PokéProfit: Breaking Down the Insane Revenue Potential of Pokémon GO

Gotta Catch 'Em All !

A phrase, which for over 20 years, has inspired gamers across the world to be the very best. Like no one ever was. Recently, this nostalgic phrase may also herald a new opportunity for organizations to utilize Geolocation-based Mobile Marketing and lure more customers to local businesses and physical locations. 

For those unaware, Pokémon GO is a free-to-play augmented reality mobile game developed by Niantic for iOS and Android devices that allow players to capture, battle, train, and eventually, trade virtual Pokémon who appear throughout the real world through the usage of Google Maps. Released on July 6th, the app exploded across the US, followed by Australia and New Zealand. Over the app's first week since launch, numerous metrics have been released confirming the app's viral success including a higher install rate than Tinder (5.2% vs 2.3%), a growing daily active user rate that rivals Twitter (3%> vs 3.5%), and an astonishing usage time that higher than social media apps Whatsapp, Instagram, Snapchat, and Messenger (43 minutes). 

The current model is centered around in-app purchases for, according to Pokémon Go, players who want to enhance their Pokémon GO experience even more. Players can spend real money on PokéCoins, the in-game currency of Pokémon GO, which can then be exchanged for power-ups, extra items, and other enhancements.

Additionally, revenue is generated through the purchase of Pokémon GO Plus, a small device, price at $35, that connects to a smartphone via Bluetooth low energy and notifies you about events in the game—such as the appearance of a Pokémon nearby—using LED and vibration.

However, the greatest potential revenue stream has appeared not in the form of in-app purchases or premium hardware features, but through Geolocation-based Marketing opportunities through B2B sales. Geolocation-based Marketing uses mobile devices' built-in GPS to accurately show where the device, and the user of the device, are located. Utilizing the information acquired through the GPS, companies are able to present ads, relevant content, or promotions, to potential customers, ultimately creating more relevant and targeted marketing content. The particular business opportunity of using Pokémon GO as a Geolocational marketing channel formed over the game's first week of launch, where natural excitement for the game caused it to go viral across the internet and social platforms. By design of the game, Pokémon GO transformed local landmarks and businesses into designated Pokémon Gyms and PokéStops, which has lead to large influxes of Pokémon GO users to visit these locations in the hopes of battling the Gym, capturing stronger Pokémon, stocking up on free accessories and items like PokéBalls. This has created an opportunity to attract more consumers which can be utilized in particular by restaurants, event organization, retail businesses, gas/convenience stores and even the travel/tourism industry. 

Similar to Snapchat's geolocational promotional filters know as on-demand Geofilters, small and large businesses alike may be able to select a particular function type to promote (whether it be an upgrade to a gym, appearance of rare or strong Pokémon, or particular items awarded at a PokéStop), specify the date and time range, and fence the desired area to apply the advertised promotion. In turn, the promotion would lure Pokémon GO users and potential consumers to the specified location, increasing consumer traffic, customer acquisition, and overall sales conversions. Snapchat's current model generates on average $20 per 1,000 views of video ads on the app and Geofilters can be customized to a specific budget allocation for any sized business or organization.  

Imagine, being at an event such as a baseball game, farmers market, a street venue, or possibly brick-and-motor businesses- whom often experience particularly slow days or need more users in a particular retail space and having access to a tool that literally lures in Pokémon GO users and potential customers to your location.  The application and the concept are simple: Utilizing Pokémon GO creates more value for physical locations and venues as perceived by the user and potential customer. The result of this B2B exchange increases overall value, engages the influx of potential customers in a positive way, and if successful, generates more revenue for the organization.

With numerous updates by Pokémon GO scheduled in the very near future, one wonders whether Pokémon GO and other organizations will capitalize on the business opportunities driven by the app users and the potential of Geo-locational Marketing. If businesses look to leverage the application's influence, they will face questions regarding sustained usage, ethical, and the overall effectiveness of Pokémon GO in the long run. Until then, if you happen to see hordes of people obsessively swiping their phones, glued to their screens, and all within 10 feet of one another- it's safe to assume it's Pokémon GO.

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