The Meteoric Rise & Eventual Fall of Pokemon GO

Image Source: Niantic

Ever since the launch of Pokemon GO by Niantic Labs on July 2016, the media and general masses have been quick to zoom in on it, with businesses trying to ride the wave and cashing in on the potential profits it could bring.

If you are still not convinced by its virality yet (and I wonder what would), looking at these figures would help you visualize it better.

#1: Pokemon Go crosses $200M in global revenue one month into launch.

#2 : The company that created Pokemon Go is now worth over $3 billion.

Secret sauce behind the success of Pokemon GO

So what is the X-factor that makes the game so successful?

Some have attributed it to AR being a new thing while others gave credit to the delayed launch that helped drive excitement around it. And the most common theory ever heard is the supposed nostalgia behind it.

To find out, let us examine the various aspects of the game.

#1: Game Structure and rise of social gaming

The game is structured in a role-playing nature where avid gamers get to be “Pokemon trainers” in the Pokemon world, hunting the poor Pokemons.

Source: https://www.youtube.com/watch?v=DlZaRzTjlGo

The gaming structure itself is a pretty big factor that creates one of the biggest strength of Pokemon GO — network effect.

But before this, let’s start with a little history on e-gaming:

Single-player games existed way before MMORPG became mainstream. Back then, playing games like Megaman and Street Fighter was pretty common, with more popular ones like Mario having a sizable following in their heydays.

And we have strategy games like the Age of Empires series that made a huge splash before Blizzard took over the crown with star products like Warcraft, Starcraft and Diablo.

Although games like Age of Empires have a multi-player mode, the focus had always been on single-player mode. Even for multiplayer games, there were a cap on the number of players, in part to optimize the overall game play experience and partly due to game architecture and scalability issues that may have plagued early games.

Image source: Age of Empires.com

Getting Hooked in the short term

Source: Nir Eyal’s Hook Model

Here’s a simple breakdown of the hook model:

External Trigger —Splashy media releases and good game reviews.

Action — Buy the game and play it

Variable Reward —Players unlock new (and unknown) units, skills, maps etc. as they advance through the campaigns. Player goes in-depth into the game storyline.

Investment — Save the game where players last end off. Gamers only get to know the ending if they continue playing.

Internal Trigger— When people get bored, they play games for self-entertainment. Gamers get an inner sense of satisfaction through winning and conquest. Helps soothes their dark sense of ego.


Yet, these games had an issue with getting users addicted in the long term.

While gamers are generally fascinated by new features, units and possible story-line that comes with it, there will come a time when things have to end. By then, players have completed their campaign missions, and played “Death Match” games for dozens of times against the computer.

Their fascination sort of died because they are no longer intrigued. There is nothing new to attract them.

One way game developers tried to overcome this issue was by creating a second, third series and so on. And then expansion packs and new patches, but this kind of big push does not come often. If any, it probably comes every 1–2 years, and is an unsustainable model.

It’s like waiting for Black Friday or Cyber Monday sale to push the firm’s total annual revenue count.

A new series may come with a brand new plot, or perhaps continue off the story plot from the previous series.

Warcraft came a long way, from the first series of “Warcraft: Orcs & Human” to “Warcraft III: Reign of Chaos” that marked the successful comeback of Blizzard.

The same thing happened in the Chinese gaming market. Famed Chinese game series “Legend of the Sword and Fairy” (仙剑奇侠传)had developed till the 6th series. (Yes, they even had 3 series being made into drama series. Not bad, considering the number of licensing fees they have already raked in.)

These are the more successful ones that proves why a game with a good story plot is important.

Image source: Baidu baike

More importantly, gaming elements evolve as well that eventually shaped the global social gaming scene.

If we have to understand the rise of social gaming, perhaps it would be helpful to mention Neopets.

Image source: Neopets.com (Lenny certainly looks like a roadrunner rip-off)

Let us backtrack a moment in history…

Neopets was launched in 1999 and is in many ways similar to Pokemon. You create an account, own pet monsters, play games and interact with other players in the Neopia world. It was quite an innovator in the dial-up era. Of course, I am quite surprised as well by its longevity as a social site.

