Cutting Through The Hype Around Pokemon Go’s Success
The success of Pokemon Go has been impressive so far. However, its achievements are currently over-hyped. Media outlets have been reporting the game’s every new ‘record breaking’ accolade. While true, the majority are taken out of context. Here is why:
Stacking up Pokemon Go’s record-breaking app download numbers against dating-app Tinder is not a fair comparison. Hit games receive higher initial download volumes than other categories. Tinder aside, comparison to other hit games is also out of context:
- A hit in 2013 is not the same as a hit in 2016: The mobile versions of Candy Crush were launched in late 2012 – only really taking off in 2013. MIDiA Research’s Forecast Data shows there were 823.5 million app users globally back then. However, there will be 1.46 billion app users by the end of 2016. Consequently, to measure the ‘hit popularity’ accurately we have to consider that hits three years ago were only released to 56% of the addressable app audiences of today.
- The popularity of the Pokemon Franchise: Former hits like Angry Birds, Candy Crush or Clash of Clans did not have a global franchise to lean on when they launched – they built them from scratch. Naturally then, it took them longer to reach high penetration levels than Pokemon Go.
It’s been stated that the share of paying users is ten times higher than that of Candy Crush. Even if that was the case, note that this is just temporary. Here are but a few factors contributing to this:
- Early Adopters Spend More: The early days of Pokemon Go mean that the downloads are inherently skewed to early adopters, who have a higher propensity to spend on mobile apps. Our consumer survey shows that 55% of Early Adopters spend $1 per month or more on mobile apps, compared to just 36% of average Android and 46% of iOS consumers.
- Pokemon’s Geographic Skew: Pokemon Go is currently available in 37 countries –with much higher net salaries than the majority of key territories it has yet to launch in, such as Brazil or India. Thus Pokemon Go’s ARPU will dilute significantly, along with its global expansion.
- The downsides of buy-early strategy: Pokemon Go’s In-app purchase structure is designed in a manner that encourages more spending earlier in the game. The closer you get to ‘catching them all’ the less return on investment players get from buying items like Lures and Incense (which attract Pokemon to your location). Unless developers come up with a better incentive scheme for the latter stages of the game, the per user revenue will decline over time.
Many games have achieved stellar download numbers initially, but long-term engagement is the name of the game in Freemium app models. The current 40 minute average session length will dilute:
- Seasonality is more important for Pokemon Go than others: It’s summer (here in Europe) – kids are out of school, many young professionals are taking time off for holiday- As professional commitments creep back, and as the weather turns less amenable users are less likely to engage in long sessions.
- Expansion will dilute average sessions length: Just as the over-indexing of ARPUs, the countries Pokemon Go has yet to launch in are less connected than the already penetrated countries. Slower internet and lower net salaries to fund increased data usage will lower the current app length session.
The game is still incredibly glitchy across all platforms. Fans remain forgiving for now but won’t remain patient forever. Furthermore, there is not much to do after you ‘catch them all’. Some people have already achieved this, raising questions about Niantic’s ability to come up with updates fast enough to keep the players engaged. Fighting other players outside of gyms is one way to go about it, and could give Pokemon Go the longevity angle it desperately needs, before the hype starts to wear off. It’s in Niantic’s hands now – within the next 2 years Pokemon Go could be selling out E-Sports arenas as well as dying. The early trajectory is impressive, but there is a LONG way to go.