-of-mouth (Lacey et al., 2015), and improve evaluations of the functional performance of company prod- ucts (Chernev & Blair, 2015). Friedman (1970) frames investment in CSR as an agency problem: although managers may benefit in terms of their career goals, the investment does not necessar- ily improve the efficiency of the firm itself. Research documents overinvestments in CSR by firms that result in modest financial gain (Barnea & Rubin, 2010) as well as negative responses of consumers, such as lower behavioral loyalty in terms of product repurchase (Inoue et al., 2017) or share of wallet (Ailawadi et al., 2014). Chernev and Blair (2015) note that socially responsible firms can be perceived as less competent in their core area of expertise, and emphasize that a company’s prosocial behavior should be aligned with consumers’ moral values. CSR takes many forms, among which corporate vol- unteering, employee fairness, environmental programs, Do LGBTQ‑Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video... 1 3 and responsible investment are most commonly consid- ered (Ailawadi et al., 2014; Inoue et al., 2017; Wang et al., 2020). There can be other CSR measures, however, such as selling locally produced products (Ailawadi et al., 2014) or LQBTQ-friendly and inclusive policies (Brahma et al., 2021). Companies may also address CSR and company branding strategically (Vallaster et al., 2012). Actions and public statements that help companies present themselves as open minded, liberal, and supportive regarding the rights of minority groups are likely to improve perceived CSR and, consequently, consumer trust and loyalty (Sta- naland et al., 2011). Among actions to support the LGBTQ movement and enhance perceived CSR, product branding is a popular strategy with a strong impact (Friederichsen, 2019). LGBTQ‑Inclusive Policies Some brands and firms actively support social movements through publicity and marketing campaigns and product labeling. For example, during soccer Euro 2020, Volkswa- gen, Booking, and TikTok showed pitch-side rainbow adver- tisements and made public statements in favor of LGBTQ rights (McCarthy, 2021). We interpret this type of LGBTQ- friendly initiative from brands that are well positioned in the market as CSR measures. However, although the public acceptance of the LGBTQ community has improved in some countries, 2 it does not necessarily mean that the LGBTQ community or products associated with it enjoy a better posi- tion (Adamczyk & Liao, 2019). Previous studies find that LGBTQ-inclusive policies pro- vide firms and organizations with benefits related to human resources, marketing, and performance. LGBTQ-inclusive policies in the workplace, which allow members to be open about their sexual orientation, have been linked to better employee recruitment, lower employee turnover, and a less stressful working environment (Clermont, 2006; Metcalf & Rolfe, 2011; Ragins & Cornwell, 2001; Ragins et al., 2007; Stonewall, 2021). Research shows that LGBTQ-inclusive companies can profit from positive consumer attitudes (Cunningham & Melton, 2014; Patel & Feng, 2021; Pounders & Mabry- Flynn, 2016). In the US, LGBT identification has increased from 3.5% in 2012 to 5.6% in 2020 (Jones, 2021), which significantly increases the pool of potential consumers from this group. LGBTQ consumers have higher income levels than heterosexual counterparts (Colgan et al., 2007; Iwata, 2006; Paul et al., 2011) and they are loyal to products from LGBTQ-inclusive companies (Clermont, 2006; Valenti, 2012). Consequently, a few studies have considered the impact of LGBTQ-inclusive policies on the financial performance of firms. Research indicates that LBGTQ-inclusive policies have a positive effect (Johnston & Malina, 2008; Li & Nagar, 2013; Pichler et al., 2018; Wang & Schwarz, 2010). Addi- tionally, Chintrakarn et al. (2020) show that companies that adhere to this type of LGBTQ-inclusive policy enjoy better credit ratings. Despite the positive association between LGBTQ-sup- portive policies and performance, establishing a causal rela- tionship is challenging, especially using the firm value of big companies as the dependent measure. Supportive policies may also have detrimental effects. Chintrakarn et al. (2020) pointed out that if LGBTQ-inclusive policies are not ben- eficial for shareholders, they may enhance the public image of managers but be a waste of resources for the organization as a whole. Indeed, several studies find that more effective and insider ownership companies invest significantly less in CSR (e.g., Cespa & Cestone, 2007; Chintrakarn, et al., 2016; Oh et al., 2011). Additionally, although the public acceptance of LGBTQ rights has improved in most countries, this group still suffers from explicit and implicit discrimination in several social domains (Coffman et al., 2017; Dessel et al., 2017). Chin- trakarn et al. (2020) find that companies located in regions with a better attitude toward LGBT communities are more likely to adopt congenial policies. The upshot is that analyz- ing only small, local companies can result in biased findings. Beyond the influence of LGBTQ-inclusive policies on firm financial performance, there are implicit marketing- related benefits in CSR