Whether you are a lover or hater of "Pokemon Go," Nintendo and Niantic's nostalgia-tastic augmented reality game seems to be everywhere. The free-to-play game reportedly has already racked up over 15 million downloads, which for most mobile games should spell big profit, begging the question — how does "Pokemon Go" make money and still remain free to download?
The Fiscal Times reports that in the few days following the popular game's release, Nintendo's stock rose by 53 percent, upping the company's market value by some $12 billion. Clearly, the game is generating profit somehow. As The New Yorker points out, while one doesn't have to spend money to enjoy "Pokemon Go", microtransactions within the game make up an important part of its business model. In order for players to upgrade their Pokemon-catching abilities they can visit the Pokemon shop. Here players can spend their Pokecoins on items such as extra Pokeballs, Lure Modules, egg incubators, and even extra Pokemon storage. One hundred Pokecoins is equal to 99 cents in U.S. currency, and the game makes approximately $1.6 million a day off these microtransactions. For a popular mobile game this model can be quite profitable, but "Pokemon Go" has other revenue streams that make it unique.
Niantic will be shipping a new wearable towards the end of this month (July 30 or 31 depending on where it was preordered from) called "Pokemon Go Plus." This small device, shaped like a red and white Pokeball, vibrates and lights up whenever a Pokemon is nearby.
It links to your smartphone via bluetooth, allowing you to play the game while commuting without distractedly staring at a phone screen. Press the central button on the "Pokemon Go Plus" and you can check into Pokestops collecting items or even throw a Poke ball. The accessory costs $34.99, and many stores have reportedly stopped taking preorders due to overwhelming interest.
Besides the store and the wearable, "Pokemon Go" has one more important thing at its disposal: information. In order to play, the game gains access to the player's smartphone's camera and GPS tracking. As The New Yorker points out, should Niantic choose to make a database of the customer information and sell it to third-party marketers and advertisers, this data would be the company's most highly-valued product. The Wall Street Journal reports that McDonald's is taking advantage of the widespread popularity of "Pokemon Go" by cutting a sponsorship deal with the game as it debuts in Japan.
Ingress, "Pokemon Go"'s augmented reality predecessor, also used corporate sponsored locations for the games "portals" (locations that Pokestops are based on). The deal is expected to be announced Wednesday, giving the fast food chain important locations in the game in Japan. Nintendo may only own one-third of Pokemon Co., but it's safe to say they will have a few more Pokecoins in the bank by the end of this week.