Understanding the business model of Pokémon GO!


The success and popularity of Pokémon GO  is established from the fact that 26 million people in the U.S. are playing it daily, and it has generated $35 million in revenue within fortnight of its release.


The business promotion in today’s hyper competitive world is defined by strategic Segmentation, Targeting and Promotion for any given product or service.


Niantic and Nintendo, main promoter of this game share a glorious history of promoting new ideas. Niantic’s history and company’s roots go back to Google’s 2004 acquisition of Keyhole – a startup focused on letting users interact with maps. The merger lead to the creation of Google Earth and the introduction of Street View for netizens. Niantic was formed from that foundation inside Google in 2010. Niantic in 2012, had launched a game called Ingress, which bid its players, visit real-world locations, in order to conquer territories for the in-game factions. Ingress game is viewed as basis, around which, the new augmented game for Smartphone Pokémon GO, is weaved; and the trade pundits, term it as version 1.0 of the new Pokémon GO.


The augment Smartphone game Pokémon GO, is targeted for people, who move out from their home, to different transit location for education, work, leisure or hobby purposes and utilize this smart app based Smartphone game, for leisure or recreation. The game is also simultaneously released on mobile servers, to facilitate gaming experience, in different “online location or gaming hubs or gaming gyms or battle locations”. Gyms are typically high-profile public places, like train stations or churches. Pokémon GO, is free to download and play, and so far in early launch phases, its minting money from most unexpected quarters—in-game purchases or in-app purchases like the lures or extra poké balls for capturing the imaginary creatures.


The game developers are able to sustain bonding with gaming community, where they have implemented low budgeting, on different purchases made both in gaming currency and actual customer spent, on gaming related purchase for Pokémon GO. The single items usually costing a dollar or less, and the most expensive item is a pack of 25 eggs, for increasing the experience points players earn, and it costs only a little more than $10 with the in-game currency.


The next pit-stops for revenue would be to sponsor locations within the game–known as PokéStops and gyms which could provide alternate revenues if players refuse to shell out for PokéCoins.


The virtual game location near your place of business is untested product idea which still has be tested on revenue generation capabilities. A similar idea is put to practice earlier in Ingress game, where, companies like Jamba Juice, the telco SoftBank, & convenience store company Lawson and banking company Mitsubishi UFJ Financial Group (MUFG) sponsored items in the game. The possible fallout of this virtual business location in game could be that, in the post-Snowden world, too many corporate logos in the game could quickly generate a mixed feeling.


The advertisement and promotional revenues, from sponsors is expected to improve with block-buster release in US markets, and an expected release in Japan, which is world’s third largest gaming market for mobile games. McDonalds Japan will be the first paying sponsor of Pokémon GO,  when the game launches in that country, by hosting 3000 of its outlets as ‘gyms’ for the game, or battle locations.


The success of game is keenly followed both by marketers and promotion managers alike in US and other regions of the world. The game has been able to win spontaneous promotions from many retail stores and many digital formats, in US provinces. Since Pokemon GO allows users to take a picture of themselves with Pokemon GO, some businesses offer a discount, if users check-in & post on Facebook, Twitter, or other social media.


In Florida, a brewery near a PokéStop, set down a $0.99 lure module purchased from the game’s in-game store, which causes Pokémon to show up around the venue, for 30 minutes in the hopes of improving foot traffic or foot fall to their retail store.


An outlet mall outside Phoenix recently shared on Facebook, that Pokémon GO game players would get a $10 GIFT card, for proving, they caught one of the imaginary creatures on site.


The increase in mobile servers and newer digital promotion is expected to follow soon, to capitalize further on success of Pokémon GO. The main attention of this drive, mainly, would be brick and mortar companies, to increase advertisement and promotional revenues, as well improve promotional space, for this new game.


Pokémon GO relies on Smartphone technology – GPS and location services, camera, accelerometer, Wi-Fi or cellular connectivity, sound/vibration, etc. The place to recharge can improve foot-fall in retail locations. In addition to offering device recharging, free Wi-Fi can encourage Pokémon GO players and consumers to hang out. Although the game is reportedly not heavy on data use, it does require data. Free data or Wi-Fi services to access Pokémon GO can improve footfall for a retail store.


Analytics firm App Annie, shared a recent estimate, that Pokémon GO, is earning $1 million a day, and predicted that the game could reach higher revenues in a year, based upon expansion of its server capacities to meet operational requirements.


How far will Pokemon Go- only time will tell! But for now, it is driving everyone crazy! So, are you playing Pokemon? Are you enjoying it? What is your view – how long will this craze continue?


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