initiatives related to consumer behavior (Brown & Dacin, 1997). CSR initiatives are not always effective, however (Sen & Bhattacharya, 2001). There is extensive research on the reaction of consumers to different CSR initiatives (e.g., Deng & Xu, 2017; Pali- hawadana et al., 2016; Tian et al., 2011), but so far we have only limited evidence on how consumers react to LGBTQ- inclusive measures. Our paper contributes to this literature by empirically testing how consumers react in terms of demand when confronted with a new gay-labeled product in the video game industry. Product Branding and Consumer Behavior in Computer‑Mediated Environment Product branding is a business strategy that consists of describing or designing a product to differentiate it from other products (Ward & Lee, 2000). For example, car manu- facturers brand cars as being especially appropriate for fami- lies, singles, or adventurous consumers. Airlines brand their 2 In a 2012 poll directed at members of the LGBT community, 92% of the respondents stated that they see society as more accepting than ten years before (Pew Research Center, 2013). Attitudes toward LGBTQs vary greatly throughout the world and change gradually (Haerpfer et al., 2020). P. Parshakov et al. 1 3 services as safe and reliable. Soft drink companies brand products as healthy, exciting, exotic, or suited for younger consumers. Fast-food companies try to rebrand their prod- ucts as healthy and eco-friendly and expand the variety of their offerings. A more recent phenomenon is branding a product as LGTBQ friendly to attract this group of consum- ers and enhance perceived CSR (Friederichsen, 2019). Popular clothing and footwear brands such as Nike and Converse also support the LGBTQ + and Black communities by creating products with symbols, colors, and logos that reference these movements. Beyond clothing and footwear, other global brands such as Skittles, Starbucks, Apple, and Fossil use product branding to align with the LGBTQ move- ment. There are many examples of companies that launch LGBTQ-themed products, especially at public events that maximize attention. During pride month (June), many companies take the opportunity to introduce products—with supporting slo- gans—focused on LBGTQ consumers. For example, in 2014, San Francisco Burger King started to sell the Proud Whopper and use slogans such as “Be Your Way” and “We Are All the Same Inside.” On June 1, 2021, LEGO launched its first LGBTQ-themed set with figures and colors that resemble a rainbow. This initiative by LEGO is part of a long-term commitment to creating diverse, inclusive workplaces in partnership with organizations such as Stone- wall, Workplace Pride, and Open for Business. Similarly, the video game developer and publisher Blizzard honors LGBTQ gamers with the Overwatch League Pride Day, which includes special themed features and merchandising (Venter, 2021). LGBTQ-themed product branding aims to improve the visibility of members of this minority group and challenge social norms, which often shape behavior (Bursztyn & Jensen, 2017; Holland et al., 2013; Jones et al., 2014; Li & Li, 2014). CSR measures such as LGBTQ-themed product branding can create more inclusive societies because aware- ness and role models have the potential to change social norms, influence attitudes, and reduce inequality (Bertrand & Duflo, 2017). On the other hand, LGBTQ-supportive policies can be harmful to companies (Chintrakarn et al., 2016). There are several risks that companies face when implementing CSR measures. In addition to the danger already discussed—man- agerial gain at shareholders’ expense (Friedman, 1970)— companies face the risk of losing consumers with certain religious or cultural values. For instance, after Burger King (BK) aligned some of its products with the LGBTQ move- ment, some consumers voiced their displeasure on social media: “You can take that pride BS and shove it BK, me and my family are going somewhere else!” (Peterson, 2014). Thus, companies that support LGBTQ initiatives may also introduce strategic features in order to balance legal compliance with consumer moral diversity, especially in countries where LGBTQ issues face opposition. Blizzard Overwatch League Pride Day is one such example (Venter, 2021). Today’s business setting is strongly influenced by con- sumers’ use of online platforms to access information, build relationships, and create social networks (Joo et al., 2011). Social media and online platforms function as electronic word-of-mouth and represent a powerful way to influence consumer attitudes about products and brands (Podnar & Javernik, 2012). Negative comments toward brands and products in this context are an important threat for firms. Additionally, in computer-mediated environments, social norms often become less potent due to reduced social pres- ence (Li & Li, 2014) and anonymity (Cirucci, 2013). A person is more likely to behave in a socially desirable way when others are around. Playing video games, individuals are more likely to openly express their uncensored attitudes (Li & Li, 2014). The Overwatch Case Causal analyses of consumers’ reactions to CSR LGBTQ- inclusive practices in computer-mediated environments are nonexistent in the