Pokemon GO is earning Apple's App Store 3x as much money as Nintendo

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in iPod + iTunes + AppleTV
App Store chart-topping downloads of the hit game Pokemon GO have sent Nintendo's stock soaring, adding more than $7 billion to its market capitalization. However, the Japanese gaming icon is reportedly earning significantly less from app-related sales than Apple is from its App Store cut.


Pokemon Go


The Pokemon GO title is free in the iOS App Store, currently limited to the U.S., Australia and New Zealand but expanding soon to Europe and Japan. Players seeking to collect the game's pocket monsters can buy virtual currency via in-app purchases. Like other IAP, Apple collects an App Store cut of the proceeds.

A report by Luke Kawa for Bloomberg noted that the game already has more active users than Snapchat or WhatsApp, having rocketed to the top of the App Store charts at a record pace.

The report cited Macquarie Capital Securities analyst David Gibson, who noted, "As users build their Pokemon inventory, spending money becomes needed to store, train, hatch, and battle."

Nintendo's belated foray into smartphone apps--via licensing one of its most popular gaming franchises--is expected to boost the company's net profits by as much as 15 percent.

However, Gibson noted that its still unclear how much Nintendo itself would be earning from the game's success. The Pokemon GO title is based on previous work in augmented reality gaming developed by Niantic, formerly part of Google.

Niantic was spun off into an independent company last October as Google restructured itself under the new name Alphabet. The company formed a $30 million partnership with Nintendo and the Pokemon Company, a joint venture developed to license Pokemon characters, which Nintendo owns a third of.

Gibson stated that "we presume that out of every 100 units earned at the App Store, 30 would go to Apple, 30 to [software developer] Niantic, 30 to Pokemon and 10 to Nintendo."

Apple earns a 30 percent cut of App Store sales and IAP, collected to help maintain and enhance the market for iOS software. App Store sales are a major part of Apple's Services segment, which experienced 20 percent growth in the March quarter, bringing in high margin revenues of $6 billion.

Apple earned ~3x more from Pokemon Go in the App Store than Nintendo did. https://t.co/owXAOEOMOy

-- Daniel Eran Dilger (@DanielEran)


A similar cut for Niantic helps fund the development of the game, while Nintendo and Pokemon earned a combined cut for the use of their intellectual property. As a joint owner of the Pokemon Company, Nintendo will benefit from the firm's appreciation.

However, it is notable that while the game's success has immediately excited investors in Nintendo, the success of the title benefits Apple by a much larger amount, without involving an initial multi-million dollar risk in developing the software.

Apple has increasingly sought to emphasize the value of its Services business to investors, particularly over the last two quarters where global economic conditions and unfavorable currency exchange rates have put a damper on the company's hardware sales.

The best mobile store, the best mobile hardware



In April 2015, analytics firm App Annie noted that while Google served 70 percent more app downloads to its Android users, Apple's App Store earned 70 percent more revenues from iOS users.

Apple's performance lead widened this year (as reported by The Telegraph, as Google Play downloads increased to become 100 percent greater than the App Store, even as App Store revenues grew to become 90 percent higher than Google Play.




Apple's veritable lock on valuable customers can be tied to a better store experience with more attractive, exclusive titles, but is also closely related to the fact that Apple's statistically more affluent iOS users are more likely to pay for apps and IAP. Additionally, iOS users are more confident that apps they buy in the App Store will actually work on their devices.

As noted by Twitter user Sumocat noted, many Android users trying to play Pokemon GO are finding that its novel use of augmented reality requires a functional gyroscope (along with a mainstream version of the OS; the game doesn't yet fully support the upcoming Android N or Apple's iOS 10 beta). Many cheap Android phones don't include functional gyroscope hardware, and many that appear to either aren't supported correctly, don't work right, or are fake.

A variety of Android users complained that poor or missing gyroscope support "ruined the game for me." Users have been reporting the issue on models from Sony's Experia, HTC, Motorola ZTE to and, according to StackExchange "all Huawei smartphones."

In 2014, the developer of dancing app Bounden noted similar issues in trying to get the gyroscope and digital compass to work on Android phones after first launching on iOS without those problems.

Apple first added a digital compass to iPhone 3GS in 2009, and was the first phone vendor to build a three-axis gyroscope into a smartphone for iPhone 4 in 2010.
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Comments

  • Reply 1 of 48
    Nintendo should directly release titles like Mario and Zelda to iOS. They'd make a fortune.
    pscooter63mike1trollkillerlondortallest skilbrakkenTurboPGTjbdragonnolamacguy
  • Reply 2 of 48
    staticx57staticx57 Posts: 394member
    Nintendo should just pack up and go home. Wind down operations and dissolve the business.
    SpamSandwich
  • Reply 3 of 48
    So if Nintendo at 10% take sees a 7 billion boost in market cap, one would expect even more robust gains for Apple at 30%take ? Right?
    edited July 2016 nolamacguy
  • Reply 4 of 48
    Nintendo should directly release titles like Mario and Zelda to iOS. They'd make a fortune.
    No, they wouldn't. This is a stupid idea. 

    staticx57 said:
    Nintendo should just pack up and go home. Wind down operations and dissolve the business.
    You should wind down commenting. 
    suddenly newtonigorsky
  • Reply 5 of 48
    apple ][apple ][ Posts: 8,360member
    Haha, that's hilarious! Faulty or fake gyroscopes! :#

    I can just imagine droves of Fandroid zombies wandering around in circles, trying to complete tasks in the Pokemon game, and failing, due to their remarkable and superb gyroscopes!