Never underestimate the power of nostalgic memories.

Neopets role as an early pioneer in social gaming sparked off a new revolution. More and more developers came on the bandwagon with new and better games developed based on the concept of mass gaming.

The Rise of the MMORPGs

Web games like Runescape in the early 2000s garnered lots of attention as school kids flock to play it — at home, school or LAN shops. This sparked off a global trend of MMORPG-style games that hoped to ride the new wave.

Maplestory, Ragnarok, Gunbound… …For the 90s generation, these were some of the games that you may have heard or even played before. Still, they proved to be just a fad, with their popularity typically not lasting more than 3 years before seeing a decline in numbers.

It had been quite some time since Warcraft III’s launch in 2002. The Blizzard team were bent on creating a new success. And so we saw the release of World of Warcraft in 2004, almost 2 years after Warcraft III was released.

The result was phenomenal. At its peak, World of Warcraft reached over 12 million subscribers. Before that, the number had been climbing steadily from 1.5 million in the first quarter of 2005.

That’s a 8X jump, pretty impressive!

One reason for the phenomenal rise of MMORPGs was the huge community driving it. This is pretty much like any social network platform — the more the merrier. The additional of every new user base adds a marginal value that then propagates down the chain and pulls in even more users. This is the power of peer pressure.

(The one thing that I cannot be sure is if the marginal value created follows a diminishing path or not, how if yes — HOW MUCH?)

Humans are by nature social creature who seek comfort in groups and crave deeply for social acceptance.

Pokemon, in this aspect, has rode on the correct social gaming wave to achieve their current success. Community is king.

#2: Nostalgia

Memories are part and parcel of life; memories make us appreciate the past and live the present. It is precisely the power of nostalgia that makes Pokemon GO’s marketing strategy a huge success.

The creators have made the dream of reliving the childhood possible for millions worldwide.

#3: Ego capital

If you are not a Pokemon GO fan like me, then chances are you have been overwhelmed by all those Pokemon madness that has happened the past month.

The symptoms all started when you open up Facebook only to see the horror of your friends posting all their Pokemon catches on Facebook and flaunting their new achievements.

Gym captured. Yeah, new #achievement unlocked.

Then you frantically start to scroll down but the horror seems to catch up as more and more of such “Pokemon stories” emerged. Maybe it is a blessing in disguise to shoo you off from wasting your productive time on Facebook.

Image source: TheMiddleGround (Yishun Park)

It’s a level similar to all those #wefies and #selfies that your friends post from time to time.

#4: Mystery rewards

Maybe when you are near the area, that certain Pokemon show up and you catch it, but did you wake up in the morning knowing what kind of Pokemon you will meet today?

The feeling of suspense makes it a strong pull factor that attracts people to participate.

Here’s an analogy:

People buy lottery or ToTo even if they now the odds of winning are slim. They believe they are going to be the chosen ones who can pick the winning number.

#IChooseYou

#5: Low barriers to entry

THE BEST PART? — The game is free, that means literally no barriers to entry (as long as the game is launched in that country), although you may have to spend some money on other expendables.

#6: Development team with area expertise

The creators of Niantic Ingress-ed to Pokemon GO (pun intended), and the rest as we know is history.

In a way, you can say that Ingress is sort of a beta experiment prior to the launch of Pokemon Go — both in market-fit and development progress.

For any successful launch comes a good product. The developers did have technical issues here and there, it’s pretty normal at that scale. They can get it fixed quick, because they had similar experience with Ingress. But shitty-ness is never tolerated. They know better than to release a buggy product that disappoints and annoys users.

Here’s a quick glance of a report on Ingress:

Image source: Niantic Labs

#7: Game familiarity

The game was launched only in July 2016 and I said familiarity? No, I am not kidding you. The evolution into Pokemon GO was actually based on ONE VERY POPULAR activity of all time — Geo-caching (or you might call it treasure hunt).

People always loved treasure hunts, especially youths. They want the venture experience, to explore the unknown. It gives them an adrenaline rush and compete against and outdo each other. Variety shows over the world have integrated these games and almost always garnered huge popularity. It’s one game that never seems to get old.