literature and a possible strand of novel research. In our study, we examine the online multiplayer game Overwatch. It is a team-based, first-person shooter game developed by Blizzard Entertainment. Overwatch is one of the world’s most popular games, generating more than a US$1 billion in revenue and played by some 50 mil- lion consumers worldwide since it was launched in 2016. In Overwatch, consumers choose one of 32 different characters (products) each time they play. Each character is unique in appearance and skillset. The skills determine a player’s role in a team and the style of play. On the game’s website, the company briefly describes and updates the stories of the characters. Comics, animated short videos, and social networks are used to create these stories. This is a way of marketing that aims at keeping the consum- ers interested and attached to the product. The story of a character, however, does not affect its skillset— the product stays the same (Venter, 2021). In January 2019, Blizzard released the short illustrated story “Bastet” (Chu, 2019b), which revealed Soldier:76’s close relationship with a man in the past. Managers from the company publicly announced through different platforms that the character was gay. The announcement attracted considerable attention on social media. At first, consumers seemed to welcome the announcement: the initial tweet received 26,000 likes. How- ever, the most popular retweets were negative. One such was “uninstall overwatch.” The story evoked a huge, though short Do LGBTQ‑Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video... 1 3 term, interest in both game and character. Figure 1 shows how the interest sharply increased after the announcement. Our empirical analysis aims to examine the consumer response to the announcement. Specifically, we ask whether the character pick rate was penalized after Blizzard took this LGBTQ-friendly step (Venter, 2021). The setting is well suited to test the response of players to the LGBTQ- supportive measure because the skillset of the characters is unaffected by their sexual orientation. Hypotheses Public attitudes about sexual orientation have become stead- ily more positive in most developed countries, and the iden- tification with the LGBTQ movement has increased in recent years (Jones, 2021). Previous research analyzes how con- sumers react to CSR. Following the dominant stakeholder theory in CSR (Freeman, 1984), this research is crucial for firms to understand the impact of their CSR decisions on key stakeholders. Positive associations of consumers with CSR in terms of awareness, information processing, trust, and ethical ideologies, anticipate a positive reaction (Deng & Xu, 2017; Palihawadana et al., 2016; Tian et al., 2011). Based on the empirical evidence on LGBTQ-supportive corporate policies, which also reflects consensus on ben- efits for companies that engage in such policies (Chintrakarn et al., 2020; Hossain et al., 2020; Johnston & Malina, 2008; Li & Nagar, 2013; Pichler et al., 2018; Wang & Schwarz, 2010), it is possible that consumers will welcome the actions taken by the firms to increase diversity, e.g., through LGBTQ-themed products. More specifically, we hypothesize that video game users will pick more often new LGBTQ- themed products to participate in the contest. We label this the inclusiveness hypothesis Research identifies several moderators that influence con- sumer response to CSR measures such as CSR demand from consumers (McWilliams & Siegel, 2001), trust and aware- ness (Tian et al., 2011), ethical ideologies (Palihawadana et al., 2016), identification with a company (Deng & Xu, 2017), and several demographic aspects such as age, income, or education (McWilliams & Siegel, 2001; Tian et al., 2011). Video game users’ youth challenge the features that moder- ate positive responses to CSR measures (ESA, 2021). Addi- tionally, research extensively discusses the masculinity and manliness stereotypes inherent in the video game industry (Taylor & Voorhees, 2018), especially in first-person shooter games (Voorhees & Orlando, 2018). Thus, we cannot rule out that some users will negatively respond to the new gay- labeled character. Over the last thirty years, several countries, including the United States, have experienced increasing support for LGBTQ; however, there are multiple countries where the majority disapprove of homosexuality (Adamczyk & Liao, 2019). As our video game setting is global, we can also expect a negative response in demand to the new gay-labeled character, especially in the short term as habituation is a slow process and shaping social norms takes time (Groves & Thompson, 1970). Several studies also show that there remains a substantial amount of discrimination and anti-gay sentiment that research and society tend to underestimate (Coffman et al., 2017; Dessel et al., 2017). Additionally, the anonymity that characterizes com- puter-mediated environments is likely to overcome social norms (Cirucci, 2013; Li & Li, 2014), foster negative atti- tudes toward LGBTQ-related campaigns and policies by firms worldwide (Peterson, 2014), and negatively influence Fig. 1 Google normalized search activity (from 1 to 100) for the term “Soldier:76” in Jan- uary 