Pokémon Go is also the rare video game whose economic success will be determined in part by the weather. And while that’s part of what makes the game novel and appealing at the moment, it’s easy to see how the charm might wear off over time. (The vast majority of people who have downloaded Pokémon Go were tweens, or younger, when Pokémon first appeared.) That may not translate into long-term commitment.Įven more challenging could be the active nature of the game-you don’t walk around only to find Pokémon once you’ve captured them, you also have to walk around in order to “evolve” them and increase their power. While most accounts of the game have focussed on its use of augmented reality, its appeal clearly also relates to users’ nostalgia for the original Pokémon game. Pokémon Go might be immensely popular today, but it could be harder for its maker to sustain people’s interest than investors are imagining. In the traditional video-game model, those concerns are less important, since companies earn revenue as soon as someone purchases the game (though sales of downloadable add-ons have become economically important to the industry, as well). (It hasn’t disclosed exactly how much.) More important, even given the additional revenue sources, the microtransaction model depends on keeping users playing regularly and bringing new ones in. To begin with, the company is only taking home a small fraction of the profits that the game makes.
Still, even with all this, it’s hard to see how the game could be worth as much as twelve billion dollars to Nintendo. Niantic could also cut deals for in-game sponsorships-Gizmodo reported on Thursday that the company is finalizing such a deal with McDonald’s. But unlike most games, Pokémon Go has another important potential revenue stream: since most people playing the game give it access to a great deal of data about their locations and movement, Niantic could build a huge database of customer information that it could then sell to marketers and advertisers. Microtransactions are at the heart of most popular mobile games, and they can be enormously lucrative the mobile-games developer Supercell, which makes Clash of Clans, for example, brought in more than two billion dollars in revenue last year, despite having only a hundred and eighty employees.
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You can download and play the game for free, then pay for items that will help you succeed-for instance Poké Balls, egg incubators, or incense. Pokémon Go’s business model is built on microtransactions. Across a few days, Nintendo’s market capitalization rose by more than twelve billion dollars. Unsurprisingly, that has investors excited about the profits the game could bring in for Nintendo, which introduced the original Pokémon twenty years ago and which now owns a stake in Niantic, the game studio that built Pokémon Go.
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The augmented-reality game, which requires players to walk the streets hunting down animated creatures, has been downloaded more than fifteen million times and is already on more than ten per cent of all Android phones. Less than two weeks after its release, Pokémon Go has become one of the most successful mobile games of all time. Welcome to the Week in Business, a look at some of the biggest stories in business and economics.
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