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Pokémon Go, Nintendo’s Saving Grace or a Desperate Hail Mary?

Pokémon Go, Nintendo’s Saving Grace or a Desperate Hail Mary?

In recent years Nintendo has come on hard times as people
have gravitated away from their console systems and towards competitors such as
Microsoft or Sony. Since the relative failure of the Wii system they began to
lean heavily on their hand held DS systems; however, sales of those too began
to suffer as mobile gaming became more of a common place among target

Breaking the pattern, now Nintendo is taking a true stab at
the mobile gaming market with their newest release “Pokémon GO”. It targets people who were children during Gen 1
– millennials.

Within the first few days of the app being released it has
shot to the top of the app store “most downloaded” charts in both the iOS store
and Play Store. Not only that, but Nintendo shares doubled in price in less
than a week. What does this mean for Nintendo?

So what exactly is “Pokémon Go”? Basically, like anyone Pokémon
you go around catching Pokémon– digital creatures that can battle one another.  Pokémon Go is a success because people of my
generation have had an almost unhealthy obsession with the franchise since we
were children. This is exactly what Nintendo is banking on.

How the Game Itself

From a mobile gaming standpoint Pokémon Go is actually an
incredibly revolutionary game. It is one of the first widely accepted augmented
reality game. Augmented reality, for those that haven’t heard that term, is
where you overlay a virtual world on top of your existing world. In the case of
Pokémon Go Nintendo uses your GPS location and places you inside of the world
of Pokémon, allowing you to explore the world, catch Pokémon, battle gyms, and
visit landmarks that offer incentives like pokéballs.  This “exploring” concept alone points to the
idea that this game is targeted to the older end of the Pokémon generation as
they are the ones who are able to randomly get up and leave their homes or hop
into a car and go explore the parks in their area. As you play your Pokémon
become stronger and you go to battle surrounding gyms which comprise of
incredibly strong and difficult leaders – incentivizing you to purchase
upgrades in their shop and actually making Nintendo money off of this free to
play game. If you’re playing offline, for Guide on Building a Pokémon Card Deck check here.

So how does Nintendo make money off of Pokémon Go? In-App
Purchases. This model is perfect for the millennial generation as many of them
have disposable income and have no quarrels with spending that money on virtual

Pokémon Go Uses
Behavioral Economics to Improve Sales

In a study done by Dan Ariely, he proves that by removing
money from the equation you are able to make people more inclined to spend on
the platform long term. The way this works is you have people purchase in game
currency. People associate a conversion value with currency so they are more likely
to purchase coins than any sort of end item you would offer them. Their accounts
now flush with thousands of dollars in fake money causes them to feel as if
they have more money than they will ever need in the game. However, they also
stop associating dollar values with these tokens and are more inclined to spend
all of these tokens on the platform. Eventually they run out and they are more
than happy to go back to purchase more tokens if their first set of tokens
actually helped them progress in the game.

This style of monetization for apps has become a norm in the
app store and isn’t anything revolutionary. A primary example of this style of
monetization is candy crush. In candy crush you are able to purchase gold bars which
can then be used to buy things like extra lives. This worked so well for Candy
that there are countless articles online referencing how people
unknowingly spent hundreds if not thousands of dollars on virtual items.  Here
is a prime example of just that.

Though this structure has worked historically it is a
completely new structure for Nintendo. They are beginning to wander into the
unknown as people are far more likely to purchase items in a game that they
have time invested in rather than spend the money up front to have access to a

Personally, I feel like they may run into problems because
they are banking on their hardcore fans investing real dollars into this system
– when each pokécoin cost’s $0.01 and the minimum amount you can buy is $1
worth – at the max level you can purchase 14,500 coins for $100. The reason I
see problems here is because more hardcore fans… like myself… are more likely
to invest the necessary time into growing our accounts naturally rather than
take the short cut of buying items. Much like in candy crush, the people who
are more likely to spend money within the game are the casual gamers that enjoy gaming free money hobbies – which Pokémon
doesn’t necessarily have a lot of when it comes to the older generation. Most
of us grew up with the games and the restrictions we were placed with on those
games and are willing to really put in the effort required to successfully
become the Pokémon masters we all know we are.

Next Move for

How can Nintendo take this and turn it into a long term
sustainable business model?  This short term
success will mean nothing if Nintendo just goes back to its roots of building
systems that are part of a previous generation. However, this could signal that
Nintendo is pivoting in order to embrace mobile technology and people’s new
obsession with virtual reality and overlaying games over the world around us.

Nintendo’s challenge here will be creating a seamless
experience for the user while not overcomplicating the game itself – both things
that Nintendo tends to have trouble with. Nintendo is usually one of the first
gaming companies to embrace new technology; but sadly they tend to never
perfect it.

As a long time player of Pokémon and lover of Nintendo
products I hope this time is different. I’m just looking forward to the day
that the server issues on Pokemon Go are fixed. Until then, I’ll just continue
to obsessively attempt to login while at work until I get through.

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