2019. The dashed vertical line represents the date of the announcement (January 7). The horizontal line represents the maximum pre-announcement search activity level P. Parshakov et al. 1 3 consumer behavior. In our setting, several social media users shared negative comments and concerns after Blizzard decided to brand the Overwatch character Soldier:76 as gay. 3 This precedent predicts that some video games users may also penalize LGBTQ-inclusive efforts and pick less often new LBGTQ-themed products. We refer to this hypothesis as the discrimination hypothesis Data and Methods In Overwatch, players are assigned to two teams of six, which aim to complete map-specific objectives within a given period of time. Each player selects their character from a roster of 32. Characters vary in their ability, appearance, and personal details. A character’s popularity is reflected in its “pick rate”: how often it is chosen out of the total set of characters. To access pick rates, we rely on data provided by Overbuff.com, a con- sumer website that helps players improve. In addition to pick rates, Overbuff publishes tie and win rates per character. Naturally, characters differ in their pick rates, presumably due to role, strength, ease of play, personal background, and so on (Kinkade & Lim, 2015). Because archival data are not available on the Overbuff webpage, we collect it via the Wayback Machine, a digital archive that provides data on characters’ historical pick rates. The data are not saved regularly, so there are different inter- vals between collection points. Fortunately, however, there are numerous observations close to the date of the Soldier:76 announcement. Our sample includes 1777 observations on each Overwatch character for 63 points in time from Sep- tember 2018 until May 2019. Figure 2 shows the dynamics of the pick rate for Sol- dier:76 and the average pick rate for all other characters. The average pick rates for all characters are stable across the time period. In contrast, we find a sharp decrease in pick rate of Soldier:76 after the announcement. To test whether there is a statistically significant decrease in pick rate after the announcement, we use a regression discontinuity design (RDD). RDD is a popular, quasi-exper- imental technique in economics research (Angrist & Lavy, 1999; Goldberger, 1972). We use this approach because we cannot simply compare the treated character to the group of other characters because the characters are probably different from each other with respect to observable and unobservable skills. This might potentially bias the estimates of another method of treatment effects estimation. Another reason to use RDD is that the character’s in-game abilities did not change at all during the analyzed time period. Therefore, the only reason for the change in pick rate is the user’s attitude toward the new information regarding the gay background of Soldier:76. Additionally, we perform tests to trace consumer demand dynamics for other Overwatch characters. We focus espe- cially on the only other LGBTQ-branded character in the game, Tracer. Finally, we perform a survey among Over- watch gamers to gain insights into the underlying mecha- nisms and explore the social significance of the demand dynamics. The survey was posted on Reddit for 3 weeks and is retrospective. 4 Nevertheless, the input is useful to assess the importance of characters’ stories, the controversy Fig. 2 Dynamics of the pick rate of Soldier:76 (right panel) and average pick rate for the rest of the characters (left panel). The dashed vertical line represents the date of the announcement (January 7). 95% confidence intervals are in gray 4 This means that respondents are not likely to be involved in the demand dynamics that our empirical analysis captured back in 2019. 3 In Twitter, for example, the announcement of Soldier:76’s homo- sexuality generated negative comments and reactions from multiple users and received much attention, e.g., https:// twitt er. com/ CDawg VA/ status/ 10833 31913 87042 6112?s= 20. Do LGBTQ‑Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video... 1 3 around the announcement of Soldier:76’s homosexuality, the acceptance of LGBTQ-inclusive initiatives, and the interpre- tation of the results. The questions of the survey are avail- able in the Appendix. Results The Effect of LGBTQ Branding on Consumer Demand Figure 3 represents the results of the RDD. The vertical line represents the date of the announcement. The other lines represent the dynamics of the pick rate for Soldier:76 (panel a) and its confidence intervals. We have 16 points in time before the treatment and 20 after the treatment. There is clear evidence of a decrease in the pick rate. The local average treatment effect is 0.11 percentage points, which is 5.1% of the average pick rate for Soldier:76. We performed a series of robustness checks to test that the result is reliable. All show that the effect is statistically significant and varies from 0.10 to 0.19. This finding provides support for the discrimination hypothesis and suggests that anti-gay sentiment is still pre- sent in society (Coffman et al., 2017; Dessel et al., 2017) and can influence consumer behavior. This negative attitude