Pokémon GO money tops $342 million so far, but that’s nothing compared to the billions in ad revenue that are about to start streaming in. It may be difficult at first to see the extinction-level money event that is Pokémon GO. At first glance it’s just a bunch of kids and hipsters running around in public places looking at their phones. But a look at the underlying numbers reveals that this so-called game is actually a sea-change in sheep’s clothing that’s about to rock the world economy to its core.
Let’s look at the surface numbers that everyone is throwing around. 21 million daily active users. 700,000 downloads per day. An average of $2.3 million a day spent on in-app purchases and $342 million earned as of 12/13/16. But why, to paraphrase John Lennon, is it more popular than he and Jesus put together? Why did Nintendo’s stock jump $9.67 billion in a single week after its release? A MoneyNation analysis below shows why. Pokémon GO isn’t a new, popular video game. It’s a new, gigantic industry. It’s the next television and the next internet and advertisers are going to walk all over each other to throw money at it.
Pokémon GO Money: Where it Comes From
Right now Pokémon GO money is big. Estimates put its earnings at nearly $2.3 million a day. That’s huge, and if it keeps up it’ll mean total revenue of $1.1 billion per year. It still doesn’t justify a $9 billion stock price for a small chunk of its ownership but we’ll get into that later. The game is free, so the money comes from in-app purchases. Players need to advance through levels and that takes time. However, those who don’t mind parting with $0.99 can buy a pack of 100 “Poké Coins” with which they can buy items in the game that can help them advance without all the time spent training and struggling to improve. The coins come in packs of 100, 550, 1,200, 2,500, 5,200 and 14,500. The most expensive pack costs $99.99. In short, that’s where the estimated $1.6 million a day in Pokémon GO money comes from. But there’s a much bigger source of revenue hidden in the game, and that’s what’s got investors coming down with gold rush fever. It’s ad revenue and it’s going to be huge.
— Vince McMahon (@VinceMcMahon) July 13, 2016
Pokémon GO Potential Yearly Money: $17.92 Billion
The table below shows the potential yearly Pokémon GO money waiting to be reeled in. The numbers might smack a little of pie-in-the-sky but we believe they illustrate why Pokémon GO is worldshaking. In short, Pokémon GO stands to make $180 billion in the next ten years. How is that possible? John Hanke is the CEO of Niantic, Inc. which partially controls and created Pokémon GO. Hanke told the New York Times that Pokémon GO would make money through advertising in the form of charging retail businesses for the right to become sponsored locations. Forget driving traffic to a website. Pokémon GO is going to drive real live human traffic straight to businesses. The $17.92 billion per year estimate from Pokémon GO sponsor earnings in the table below may seem fanciful. To see how we arrived at it, see the sections below.
Pokémon GO Money Sources
|Money Source||Potential Earnings Per Year|
|Total Pokémon GO money made per year (potential)||$17,702,500,000|
|True value of Pokémon GO (based on ten years of earnings)||$177,025,000,000|
Related: How to Get Pokemon GO Coins: 2 Ways
Pokémon GO Money from In-App Purchases: $1.1 Billion
By now, most people know Pokémon GO money comes from in-app purchases. As one father described it to us recently, “You know how it is. It’s one in the morning and you think, oh man, for just $20 I could jump way ahead.” But that $20 ends up getting spent repeatedly over the course of months or years. Pokémon GO earnings will likely keep coming in as long as the game stays relevant, which could be a long, long time. However, we believe the real excitement among investors comes from the potential ad revenue to be earned. See the section below for details.[gdoc Error requesting data: cURL error 28: Operation timed out after 5000 milliseconds with 0 out of -1 bytes received]
Pokémon GO Money from Ad Revenue: $16.86 Billion
The potential for $16.86 billion per year in Pokémon GO money from ad revenue is why the new app is so earthshaking. It’s why Nintendo’s stock jumped by 57% or $9.7 billion in seven days, despite the fact that Nintendo owns only 33% of the company that makes Pokémon GO. The table below shows our quick and dirty reasoning. A 30 second Super Bowl ad in 2016 cost $5 million to air, not including production cost. There were approximately 55 such ads, which means total Super Bowl ad revenue of $275 million. The game reached 125 million viewers. With an estimated 21 million active users per day, Pokémon GO has the potential to reach 61.3 Super Bowls worth of players per year. that’s 7.67 billion people playing the game per year, or about one sixth of a Super Bowl every single day. For ad revenue purposes, Pokémon GO isn’t in the same peer group as Angry Birds or Candy Crush. It’s in the same peer group as CNN or FOX. Doing the math on the numbers of viewers, it ought to be good for $16.86 billion per year in ad revenue.
The calculations in the table are based on one Super Bowl viewer being worth one Pokémon GO player. That may not be the case. A Super Bowl commercial doesn’t get shown just once. It gets shared around on social media hundreds of times and talked about in the office and on dates and in school. That said, Pokémon GO can do something a Super Bowl ad can’t. It can drive traffic straight into a business. See the section below to find out more.