The Great Crashing of Pokemon GO

Despite the great new found success of Pokemon Go and the creation of a huge fan base globally, it suffers from several vital flaws that makes it hard to sustain long term.

Previously, I had mentioned about World of Warcraft with an impressive subscriber base. It truly was a giant in MMORPG.

Even so, WoW subscribers saw a decline in numbers after 2010.

Number of World of Warcraft (WoW) subscribers from 1st quarter 2005 to 3rd quarter 2015 (in millions)

While the launch of the expansion pack “Warlords of Draenor” in 2014 did brought in significant sales, that did not seem to last long. The numbers were still dropping steadily.

In retrospect, this is the first sign that while Pokemon may be the rage of the town for now, we can expect it to go down a similar path.

In other words, it is doomed to fail.

And here is a chart of Pokemon GO’s DAUs:

Did it occur to you that both charts look similar?

What led to the decline of Pokemon?

  1. No interesting storyline — humans love stories, it excites us and forms the soul of any good game.
  2. Routine tasks — what else do wannabe Pokemon trainers do besides catching more Pokemon? It becomes a mundane tasks whereby users catch Pokemons for the sake of catching (and then posting on Facebook).
  3. Limited Pokemon — for the masses, the most probable outcome would be that they would catch the same kind of Pokemon’s time and again. I once saw someone who caught crabs a few times. Maybe he really love crabs so much.
  4. Smaller than expected market — the Gen-Z did not grew up in the era of Pokemons and Gameboys, but that of iPhone, Samsung Galaxy and League of Legends, and have a much shorter attention span than the generations before them. What this means is that they have less memory bonds with Pokemon and therefore lesser likelihood to stick with the game. They started playing because everyone else is playing it. They are the ones on the accelerated user decay curve.

All games suffer from the same problem in decay value that at its root, is the result of a nomadic human behavior seeking new experiences.

Perhaps the Pokemon craze will still continue on for a while, and the launch of subsequent series or related products may stall its death. But that’s akin to what we have seen for ages in computer gaming — new expansion packs that offers new stuffs and additional features.

At the end of the day, if the game has lost its lustre, it will lose its audience. Because these gamers who once were fascinated by new stuffs eventually got bored of it.


The Future of Pokemon GO

What’s next? The game will probably evolve to the point such that it has almost every element that typical MMORPG has to offer, from rooms to auctions and “adventure quests”.

Maybe you kill monsters at business zones and get coins or in-game credits. Pretty much like mobile game advertising concept brought into reality.

Looking back in the past 2 years — Flappy bird got viral it fumbled, Angry Birds was once the rage of the town, Candy crush got users sticky for a short period before they got displaced.

The lesson from Pokemon GO shows the inherent nature of mobile gaming as a hit-or-miss business.

The gaming and entertainment industry is vastly similar — it’s all part of business to get big and then see decline. The profitable part comes in at the initial stage where it becomes viral, and that’s where businesses try to extract as much value out of it as possible.

Niantic’s revenue from Pokemon Go is already $500 million.

Here’s the latest news straight from the mouth of John Hanke, CEO Niantic. (52:45 onwards)

“There are a lot of great ideas out there, great teams out there. Our goal is to enable them with our unique real world technology and the data.”

A note-worthy fact to know is that the link between Pokemon GO and AR/Geo-location technology is very similar to that between Bitcoin and blockchain technology. Pokemon GO is just one of the product powered by an innovative technology behind it, which is actually the more useful of the two, not the other way round.

Slack’s success was born out of their failed launch of Glitch. Niantic could follow a similar business path with a proven technology.

If they are indeed venturing into the B2B segment, that will mark a huge shift in business strategy from a very seasonal monetization flow to include a more sustainable model by serving other businesses.

It’s a two-pronged approach targeting both the B2C and B2B market.

I would love to see how far Niantic can grow and progress in the future.

Disclaimer: Personally, I don’t play WoW. So gamers please feel free to drop me feedbacks if any areas could be more accurately written.

A single golf clap? Or a long standing ovation?

By clapping more or less, you can signal to us which stories really stand out.