toward an LGBTQ-friendly policy contrasts with the posi- tive perceptions of consumers to LGBTQ-inclusive equality policies, advertising, and imagery (Cunningham & Melton, 2014; Patel & Feng, 2021; Pounders & Mabry-Flynn, 2016). In this case, video game users decreased their demand for an LGBTQ-branded product by 5%. It should be noted, however that the demand metric is relative and could be affected by the increase in demand for other products (video game characters). We also performed a “placebo” test. We tested if the pick rate of the other characters was affected on this day to understand if there was a com- mon shock that day not related to the announcement of Soldier:76 as gay. To do this, we performed an RDD for the average pick rate for a sample of non-LGBTQ charac- ters with similar styles of play and skillsets. Panel (b) of Fig. 3 shows the results. At the time of the announcement, the average pick rate of characters other than Soldier:76 was not affected. So, the decrease of the pick rate for Sol- dier:76 is due to the LGBTQ announcement. Figure 2 shows the recovery of Soldier:76’s pick rate after the announcement, and we can estimate when the pick rate returns to its previous level. To test this formally, we performed an RDD with grid search, skipping on each iteration an increasing number of days after the treatment to determine when the effect is no longer statistically significant. The analysis shows that starting from April 11, the pick rate again has the same level as before the announcement. Thus, it took about 3 months (94 days) for demand to return to its previous level. Underlying Mechanisms To better understand consumer dynamics regarding gay products, we performed additional analyses. First, we focused on another LGBTQ-branded product in the same game, the lesbian character Tracer. This character was declared as LGBTQ long before the announcement about Soldier:76. We performed another RDD to understand whether the announcement regarding Soldier:76 affected the pick rate of Tracer. Figure 4 shows that the pick rate for Tracer increased, and this effect is statistically significant. Soldier:76 and Tracer are the same character type, so the decrease in Soldier:76 could increase the pick rates for all same-skill characters. However, we do not find such an effect for the other same-skill characters. Thus, the announcement regarding Soldier:76 positively affected demand for the only other LGBTQ character. To some extent, this finding supports the inclusiveness hypothesis. However, our data have limitations that prevent us from identifying and tracking individual users’ choices Fig. 3 Regression discontinuity design results for Soldier:76 ( a ) and for the placebo test ( b ). Pick rate is represented on Y -axis, time on the X -axis. The dashed vertical line represents the date of the announcement (January 7). 95% confidence intervals are presented by dashed lines P. Parshakov et al. 1 3 for characters. We know that after the LGBTQ-supportive announcement about Soldier:76, there were homophobic comments and insults in the game live chat. Several users shared this fact on social media platforms like Twitter. 5 Therefore, one possibility is that some players did not necessarily dislike the gay-branded product; rather, they disliked something around the public announcement that drove unexpected attention to this character. This expla- nation is in line with previous research that suggests that consumers in the video game industry are supportive of LGBTQ-friendly policies (Jones, 2021). One can assume that the demand recovery for Soldier:76 was due to attracting new players to the game. Unfortunately, there are no player-level data to investigate the composi- tion of players. However, we can test whether there was a substantial change in Overwatch popularity using country- level data. For the keyword “Overwatch,” we collected a cross-sectional dataset for the quarterly periods before and after the announcement. The dataset represents the popu- larity of this search term by country. There are limitations of such use of Google trends, as the two cross sections are both normalized to be distributed from 1 to 100 (Parshakov, 2021); that is, they indicate the relative popularity contrast to absolute. The Spearman’s rank-order correlation coefficient for the search term before and after the announcement is 0.89 ( p < 0.001), indicating that the popularity of the game did not change much. To gain insight into the drivers of the consumers’ reac- tions, we performed a survey among Overwatch players. Fol- lowing Välisalo and Ruotsalainen (2019), we asked players on an Overwatch Reddit channel to participate. The survey was performed three years after Soldier:76 was announced as gay; therefore, it should be evaluated with caution. The sample consists of 263 players. It includes a substantial proportion of female players (16.3%); varies in age, with most respondents 18–24 (52.5%) who are mostly from North America (49.4%) and Europe (39.5%), but also Oceania (6.8%), Asia (3%), South America, and Africa. 