Pokémon GO Future Ad Revenue
|Total number of Super Bowl Ads||55|
|Cost to air each Super Bowl ad||$5,000,000|
|Total Super Bowl ad revenue||$275,000,000|
|Total number of viewers reached per year by Super Bowl||125,000,000|
|Number of people reached by Pokémon GO per year (potential based on current trends)||7,665,000,000|
|Potential ad revenue from Pokémon GO per year (based on Super Bowl spending)||$16,863,000,000|
Pokemon Go is installed on more android phones than Tinder.
— Fact (@Fact) July 14, 2016
Why Pokémon GO Will Transform the Advertising World
Pokémon GO money is serious because the game itself is more than just a lot of kids running around the neighborhood with smartphones. Early demographics show the game is being played by millennials and even older age groups. The internet is huge because it can drive online traffic to business websites. Pokémon GO can go one step further and drive real foot traffic straight into a brick and mortar business. Pokémon GO has plans to charge coffee shops, fast-food restaurants and other retail businesses for the privilege of becoming sponsored locations or “Pokéstops.” These stops will motivate players to visit them because they’ll contain in-game loot. So here’s the real groundshaker: Players will have huge incentives to visit these Pokéstops in real life. That’s not a virtual visit, it’s shoes and sneakers entering a store. Of course that will work better for some businesses than others, but the potential revenue is enormous. Even more intriguing, buy-in won’t be limited to the gigantic corporations. It’s easy to imagine Starbucks or McDonald’s paying for Pokéstop promotions, but what about mom and pops from Bangor Maine to San Francisco? Once that future Pokémon GO money source is understood, Nintendo’s $9.7 billion stock value jump snaps into focus.
Check out the video below from the Today show. Some businesses have already seen a 75% increase in revenue from the added foot traffic from Pokémon GO, likening the effect to holiday traffic.
Related: How Much Does a Super Bowl Ad Cost?
Pokémon GO Money Facts
Pokémon GO is worth a potential $180 billion according to our estimates. The rest of our Pokémon GO money facts are collected in the table below. There are an estimated 18 million downloads of the game so far. Five percent of most app users spend money on in-app purchases, shelling out an average of $9.60 per month, according to research from research firm SensorTower. That estimate is quite a bit lower than what most stats sites are saying specifically right now about Pokémon GO. The consensus is that real spending on in-app purchases is more like $3 million a day or $211 million so far. Nintendo’s total stock value before the game’s release on 7/6/16 was $16.9 billion and one week later it had jumped to $26.6 billion. The perception at the time was that Nintendo owned 33% of The Pokémon Company. That means we can multiply by three to get Pokémon GO’s valuation of $29 billion based on stock alone. As we’ve stated in this article however, we feel Pokémon GO is worth a lot more because of the potential for future ad revenue.
Pokémon GO Money Facts
|Price to download||Free|
|Cost of in-app purchases||$0.99 to $99.99|
|Percentage of all app-users who buy in-app purchases||5%|
|Average spend per user per month on in-app purchases for most games||$9.60|
|Number of Pokémon GO users so far who buy in-app purchases (figured from numbers above)||15,500,000|
|Spending per month on Pokémon GO (estimated by average in-app spending)||$148,800,000|
|Spending so far on Pokémon GO (based on above estimate)||$446,400,000|
|Nintendo company valuation before Pokémon GO release 7/6/16 (Price per share x number of shares)||$16,942,958,900|
|Nintendo company valuation AFTER Pokémon GO release 7/6/16 (Price per share x number of shares)||$26,620,531,000|
|Percentage of Pokémon GO owned by Nintendo||33%|
|Value of Pokémon GO based on Nintendo stock gain as 33%||$29,032,716,300|
— Game Informer (@gameinformer) July 14, 2016
Beyond Pokémon GO
The big question of course is whether the estimated Pokémon GO money actually materializes. Potential is one thing but it requires execution to turn it into real world dollars. Pokémon GO may fail to pull in the ad money estimated in the tables above because it may not make the transition from possibility to actually forging deals with advertisers. The craze could die off also, depleting the ranks of Pokémon GO players and vastly lowering the ad revenue potential. One thing is certain: whether those ad dollars wind up as Pokémon GO money or being paid toward the next big augmented reality game, they’re going to get paid. The genie won’t go back in the bottle. Pokémon GO is the first big augmented reality game but it’s not the last. Advertisers are almost certainly sitting up and taking notice, as are app developers. Pokémon GO is the first shot fired in a new war on a new playing field the size of the existing TV and internet industries, but it definitely won’t be the last.
Did Investors Make a Mistake?
By 8/3/16, Nintendo shares had dropped 18% after the company announced that it would see limited money coming in from Pokemon GO. Does this mean the game is worth a lot less than we said? Absolutely not. It means investors thought Nintendo would get a bigger cut of any Pokemon GO money than it actually will. That says nothing about the huge potential for ad revenue we outline for the game in this article.