How Pokémon Go earns money - Pokémon Go's business model

Right before its release, Pokémon Go has received the hunt of players around the world. The game became a global phenomenon and only about 1 week after its release, Pokémon Go raised the share price of the issuer - Nintendo - up to 50% and held the top position on the iPhone's App Store and Google Play. . In this game, players will find virtual Pokémon in the real world via GPS navigation system, make their own collection, along with activities to buy new Pokémon, take the character to join Join the battle in the arena.

See also: Summary - How to play Pokemon GO, virtual reality game catch Pokemon on smartphone

How was Pokémon Go?

Pokémon Go is a combination of Nintendo, Ninantic and Pokémon Company. The first Pokémon character appeared in the 90s on Nintendo's Game Boy handheld device. It is also the company behind the icon of Super Mario mushroom-eating adventure game. Nineveh was previously famous for its Ingress game on Android and iPhone - challenging players to explore the world around and compete for territory. At its peak, Ingress also had millions of players around the world. Finally, Pokémon Company, which co-owns the Pokémon character copyright with Game Freak, develops toys for both Creatures and Nintendo.

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Pokémon Go took the spirit of the preceding Ingress when Ninantic used a lot of Ingress data and the lessons they had obtained from this game to ensure the safety of the players. Along with that, Google and Pokémon Company started their cooperation in April 2014. A game that is short but spreads quickly challenges players to find Pokémon through the Google Maps application. People love it and according to John Hanke - CEO of Pokémon Go in Nineveh , Google Maps works with Pokémon like " chocolate and peanut butter ". Watch the video introducing Google Pokémon Challenge in 2014 below - the game is considered the prototype of Pokémon Go .

Business model of Pokémon Go?

See more: Understanding the business model in just 2 minutes - Business Model Canvas

The business model is an operating structure consisting of many constituent elements, from product identification, revenue stream to customer base, financial resources. But in short, it is the way that businesses or products of businesses make money . According to Busniess Model Generator , the components of a business model include

1. Customer Segment - customer segment.
2. Value Propositions - value statement.
3. Channels - distribution channels.
4. Customer Relationships - relationship with customers.
5. Revenue Streams - revenue stream.
6. Key Resources - essential resources.
7. Key Activites - essential activities.
8. Key Partnerships - important partners.
9. Cost Structure - cost structure.

Many people believe that Nintendo should exploit mobile games for their available products such as Super Mario to make money. But is that the real cause? Looking closely at the business model of Pokémon Go, we will see success only at this time and cannot be applied to all other Nintendo products. Besides the value statement, the remaining elements can be encapsulated in the question of "how to make money or how to generate revenue streams ". So analyzing the business model of Pokémon Go will encapsulate in two issues: value proposition and how to make money .

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On the surface, Pokémon Go's value seems simple, just a game for fans of Pokémon characters to interact with their favorite characters on mobile devices. But the scale of mobile devices is much larger than previous console devices. That's because of its versatility. At a deeper level, it is stated that the value of Pokémon Go is for players to explore and experience the real world . John Hanke himself told Business Insider in an interview that: " Pokémon Go itself aims to experience the real world, not just a big screen and a boss fight to death ".

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Hanke said, building Pokémon Go, the Ninantic team working towards 3 goals.

1. Exercise - there are many fitness apps but only make you feel like "a failed Olympic athlete".Pokémon Go is designed to make you stand up by promising Pokémon outside the street, instead of putting pressure on users.
2. Looking at the world with new eyes - the game aims to bring players some new and interesting things about their surrounding areas by turning famous historical places into Gyms or Pokéstops - where people play fighting. Hanke said: " By encouraging discovery, Pokémon Go can make your life better in some way ."
3. Connect friends - around the world, people organize meetings, go together to catch Pokémon or attack Gyms.That's what Hanke describes, Pokémon Go is an "icebreaker" (the word for the activity of strangers' familiarity) and gives people a reason to spend time together.

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Pokémon Go and Ingress?

The co-developer of Pokémon Go - Niantic Labs has also had a similar game a few years ago called Ingress mentioned above. The playing mechanism is similar to Pokémon but the interface is worse. The interesting thing is that Niantic only considers Ingress as a " proof of concept " (POC - temporarily translated as a "test idea" is a data strategy, taking advantage of exploitation code to investigate possible values. ) to attract developers and partners to Niantic's API.

In other words, Ninantic has created an easy-to-replicate location-based game product. Of course, with the ability to blend in with the Pokémon's playing mechanism, this attracted Nintendo - as partners and investors. The foundation of Niantic is not suitable for all other products, but the success of Pokémon Go certainly attracts many game owners. For example, you can imagine an AR game (Augmented Reality) and a Harry Potter-inspired journey to find Horcruxes.

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How does Pokémon Go make money?

Get the amount of quality compensation

David Gibson - analyst of Macquarie Capital Secutiries Securities in Australia - where the application ranked second - said: " When users have collected their Pokémon sets, spending money to incubate and train storing and putting them into battle is something that can't be done . " Players need a coin to buy items like PokéBall - used to catch Pokémon, and to upgrade their collections. There are many ways to earn coins but the fastest is to pay real money, especially when the price is only $ 0.99 for 100 PokéCoin.

Most of the free games do not rely on such small funds. Like Clash of Clans, for example, they often rely on big spenders - or " sharks " - to make up for the completely free players who pay nothing. But the model of Pokémon Go is based on small cash flows, and that's part of the reason why Pokémon Go tops the list of free apps on the App Store.

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Not only did Pokémon Go spend money, Pokémon Go also dragged them to the street, exploring the surrounding locations. In an interview with Financial Times, John Hanke said " sponsored location - also a component of our business model ". The game can take you to stores or other locations and it could also be the way to get users to wait for billboards. Businesses can pay for Ninantic to sponsor PokéGym, to have their locations with Pokémon, even rare Pokémon, thereby enticing users to.

See also: How to catch Pokemon rare in Pokemon GO

Hanke said the company will charge advertisers for visits to " cost per visit ", as well as " pay per click " calculations in Google ads. Of course, the location-based money model is already used by other companies like Foursquare, and efficiency depends on the users and their attachment to the service.

See more: 7 valuable marketing lessons that Pokemon Go "teaches" to marketers