Pokemon Go is a free app, but that’s not to say the game’s developer is not making any money off it. Indeed, the mobile game, which has become an instant phenomenon since its release earlier this month, has already made millions of dollars
According to Venture Beat, Pokemon Go has generated approximately $35 million in revenue within its first two weeks. The game brings in approximately $1.6 million each day from iPhone users alone.
So how exactly is Niantic, the game’s creator, making money off of an app that is ostensibly free? Well, although Pokemon Go does not cost anything to download, the game’s shop invites players to spend real money on items. These items, which include additional Poke Balls and potions, can all be acquired through regular gameplay, but for many, it’s significantly easier to drop a few dollars here and there to refill their inventory.
With Poke Balls in particular, the only way to get them for free is to level up or visit Poke Stops, real world locations that give out items. But many players who live in rural areas find that there are barely any Poke Stops nearby, and so spending money on more items is much less of a hassle than traveling to a faraway location.
Indeed, a significant number of players who download the app end up paying for items. The ratio of users spending money on the game to the total number of users is about 10 times that of Candy Crush, another free-to-play game that has in-app purchases, The Guardian reports.
Niantic is not the only company making a fortune off of Pokemon Go. According to The Guardian, Apple keeps approximately 30% of the revenue spent by iPhone users on the game, and it’s estimated that they could make up to $3 billion on Pokemon Go over the next two years.
Nintendo, however, is not benefiting nearly as much from Pokemon Go’s success. Although Nintendo has traditionally produced the Pokemon games, Pokemon Go is actually made by a separate company, Niantic, which Nintendo invested $20 million in last year, according to Polygon. Nintendo does, however, own The Pokemon Company.
“Because of [Nintendo’s equity in The Pokémon Co.], the income reflected on [Nintendo’s] consolidated business results is limited,” Nintendo recently said.
This information caused Nintendo shares to drop by the largest number since 1990, according to Bloomberg. But Nintendo will stand to rake in a significant amount of cash when Pokemon Go Plus launches. This wearable accessory, which serves as an add-on to the game, is published directly by Nintendo and will retail for $34.99, about the same amount of money as a standard Pokemon game.
It remains to be seen how long this massive revenue stream will continue, though. The game has been seeing a small but steady decline in users over the past week, with the app down several million daily active users since July 14th.