Pokemon Go could add $3B to Apple revenues, analyst says

AppleInsider

Apple could potentially reap $3 billion in incremental revenue from Pok?mon Go over the next couple of years, an analyst argued in a Wednesday investor memo, helping to buoy the company's stock price.

In the memo, seen by AppleInsider, Needham's Laura Martin noted that an earlier casual gaming hit -- Candy Crush -- generated over $10 billion per year in its peak years, 2013 and 2014. Pok?mon Go, however, already has 10 times the number of players, and Apple gets to retain a 30 percent cut of any revenues generated from the iOS App Store, though the game is also available for Android.

The game is currently thought to be reaching 21 million people in the U.S., or about 6 percent of the country's population. Assuming global penetration peaks at 20 percent in the markets where Go is available -- and Apple pulls in 5 cents per person, per day -- the company could theoretically take in an extra $3 billion in revenue in the next 12 to 24 months.

That might boost the company's market cap by as much as $5.5 billion, or $1 per share, Martin added, also pointing out that Apple's short-term cash flow from Pokemon Go is expected to be higher than Nintendo's, which only owns 33 percent of the Pok?mon Company along with a 30 percent stake in the game's developer, Niantic.

Apple shares have risen slightly in Wednesday trading, sitting just over $100. For most of the past three months, shares have typically sold under that threshold, bottoming out near $90 in May.

stantheman

If Pokemon Go customers on iOS spend dollars they were previously spending on other iOS games and services, the net impact for Apple will be zero. That is admittedly an extreme case, but no more extreme than the assumption made by the analyst that 100% of Pokemon revenues would be on top of existing revenues. Consumers have budget constraints, and cannot buy more of one thing without buying less of something else. Not knowing what those alternatives are, or making a theoretical (%) adjustment for them, deprives the forecast of any predictive value.

sirlance99

AppleInsider said:

The game is currently thought to be reaching 21 million people in the U.S., or about 6 percent of the country's population. Assuming global penetration peaks at 20 percent in the markets where Go is available -- and Apple pulls in 5 cents per person, per day -- the company could theoretically take in an extra $3 billion in revenue in the next 12 to 24 months.

Not all 21 million people in the U.S. play it on iOS, about half do and half for Android. Also, once again, not all of the assumed "global penetration peaks at 20%" play on iOS. This is so off the mark as it's saying every single player is iOS only which it's not. 

rogifan_new

Well Apple stock is flat today so I'm not sure how this silly research note is "helping to buoy the company's stock price". This is what I hate about sell side analysts. They come up with these stupid research notes where they pull numbers out of their rear end. 

homie

This is why Apple should have bought Nintendo 1-2 years ago for the IP.

mubaili

No, in the short term Apple stock price would be determined by iPhone sales. If iPhone 7 is to be as has been rumored to be like 6 and 6s, it would be a big trouble for Apple in China market. We could well see Apple dropped %25 to test $75. Without a bigger user base any prediction on services is useless and a mirage.

scartart

stantheman said:

If Pokemon Go customers on iOS spend dollars they were previously spending on other iOS games and services, the net impact for Apple will be zero. That is admittedly an extreme case, but no more extreme than the assumption made by the analyst that 100% of Pokemon revenues would be on top of existing revenues. Consumers have budget constraints, and cannot buy more of one thing without buying less of something else. Not knowing what those alternatives are, or making a theoretical (%) adjustment for them, deprives the forecast of any predictive value.

I guess the hope is that users spend more time and money gaming on iOS, with other gaming platforms and other forms of entertainment losing out. I agree the net impact won't be 100% but I'm sure it will be greater than 0%, which will be positive for Apple.

cali

Apple needs to buy Nintendo. I don't care what the cost!!

Marvin

AppleInsider said:

In the memo, seen by AppleInsider, Needham's Laura Martin noted that an earlier casual gaming hit -- Candy Crush -- generated over $10 billion per year in its peak years, 2013 and 2014. Pok?mon Go, however, already has 10 times the number of players, and Apple gets to retain a 30 percent cut of any revenues generated from the iOS App Store, though the game is also available for Android.

