You may have read about them: People chasing little creatures on their mobile phones, oblivious to anything around them, blindly walking into traffic, people and walls.
In the two months since it was officially launched, Pokemon Go has taken the world by storm, breaking all records for mobile games.
Niantic Labs, partly owned by Nintendo which introduced the world to Pokemon more than 20 years ago, said the game has been downloaded 500 million times and generated $500 million in revenue.
For the uninitiated, Pokemon Go is a mobile game that uses augmented reality to deliver a “real-life Pokemon experience”.
To play, users have to go out into the real world tracking down and capturing Pokemon (the word is both singular and plural), using the same technology as Google Maps.
The goal is to catch as many of the Pokemon monsters as possible, and to use them later in virtual fights. It puts the characters that teens and millennials know from the Pokemon games of their childhoods out into the world.
Pokemon Go has dominated top iOS and Android app charts, and Apple said recently that it had the most first-week downloads of any iOS app ever.
People are spending more time using the app — an average of 33 minutes a day — than popular go-tos like Facebook and Snapchat, according to analysts.
William Daddi, president of New York-based Daddi Brand Communications, said part of the success of Pokemon Go is that Pokemon has been around for a long time.
“Pokemon Go builds on several decades of cross-media promotion,” he told China Daily Asia Weekly.
“So far there have been no fewer than 17 full feature-length movies, an ongoing cartoon series, comic books, merchandise, collectible card games and other ways for audiences to connect with the brand.
“That, in combination with the absence of many of Nintendo’s strongest brands including Super Mario and Zelda on mobile, creates a perfect moment for Pokemon to steal the show.”
Pokemon Go is a collaboration between San Francisco-based software development company Niantic and The Pokemon Company of Japan, of which Nintendo, the original founder of Pokemon, owns 32 percent.
Though the app is free to download and use, it offers in-app purchases, which are lucrative for Niantic as well as Google Play and Apple’s App Store, which get a cut of the profits.
Citibank analysts have said Google Play could make $77 million this year from the game, and that Facebook and Google will see advertising revenue increase.
Niantic started out as a department inside Google making location-based apps and games like Field Trip and Ingress. Google spun it out as a startup last year, but retained a 6 percent stake. According to the Citi estimates, that stake could now be worth $200 million.
Within just a few days of the launch, Nintendo’s market capitalization rose by more than $12 billion.
Peter Warman, CEO of Newzoo, a market intelligence company specializing in games, headquartered in Amsterdam, said the basic business model of Pokemon Go is a “proven way of monetizing and fits within the concept”.
“Spending money to speed up the collection and evolution of Pokemon is a voluntary choice for consumers who would rather spend money than time to achieve the same result,” he said.
“Very comparable to, for instance, Candy Crush, where you can wait to play another level or spend a small amount of money and continue directly.”
Jelle Kooistra, head of product development at Newzoo Mobile, said the Pokemon brand ensures tens of millions of downloads regardless of the game concept.
“It is the concept that makes it intrinsically viral. It is a combination of the content (face-swap) filters of Snapchat with the power of Pokemon collectibles,” he said.
“It is completely geared towards the content-first generation, who want to create and share all day long. So the marketing of the game by its users is at the very core of the concept.”
What also makes Pokemon Go unique and compelling, Kooistra said, is the fact that it forces players to go out and find Pokemon. “This transforms local parks, village squares and neighborhoods into exciting hunting grounds, ready to explore at anyone’s leisure.
“As a large share of players will hunt Pokemon together with their friends, it quickly becomes a social thing, with players notifying each other of nearby Pokemon, and showing off their most prized captures.”
Unlike traditional mobile games which are often played alone and indoors, Pokemon Go has been hailed in some quarters for bringing children out into the fresh air. In other words, to exercise.
Although the game is not marketed as a health app, gamers do a lot of walking as they play, a recent editorial in the respected British Medical Journal said.
People playing Pokemon Go have walked an astounding 4.6 billion kilometers while playing the game, John Hanke, CEO of Niantic, told Forbes on Sept 8.
Ian Fogg, senior director of mobile and telecoms with IHS Markit, a London-based analysis group, said within five days of its launch in the United States, Australia and New Zealand it became the top grossing and top free download app in all three countries.
“The Pokemon brand has propelled Pokemon Go to a chart-leading position extremely quickly. But to succeed long term, the Pokemon franchise must demonstrate it has successfully adapted to the mobile platform and to mobile audiences’ ongoing expectations,” he told China Daily Asia Weekly.
“If the game does not tailor its experience successfully for mobile, then the Pokemon Go audience will decline and fail to become a real mobile hit. In effect, the strong Pokemon brand means it is far too early to know if Pokemon Go is a star for the long term.”
Twenty years after the original Pokemon game’s Japanese Gameboy release, and despite the relative decline of the handheld game console market, The Pokemon Company generates enormous revenues from its brand. In 2015 alone it enjoyed $2.1 billion revenue.
“If it can build Pokemon Go into a successful ongoing mobile franchise, there is tremendous potential to boost merchandise revenues significantly by appealing to the vast mobile audience a mobile game can reach with new Pokemon merchandise,” Fogg said.
“The timing is perfect. The millennial audience which grew up with the original Pokemon games on Gameboy, Gameboy Advance or Nintendo DS are now in their late 20s, which is the perfect demographic for a mobile game that requires users to spend a lot of time outside.
“Plus, smartphones are now ubiquitous, affordable, powerful, and include a rich range of sensors and good location support.”
Brand alone cannot explain Pokemon Go’s uptake, because it is neither the first mobile Pokemon game, nor is it the first location-focused mobile game.
Instead, IHS believes it is the combination of brand, interesting location-based game design, and a mainstream Pokemon focus which underpins this initial success.
“Early signs are good that The Pokemon Company understands the difference between smartphone-based mobile games and other mobile or gaming platforms,” Fogg said.