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Pokémon GOes Viral in its 20th Anniversary Celebrations

By Karina Masolova

Free-to-play augmented reality game Pokémon Go has caused quite a stir—with everyone from retailers to networks eager to get a piece of the pie. The game’s success is born of arguably born of a cross between nostalgia for the classic franchise (Pokémon celebrates its 20th anniversary in 2016) as well as consumer excitement for new gaming technology. Pokémon Go is the most viral mobile app of all time; its users outnumber Twitter’s daily users and spend more time in its app than in Facebook, according to SimilarWeb and SurveyMonkey.

Over the next few weeks, it will remain to be seen exactly how far consumer excitement translates into retail sales. According to Adobe Digital Insights, which tracks sales on the top 500 U.S. ecommerce sites, Pokémon-related merchandise sales rose 91% in this last month—before Pokémon Go came onto the scene. TLL estimates that Pokémon sold approximately $330 million in worldwide retail sales of licensed consumer products worldwide in 2015, and sales are expected to increase in 2016. Right now, the Pokémon Company Intl. is not planning on licensing Pokémon Go-specific merchandise, or in signing any new deals based on the the game’s popularity.

Pokémon Go is a joint venture between Nintendo, Google’s Niantic Labs and the Pokémon Company Intl. (remember that Nintendo additionally holds a 1/3 stake in the Pokémon Company with originator Game Freak and Creatures, which takes care of the trading card game and some toy production). The game uses a mobile device’s clock and GPS to detect location and camera to show Pokémon in the real world. Players explore their neighborhoods with the ultimate goal of catching them all.

According to SuperData Research, Pokémon Go has made an estimated $14.03 million in worldwide in-app sales in the four days following its release. It remains to be seen if the momentum will hold: some, like equity analyst Mia Nagasaka of Morgan Stanley MUFG Securities, believe the mobile game could generate almost $1 billion in sales annually. The true test will be the 60- and 90-day marks after launch. But keep in mind that interest has been growing for quite a while. The initial spark was a 2014 April Fools stunt that hid Pokémon throughout Google Maps. In March 2016 beta test runs for the mobile game began in select markets including Japan, Australia, New Zealand and the U.S. Still to arrive at the end of July is Pokémon Go Plus, a Bluetooth wearable device that allows players to traverse the game map without looking at their phone.

And the mobile game isn’t even out in Japan yet (current markets are the U.S., Australia, New Zealand, the U.K. and Germany). Build-up demand is expected to fuel ticket sales for the 19th Pokémon feature animation launching in theaters Saturday, July 16th. Niantic plans to expand the game to 200 markets worldwide, although there are some legal issues issues with launching the game in South Korea and China. There is plenty of room for expansion in-game as well: right now, the mobile app features just 151 of 729 Pokémon, according to Reddit user Juxlos who delved into the field test version of the game. That number matches the original set in the Pokémon Red and Pokémon Blue Game Boy games, and fans anticipate expansions with new updates.

Even if Pokémon Go simmers out into just another summertime fad, the possibilities it has generated are endless: the mobile game app joins others like Snapchat in introducing branded augmented reality to consumers. And if the current frenzy is to be believed, consumers are not content to own their Pokémon in the digital sphere, but also in merchandise.

Retailers Jump on the Boom

TLL estimates that Pokémon sold approximately $330 million in worldwide retail sales of licensed consumer products worldwide in 2015. Note that this figure does not include video games, the trading card game, experiential licensing including amusement theme park merchandise, animated movies and TV shows. The 20th anniversary celebration, encapsulating an expanded merchandising program, new console games, Pokémon GO! and the 19th movie are expected to boost retail sales in 2016. Earlier this year, master toy licensee Tomy reported that its sales surged 114% in Q1 thanks to its latest range of action figures and plush characters. As of May 2016, the Pokémon Company counts 400 licensees worldwide, including new partners in apparel (such as Freeze, Bioworld and Hybrid) and others like Build-A-Bear Workshop (experimental plush in North America, Europe and Australia). See more companies with full contact info in the online edition of the Licensing Source Book.

Although Nintendo seems to be the biggest winner, generating billions of dollars in market capitalization over the last week, keep in mind that the publisher did not develop the game and, according to Shacknews, receives just 31% of revenues from the app. Nintendo’s gain will be from its homegrown brands as it introduces franchises like Mario and Zelda to mobile—a step the gaming company has been reluctant to take so far for fear of mobile cannibalizing its main console business.

Current retail partners who stocked up for the 20th anniversary celebrations are working to coordinate with the app’s boom and the 19th feature film’s release such as Hot Topic, Toys ‘R’ Us and GameStop. But even for those that don’t stock licensed merchandise, Niantic will sell the opportunity to become a sponsored location for Pokémon Go, according to the New York Times. Niantic currently has eight corporate sponsors for Ingress (its other augmented reality game) globally and the number is likely to be similar for Pokémon GO.

On the Big(ger) Screen

Right now, Cartoon Network and sister network Boomerang have linear rights to the long-running series, while the three big SVODs (Netflix, Amazon and Hulu) have a significant lineup of Pokémon movies and series. Hulu is one of the first SVODs to jump on the trend with a large social push and Pokémon masthead on its homepage; the network has had a 10% daily jump in the daily viewers and minutes watched of Pokémon content, according to Adweek. And Deadline reports that Legendary Pictures is close to signing for the rights to make a live-action film.


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