    And like I said in the other thread, and like I've been saying for years, bring Mario to iOS! Bring Donkey Kong to iOS! Bring it all!

    I think that it's going to eventually happen. The market is too big for Nintendo to ignore.
    elijahgpscooter63kevin keebrakkenSpamSandwichsuddenly newtonjony0
  • Reply 6 of 48
    No matter how much money Nintendo is making, I'm already pissed off by Pokemon Go and it's not even available in my country yet!
    airmanchairman
  • Reply 7 of 48
    foggyhillfoggyhill Posts: 4,692member
    If it weren't in the App Store they'd get 0, how much does 0 / 3 makes?
    icoco3airmanchairman
  • Reply 8 of 48
    apple ][apple ][ Posts: 8,360member
    Actually, I think that Nintendo is making a lot more, than what the article suggests.

    The article says that Nintendo's cut is only 10%, but Nintendo also owns 33% of the Pokemon company and they also have a stake in Niantic, so I think that Nintendo is actually doing quite ok.

    From something I read at Toucharcade:

    What makes this jump even more impressive is how Nintendo is only indirectly involved with the game since the Pokemon franchise is owned by the Pokemon Company and the game is actually developed by Niantic. However, Nintendo owns 33% of the Pokemon Company and also owns a stake in Niantic, which explains why Pokemon GO's success is reflecting on Nintendo's value.

    http://toucharcade.com/2016/07/08/pokemon-go-is-already-helping-nintendos-bottom-line/
    Deelronpscooter63brakken
  • Reply 9 of 48
    Nintendo owns 33% of Pokemon Co and part of Niantic, which is clearly not figured into the numbers above. I also suspect their investment in this game is small. Maybe already making a profit...
  • Reply 10 of 48
    mwhitemwhite Posts: 137member
    Downloaded it and deleted it that fast. :|
    baconstangSpamSandwichDJ 007
  • Reply 11 of 48
    Nintendo owns 33% of Pokemon Co and part of Niantic, which is clearly not figured into the numbers above. I also suspect their investment in this game is small. Maybe already making a profit...
    It also builds hype for Pokemon Sun and Moon being released later this year. 
  • Reply 12 of 48
    mcdavemcdave Posts: 901member
    Google lost out.
    Google's customers lost out.

    I like this news, bring me more news.

     :) 
  • Reply 13 of 48
    elijahgelijahg Posts: 592member
    Why does DED keep quoting himself posting on Twitter?
    SpamSandwichboopthesnoot
  • Reply 14 of 48
    elijahg said:
    Why does DED keep quoting himself posting on Twitter?
    Thinks highly of himself. 
    singularitySpamSandwichboopthesnoot
  • Reply 15 of 48
    Nintendo should directly release titles like Mario and Zelda to iOS. They'd make a fortune.
    No, they wouldn't. This is a stupid idea. 

    You should wind down commenting. 
    Yeah ok....I suppose you think Pokemon Go is a flop too? I thought Falcons had better vision then that.
    mike1
  • Reply 16 of 48
    MrloweMrlowe Posts: 3member
    The linked reports do not say anything at all about Pokemon Go having more active users than WhatsApp or Snapchat. It's understood that you use your protracted rants to bash anything non-apple but blatant lies is a little too trumpian for my liking.

    The report actually states that Pokemon Go users in the US (only) spent more time playing their new game (43 min average) than those same users spent in Snapchat and WhatsApp that week. Nothing about number of active users and nothing at all about those users who are not playing Pokemon Go, or the rest of the world for that matter. Kinda makes sense if you have a new game that you enjoy playing. I spent more time playing Eve Valkyrie in VR last week that I did in WhatsApp, it doesn't mean much more than the fact I enjoy the game.
  • Reply 17 of 48
    entropysentropys Posts: 1,103member
    10% for brand recognition is pretty good I would have thought. Everyone else has to something, the developer, the App Store etc. and nintendo just has to allow them to build the app around Pokemon.  Also, Nintendo has an investment in the developer anyway.
  • Reply 18 of 48
    Played it on a friend's Android phone. (I'm waiting for it to be available in Canada and don't want to bother with an Australian Apple ID.) It was pretty fun from the little that I did. It doesn't quite feel like a faithful adaptation of the Game Boy game I played as a kid. But it is fun to see the characters and some of the things they did seem really interesting. I really hope that Nintendo works out some sort of good deal with Apple or gets acquired by Apple. The smart phone is killing the portable game console, and Sony and Microsoft are beating Nintendo in the home console market. But they make such great games!
    Rayz2016
  • Reply 19 of 48
    kevin keekevin kee Posts: 832member
    I have it (on my 'real gyroscope' iPhone, obviously) and I love it! Chasing those little monsters around the town really stimulate physical exercise! This is an example of how Augmented Reality applied in the game. Looking forward to see more smart use of AR on Apps.
  • Reply 20 of 48
    koopkoop Posts: 337member
    So you're telling me through the power of anecdotal evidence, random listings of chinese manufacturers and brands that there are some Android phones that can't run a game and it doesn't even run on the pre-release beta version of Android N yet?! What?! What will you tell me next, that these phones are not sold in the United States and are likely sub $100 prepaid phones for developing markets too? Have mercy!


    singularity
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