Pokémon Go is a mega-hit. No, it’s a mega-mega-mega hit. It’s estimated that the mobile game is making up to $10 million a day, and total revenue could hit $1 billion before the year is over. Not bad for a game that just launched a month ago.
But nothing lasts forever. Check out this chart from Survey Monkey, via TechTimes.com:
The all-important Daily Active Users (DAU) metric seems to have already peaked and is on the decline. Perhaps this is to be expected since the game was such a phenomenon right out the gate but historically, hit games “including previous record-setting hit games Draw Something and Candy Crush Saga, experience a slow start.”
So what does the future hold for the creator of the game, Niantic? Well, we’ve seen hits before and usually there seems to be three paths these companies take after a blockbuster. Let’s examine each one.
Adapt: Rovio Entertainment
Angry Birds was a monster hit for the Finnish developer of mobile games, formerly known as Rovio Mobile. Remember a few years ago, everyone and their mother was busy flinging birds at fat green pigs?
Yeah. You remember.
Angry Birds got a billion downloads and made hundreds of millions for Rovio, but though its sequel games did well, they never achieved the same level of notoriety as the original. So what did they do?
They adapted. They were wise enough to know that they had more than just a game on their hands. They had hot intellectual property in these birds that could expand to other media. So Rovio Mobile turned into Rovio Entertainment and soon the birds were everywhere with merchandise, console video games, a cartoon series, and the feature movie that came out this year. Of these, the movie was the most successful venture (grossing nearly $350 million worldwide on an estimated budget of $73 million) and saved the Rovio employees working on it from a recent round of layoffs.
Rovio’s hit game led to adapting the company to an animation powerhouse. Who would have thought?
Acquired: King Digital Entertainment
In 2011, Candy Crush Saga took over everyone’s life. By mid-2013, it had 6.7 million active users and was earning revenues of $633,000 a day. Developer King.com had a bonafide mega-hit on their hands.
Your thumbs are trembling right now due to muscle memory.
Candy Crush Saga was a huge craze, and it launched sequels that involved crushing sodas and jellies, and it launched a lot of other sagas as well. A whole lot, including Bubbles, Pets, Diamonds, Farms, you name it. But King.com couldn’t replicate the same success. So what did they do?
They got acquired. In February of this year, Activision Blizzard bought King Digital Entertainment for $5.9 billion to become the “largest game network in the world.” This was probably the best thing to happen to King, especially since their brand was in decline and they hadn’t produced another hit game. While Activision Blizzard probably didn’t overpay for King Entertainment, the jury’s out on just how business-savvy this acquisition was.
But no matter what, an acquisition at nearly $6 billion? Not a bad way to go.
Farmville, Cityville, Words With Friends; Zynga’s games were on everyone’s thumbs before mobile was even really mobile. In 4 years since its inception, Zynga has pulled in a billion dollars and ushered in a new casual gaming paradigm that has shaped the industry since.
Remember that one English major friend who this game made you hate?
Zynga paved the way for mobile gaming and reaped the benefit for years. They codified ideas like spending real money on more energy, to speed up time, and to unlock virtual items. High off all this success, Zynga went public and listed itself on the NASDAQ in 2011. Unfortunately, share value fell as they released lesser and lesser hits. So what did they do?
They atrophied. Shares as of this writing is at $2.68, having fallen from the original $10 value back in 2011. Today, analysts are a bit bullish on the company since they “only” posted a net loss of $4.4 million this quarter compared to losses of over $26 million in each of the previous quarters.
Unable to find a new game to hit with its changing audience, Zynga has become just a shell of the juggernaut it used to be in the gaming industry.
So, then Niantic?
So once Pokémon Go inevitably begins to peter out, what’s going to happen with Niantic? Well our money’s on acquisition. After all, they can’t really expand to other media since Nintendo and the Pokémon Company own the character rights. Another hit game? Unlikely. See the previous 3 companies that have tried. Atrophying is possible, but the associated game brand is so strong that it would be highly unlikely for the company to just evaporate, though we’ll probably see a bit of that before an acquisition.
But we’re app developers first, and business speculators second! Let us know what you think will happen to Niantic post-Pokémon.