6 In the sample, most (79.8%) players “sometimes” play with Soldier:76. Of these, 84.9% know that he is gay; among players who do not play with Soldier:76, 81.1% know that he is gay. Nearly all (98.5%) players know that Tracer is lesbian. We asked players if they remember the controversy that the announcement of Soldier:76’s homosexuality generated, and how long it lasted. More than half (57%) remembered. Among these, most thought the controversy lasted between one or 2 weeks (52.3%) or 1 month (25.8%). This timeframe is in line with the temporary drop in the pick rate found in our analysis. In an open-ended question, players were asked to provide further details about the controversy. Some stated that the controversy was “not a big deal,” “covered other controver- sies,” or “was not a controversy at all.” Others shared stories about insults and hostility in social media and chats: “People on Twitter got mad and called my friends and I homophobic slurs”; “An uptick in expressed homophobia either in the forums or in-game chat.” Still others commented more gen- erally on the “importance of backstories for characters” in the Overwatch community, the possibility that it was just a “popularity move by Blizzard,” or it led to much “specula- tion about other characters’ sexuality.” Some respondents did not care much about the issue one way or the other, but others found the issue important. Some 27.4% of respondents said that they would be annoyed by comments in social media concerning the sexual orientation of a hero. Some respondents shared personal details about Fig. 4 Regression discontinuity design results for Tracer. Pick rate is represented on Y -axis, time on the X -axis. The dashed vertical line represents the date of the announcement. (January 7). 95% confidence intervals are presented by dashed lines 6 The results of the survey are available from the authors upon request. 5 See, for example, https:// twitt er. com/ Brend enLive/ status/ 10824 27372 29131 7760?s= 20; https:// twitt er. com/ benny___ bee/ status/ 10823 82247 28880 7425?s= 20; or https:// twitt er. com/ NotTa rzan6 66/ status/ 10824 27694 75376 3329?s= 20 Do LGBTQ‑Supportive Corporate Policies Affect Consumer Behavior? Evidence from the Video... 1 3 homophobic comments on live chats, forums, and social media. Companies that adopt LGBTQ-related policies risk pub- lic controversy and even hostility from some consumers. Therefore, it is important to know the social significance for stakeholders of such initiatives. We also asked players if they are in favor of Overwatch increasing sexual diversity among characters. Some 81% were in favor, although many shared concerns about the timing of the change as well as the lack of updates and other forms of support. Finally, we provided participants with the results con- cerning the temporary drop of Soldier:76’s pick rate and the increase of Tracer’s. Most players linked the drop in demand for Soldier:76 to homophobia: players didn’t want to be associated with gay characters or were the target abusive comments. The argument was that if players wanted to avoid abuse, they would choose Tracer instead of Soldier:76. Some explained that “the two heroes [Tracer and Soldier:76] can be played similarly as a self-sufficient, high mobility flanker, so it makes sense that people would switch from one hero to the other.” Several mentioned the different attitudes toward gay and lesbian characters; for example, “Attractive lesbians are more tolerated than gays by hetero men.” The main finding of the present study is a negative short- term impact on a newly identified gay character. This is not in line with previous studies (Cunningham & Melton, 2014; Pounders & Mabry-Flynn, 2016). One explanation is that our sample includes consumers from all over the world, unlike studies that have used only US consumers (Adamczyk & Liao, 2019). As the LGBTQ community is a significant part of the global video game market, companies should, there- fore, consciously use LGBTQ branding, but be ready to deal with possible short-term negative reactions. From the company’s performance perspective, the main finding here is the reversion of demand for the product after 3 months. The reversion is probably because the spotlight shifted to another topic. While short-term drops in demand after the implementation of the LGBTQ-friendly policy can negatively impact stakeholders’ interests, the long-term financial results may still show benefits (Chintrakarn et al., 2020; Johnston & Malina, 2008; Li & Nagar, 2013; Pichler et al., 2018; Wang & Schwarz, 2010). Two different explanations are possible for the return to previous levels. First, a psychological explanation— “habituation”—would be that non-reinforced responses decrease after several interactions with a stimulus (Groves & Thompson, 1970). In everyday language, consumers could have simply “gotten used” to the gay-branded character and used it again. Second, a social explanation would be that consumers originally avoided the character due to online (Xu et al., 2012) and particularly gay (Gearhart & Zhang, 2014) bullying. If the harsh comments decreased over time, consumers may have felt safe to return. Causal analyses of consumers’ reactions to LGBTQ- inclusive practices are limited in the literature and a possible strand of novel research. Apart from observable consumer behavior toward a product, it is also important to invest