Pokémon Go has been downloaded more than 100 million times since its July debut, making it the biggest-growing mobile game ever.
Naturally, the phenomenon has drawn much commentary about what this means for marketing, but I am more interested in what it teaches us about making money.
It’s not easy to make money in an ecosystem from unrelated parties. In spite of all the press purporting that Pokémon Go offers local businesses unique marketing opportunities, there are, in fact, many limitations. The claim is that small businesses can gain new customers from being a Pokémon “Gym” or “Pokéstop” — physical locations that players visit to collect rewards or battle virtual monsters.
But not every business is a fit for Pokémon Go.
Think about the ideal Pokémon Go commercial partner — the kind of company for whom it makes sense to invest in trying to attract Pokémon to its physical location. I propose a franchise company like Jamba Juice. Why? For starters, Pokémon Go and Jamba Juice have similarly youthful brand images. At the very least, it’s unlikely that Pokémon Go customers searching for Pokémon would inadvertently annoy Jamba Juice’s existing customers.
It’s also not the case that playing Pokémon Go would detract from the Jamba Juice experience — which involves a lot of waiting to order a smoothie and then a lot of waiting to get said smoothie.
Not every business is a fit for Pokémon Go.
Playing Pokémon Go might even enhance the Jamba Juice experience by enabling customers to amuse themselves during the wait. Contrast this to a potential Poké-partnership with a bank. Though there is a similar dynamic of waiting in line, there is a risk that Pokémon Go players would alienate the bank’s core clients, who likely have little patience for tweens and 20-somethings chasing pikachus with their smartphones.
The point is, anytime there is a mismatch of target segments, or that playing Pokémon gets in the way of what customers usually do at a physical retailer, it limits the ability of the partner to monetize.
Another assumption is that Pokémon Go is going to make tons of money from collecting data about its users’ locations and movements, and that marketers can easily use that data to drive sales. However, it’s difficult to see how this data is special. Many apps and smartphone operating systems collect detailed, specific location data at the user level.
Consider Waze, the real-time traffic app, which tracks users in their cars. Consider Foursquare, where users reveal to their friends where they’re shopping and dining. Or Facebook, where users are constantly sharing their locations through status updates. To argue that Pokémon Go has something extremely valuable in its data, it has to be the case that the data is unique. But it’s not.
In spite of these limitations, Pokémon Go does offer lessons about traditional pricing segmentation — specifically, the importance of understanding which features of your product may be price insensitive to the segments of your target market that has money to pay for them.
Take, for example, the ability to purchase “incense” — vital and valuable trainer tools for catching more Pokémon and rare Pokémon — within the game. As a parent of children playing Pokémon Go, it appears you have two options: 1) Allow your children to hunt Pokémon around your neighborhood; when Pokémon appears in the middle of the road, your children try to catch the Pokémon in the middle of the road; or 2). Allow your children to buy incense and the Pokémon comes to them as they walk around your backyard. You don’t have to be a helicopter parent to see the value in keeping children out of the middle of the road.