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In this paper, we develop an exemplar-based model of the emergence and evolution of proto-categories—new groupings of products that are only weakly entrenched but have the potential to become widely institutionalized—and examine how different positioning strategies of new entrants vis-à-vis the exemplar of a proto-category affect entrant performance. Empirically, we study the U.S. console video game industry where proto-categories frequently emerge and evolve around exemplary hit games. Analyzing a proprietary database of 6,544 games comprising 78 such proto-categories, we find that, in the early stages of proto-category emergence, conformity with the exemplar’s features is positively associated with new entrants’ sales. As a proto-category evolves, a moderate level of differentiation becomes important for enhancing sales. We also find that this temporal dynamic is driven by the changing competitive …