As Pokemon fans all over Japan finally get their hands on the popular smartphone app, Niantic and McDonalds trial their potentially game-changing sponsorship model.
Since it first launched earlier this month, PokemonGo has dominated headlines. We’ve seen cases of Pokemon-related accidents and crime, anecdotal reports of the game’s mental and physical health benefits and, most importantly for its creators, record breaking financial success. It topped US sales charts in 13 hours and added over £5bn to Nintendo’s market value.
But it seems the game’s greatest impact is still to come. If the McDonald’s sponsorship is a success, we will likely see the model rolled out to Niantic’s global audience.
Whereas many free smartphone games get much of their revenue from in-app advertising, currently the augmented reality game makes its cash through micro-transactions alone. Players can download and play PokemonGo for free, and like many free to play games they can further their experience through in-app purchases. This has proved to be a lucrative strategy, with its millions of users worldwide reportedly spending an average $1.6 million a daily.
Relying on user spending alone however is not the extent of Niantic’s strategy, and this week McDonalds became the game’s first official sponsor.
The idea behind this is to drive foot traffic to certain locations. Currently, users travel to find a variety of Pokemon characters which they then battle against other players in the game’s ‘gyms’. These gyms are in set locations, so in order to play the game and defeat a gym, users must travel to find one and stay there for the entire battle.
In the case of McDonalds, the deal sees 3000 restaurants all over Japan become gyms, which in theory will drive players to the fast food outlets. As the birthplace of both Pokemon and Nintendo, Japan already has a huge fan base for the game and is a strong market in which to test the idea.
If sponsored locations do prove to be successful, we will most likely see this idea rolled out globally, and given the app’s unprecedented success, we may even see this strategy develop. There are numerous ways the game can influence the behaviour of its users, such as the placement of rare Pokemon or ways in which you can collect in-game items. Sponsorship could involve a number of strategies and could become an ideal way for brands to target PokemonGo’s predominantly 18-34 age group.
In fact, many brands have been unofficially using the game’s success to drive their sales already. A Virgin gym in London recently announced Pokemon workouts, where joggers run along a route where they can also catch the pocket monsters. T-Mobile offered customers who downloaded their app unlimited data until August 2017, as well as entering them into a draw to win Pokemon themed prizes. Many smaller firms are using the games ‘lure’ system, in which you spend in-game currency to attract Pokemon to a certain location, to literally lure consumers in.
There is already potential demand from prospective sponsors to get involved, but the success of this rests on the game’s ability to retain the attention of its players. Nintendo’s last mobile game Miitomo quickly rose to the top of the free to play charts, but it failed to retain its user base and dropped below 60th in the first two weeks.
Meanwhile, Pokemon was released over two weeks ago in several major markets and it continues to dominate the charts. The question then is whether the game can continue to engage its audience.
Currently the game has two major objectives; collect all 150 characters and take over gyms for your chosen team through battles. Niantic and the Pokemon Company may be looking to introduce more characters, of which there are over 700, or more features to reward returning players.
If they are able to create a viable business model with sponsors such as McDonalds, and keep hold of their millions of aspiring Pokemon masters, we will soon see more and more companies take advantage of the game’s viral success.