(picture taken by Mathieu Provencher on the 22nd of August 2016. Niantic owns all relevant rights to the picture)
Hi everyone! I wanted to talk about Brazil this month but something much bigger happened: Pokemon Go! I could not pass this opportunity, given that I’m a complete nerd (besides being a Prof)! Let’s try to analyse the game and its popularity.
As some of you may know, Pokemon Go was made available in Peru earlier this month. I started playing it and found myself surrounded by an impressive number of other players… this game has reached many more than I have initially anticipated.
The game has had incredible success so far: The Guiness World Records reported that Pokemon Go has made the most revenue and was downloaded the most times for the first month of release of any mobile game. The media is reporting Pokemon Go related stories every week, most somewhat linked to players flocking everywhere with their smartphones exposed and putting themselves in uncomfortable situations. New youtubers are popping all over the internet and are getting millions of views and subscriptions on Pokemon Go alone. Some fast-food restaurants in the USA cashed in the hype by placing "lure modules" on the nearest pokestops while cellphone companies in Lima (Peru) are offering unlimited data download specifically for Pokemon Go (it’s a promotion that will likely not last more than this month). On a more official note, a French mayor has banned Pokemon creatures in his village, asking Niantic to remove them from his jurisdiction (I’m not sure how that is going to work out).
SO! Is it just a fad that will die out in a few weeks or is Pokemon Go here to stay? Before I make a prediction (which I predict will be completely wrong), let’s see a bit of Economics applied to this case.
Pokemon Go is free right? So how did they make so much money?
From the players’ side, the game has what we call “microtransactions”, which means that players can pay in order to get ahead. They can pay real money in exchange for virtual money that can only be used in this game. Although you could go through the whole content of the game without paying anything, the progress of that game is made in such a way that people get addicted early on (by getting a lot of levels, items, pokemons, whatever else…) but eventually get to hit some sort of “grind wall”, after which it becomes very cumbersome to progress… and that’s where real money can help players reach new content much faster (still fairly slow as you discover more and more). In short: they make money out of people that want some sense of progress on a regular basis (after they hit the wall)… and also from impatient kids that want everything right now.
Pokemon Go also makes money from other companies. Firms can pay to have a pokestop at their location (although it was apparently discontinued in a number of countries). Companies may want to do that to lure more potential clients to their premises (if Pokemon Go players fits with their target audience). Also, there is a possibility that Niantic (the company behind Pokemon Go) offers packages in which firms pay in order to have rare pokemons in their stores or museums. Firms may be able to lure even more clients to their shops, which hopefully will lead to higher sales.
These strategies only work if the product is popular. Why then is this game soooooooooo popular? First of all, it has some surprising demographics, given its origin. It seems that a good proportion of players are well educated women, although I have read conflicting reports. There is also a fairly high amount of criticism regarding the simplicity of its concept and interface. These critics may very well be hardcore Pokemon fans (that are expecting something different) but there’s no denying that the controls are as simple as it gets… you walk around, swipe left or right, walk some more, touch your screen and swipe up, rinse and repeat!
This being said, the game benefits from what we call networking economies, or the network effect. The network effect is present when the desire for a product increases when more people own or use the same product… in other words: the more the merrier. This effect is not due to better information about the product (more people using a product makes it more likely that you hear about it) or to lower costs of production thanks to higher volumes. The network effect only comes from the fact that more people use the product, nothing else. In other words: ceteris paribus (same level of information, same price, same cost, same everything else), if more people buy the same product as me, I’m happier with that product.
All right, enough Economic jargon!!!!!! Why does it happen… in English! The network effect happens for reasons that can be very difficult to measure. In the case of Pokemon Go, people can feel part of a community when they play. This means that more people playing the game makes the community feel bigger, which tends to give more positive feedback to the players. Another benefit to a number of people is that they feel part of something big, something new. The more people join, the more “hyped” players feel as it serves as a “justification” of their own playing. A last idea I can think of is the competitive aspect of Pokemon Go. Coloured teams compete for “Gyms” in the game, which are “defended” by other players (or rather by their creatures). You need a big enough population of players for this to work well. More players makes keeping a gym more challenging, which makes the game more enjoyable for those that like to compete.
All this goes back to the concept of a self-reinforcing circle of positive forces. More people make the current players feel better about the product, which then can increase the desire of such product for others that don’t have it yet… they then join and make the circle grow.
The very simple nature of Pokemon Go is actually not a bad thing for this game. Simpler mechanics means that more people are willing to play, which then means that the network effect is even stronger. Remember that Flappy Bird was a huge success even with a simple concept and interface. Pokemon Go seems to be good for both hardcore players (catching them all) and for casual gamers (on your way to work or to school).
Here comes my self-defeated prediction: I don’t think Pokemon Go will stay as strong as it is for more than three or four months, at least here in Lima… HOWEVER, I will be very pleased when my prediction ends up being wrong and people stay excited for longer than that (I have no idea how long that may last).
Enjoy people and if your gym suddenly turns yellow, I probably just beat the heck out of your Pokemons!!!!! (and might not have even broken a sweat)