The game is currently thought to be reaching 21 million people in the U.S., or about 6 percent of the country's population. Assuming global penetration peaks at 20 percent in the markets where Go is available -- and Apple pulls in 5 cents per person, per day -- the company could theoretically take in an extra $3 billion in revenue in the next 12 to 24 months.

Candy Crush never made $10b a year, the whole company's multiple products only generated $2.2b tops in 2014:

http://www.statista.com/statistics/288974/king-annual-revenue/

Pokemon Go also doesn't have 10x the number of players, it only has about 30 million. Candy Crush has had over 300 million (10x more than Pokemon).

http://venturebeat.com/2016/07/19/sensor-tower-pokemon-go-has-already-passed-30m-downloads-and-35m-in-revenue/

Pokemon Go has been estimated at making $1.6m a day in the US. If it's $5m/day worldwide and sustains that, it would take 200 days to make $1b. Pokemon has been going for 20 years already so it's possible that it can sustain interest for a long time but if it makes $1b in a year, Apple will make $300m.

Multiple popular Nintendo games could bring in a few billion over the next couple of years though.

maciekskontakt

And thaiis how you make money on human lame bahaviors. Just a general question: What does this game develop or teach a person? Any values? Just wondering. Sounds almost like screen licking application or who makes more interesting shape of poop.

apple ][

Does it really matter how much Apple makes?

Apple makes billions and billions upon dollars, but if they sell 11.1 million iPads instead of 11.3 million iPads, because that's the figure that some analyst dug out of their behind, then AAPL will of course have to drop.

gatorguy

maciekskontakt said:

And thaiis how you make money on human lame bahaviors. Just a general question: What does this game develop or teach a person? Any values? Just wondering. Sounds almost like screen licking application or who makes more interesting shape of poop.

Well it does get kids exercising. Example: According to my son an unhatched Pokemon requires at least a 5km walk  from him before it will break free of its shell. Even outside of that I sure do see a lot of players doing a lot of walking to Pokestops to collect gear.

lordjohnwhorfin

gatorguy said:

maciekskontakt said:

And thaiis how you make money on human lame bahaviors. Just a general question: What does this game develop or teach a person? Any values? Just wondering. Sounds almost like screen licking application or who makes more interesting shape of poop.

Well it does get kids exercising. Example: According to my son an unhatched Pokemon requires at least a 5km walk  from him before it will break free of its shell. Even outside of that I sure do see a lot of players doing a lot of walking to Pokestops to collect gear.

As long as they don't walk off a cliff or into oncoming traffic... But holy shit is this game dumb. Absolutely incredible how they manage to generate so much money off of something so insanely vapid.

ericthehalfbee

lordjohnwhorfin said:

gatorguy said:

Well it does get kids exercising. Example: According to my son an unhatched Pokemon requires at least a 5km walk  from him before it will break free of its shell. Even outside of that I sure do see a lot of players doing a lot of walking to Pokestops to collect gear.

As long as they don't walk off a cliff or into oncoming traffic... But holy shit is this game dumb. Absolutely incredible how they manage to generate so much money off of something so insanely vapid.

Sorry, but there are millions playing this game. You going to claim they are all dumb because the style of play is something you don't like? This game is brilliant, and I predicted its massive success (I said it would be the biggest mobile game in history) way back when it was announced based on one simple premise: take a game/concept people love to play (Pokemon) and convert the love of that game into exercise. My kids have walked almost 20km since this game came out (about 5km a day).

kevin kee

lordjohnwhorfin said:

gatorguy said:

Well it does get kids exercising. Example: According to my son an unhatched Pokemon requires at least a 5km walk  from him before it will break free of its shell. Even outside of that I sure do see a lot of players doing a lot of walking to Pokestops to collect gear.

As long as they don't walk off a cliff or into oncoming traffic... But holy shit is this game dumb. Absolutely incredible how they manage to generate so much money off of something so insanely vapid.

The gameplay is irrelevant (some people even think it's dumb). The idea is what makes the hype. It's novelty. It makes people who used to 'curl up in their nest' walk outside and meet new people, talking about the same thing (the game) as a start of conversation, finding all those landmarks from Pokestop, hunting new and unique pokemon in local neighborhood while at the same time rejoicing that you are not doing it alone. They are all experiences that people who are playing attach to, not the 'dumb' gameplay.

bigmike

Pokemon Stop.