One of the biggest commercial successes of 2016 has been a breakthrough in Augmented Reality in the form of Pokemon Go. Over a couple of months, the game has gone through every stage - a sharp rise, occasional technical issues, becoming the best-selling game, and eventually, a fall in the number of players.
Pokemon Go already had two strong ingredients for success before it was launched - a curiosity surrounding AR and the Pokemon franchise. Fans of the latter have a strong sense of community worldwide, meaning a big chunk of the audience was already in their pocket. From the original TV series, the Pokemon franchise has been transformed to many forms - from card games to comic con events. Once Pokemon Go was out in the US, Australia, and New Zealand, people from around the globe were exploring ways of accessing the game from other geographical locations where it hadn't yet been released. Uneven distribution and extremely high demand resulted in occasionally crashed servers and tech issues, but it was just another indicator that the game had virality.
Pokemon Go, however, seems to have passed its peak just one month after launch, when it went from having 45 million players in July, to 30 million by the end of August, according to Statista. It may seem like people have lost interest, but in fact, Pokemon Go is doing just fine and here is why.
Falling numbers is a normal phenomenon, as those players who were vaguely interested have expectedly stopped playing, and those still committed are still in the game. But looking at success based on player numbers alone does not take into consideration the way apps make money.
If a game has an active in-app purchase system, it heavily relies on those players who invest real money in the game. The percentage of those players doesn't have to be big, but enough to drive revenue. So when Pokemon Go showed a seemingly shocking drop in popularity, it has, in fact, lost only 2% of its daily revenue, according to data acquired by Apptopia. So it's not the total amount of users who make the money for mobile games, but a certain type of user. According to app analytics company App Annie, Pokemon Go has already generated record revenue of more than $500 million since its launch, with a predicted $1 billion by the end of this year, meaning the game has retained a large number of users, and most importantly, those who pay.
The decay curve happens to all mobile games after a certain period of time, but an indicator that this curve is healthy and not destroying the company is the speed of the decline. Pokemon Go has successfully passed a 30% retention rate meaning that it is likely to see revenue growth, as mobile games manage to survive even with 2-3 % retention. As for creators, Nintendo's General Manager and the best-selling game creator Shigeru Miyamoto have already announced the launch of Super Mario Run this December. The announcement came during a presentation of the new iPhone 7, where Miyamoto stole the stage from Apple CEO Tim Cook. Older games have received a new life, creating an opportunity supported by nostalgia and disruptive technology. Considering the Mario franchise is the best-selling of all time, it's easy to predict that another success is on its way.