Source: (Vine, 2016)
Nintendo and Pokémon
Unless you have been living under a rock for the last two decades you would have heard of both Nintendo and Pokemon. Pokemon is short for pocket monster. Pokemon is an imaginary world created in 1995 where trainers catch Pokemon to release them at will. Nintendo was founded in 1889 as a trading card company before dominating the video game market in the 1980’s. In the 1990’s, Nintendo launched Pokemon games on their handheld console (Gameboy) with great success (Nintendo, 2016). This was around the time Pokemon’s trading cards and cartoon show were at the height of their popularity. It is not exactly known how much of the Pokemon brand is owned by Nintendo but It is safe to say they have a majority share (Musgrave, 2016).
Source (Benson, 2016)
Historically marketing has been viewed as an expense rather than an investment. In order to gauge the success of marketing dollars spent, there must be measures in place. This is an elementary process for many functions of a business but not marketing. Finding a set of marketing indicators to be congruent with is a complex endeavour, as seen in the table below. Based on the ever-expanding list of marketing metrics, companies are moving away from the adage ‘You can’t manage what you can’t measure’; instead adopting the position ‘You measure what matters’ (p.p. 218, Iacobucci 2013). The question is – what matters then?
Marketing & Financial Metrics
Source (Mintz and Currim, 2013)
New Product Development
Nintendo’s profits were down 61% last year. Their latest console (Wii U) sold roughly a quarter of the sales enjoyed by Sony’s PS4 (Vine, 2016). Nintendo, seeing the rapidly expanding mobile game market, decided it was time to throw Mario’s hat in the ring.
Source (Wong, 2016)
Nintendo was initially reluctant to enter into the mobile market, lest they compete against their own handheld gaming consoles. This was reinforced by the failure of their initial foray. Nintendo’s share prices dropped 9% the day they announced their first mobile app: Miitimo (Vine, 2016). It was looking as if you couldn’t teach an old dog new tricks! Nintendo persisted. They partnered with Niantic Inc. releasing Pokemon Go and had their share prices surge by a staggering 65% (Vine, 2016). The fastest mobile game to top the iOS and Android chart – ever!
Return On Investment (ROI)
This notion was formulated in the belief that investments are made once with profits to eventuate (Ambler and Roberts, 2008). While there is merit in this approach there are also a number of limitations inherent with the ROI concept. While marketing expenditure can have influence for years to come, it is generally directed to the current year. Conversely, if marketing is viewed as an investment it perpetuates the idea of always increasing sales and profits. It does not take into account diminishing returns. ROI also requires profit to be divided by expenditure instead of considering profit after deducting expenditure (Ambler and Roberts, 2008). Most importantly, ROI promotes short-term vision and does not take into account long-term brand equity.
Limitations aside, let’s look at Pokemon Go through the ROI lens. What investment was made into Pokemon Go? This is a difficult question to answer. The idea for this concept was invaluable. A huge team to design and develop the game is needed. Intellectual property is utilised and there is opportunity cost in any commitment to resources. Then there is support and promotion and countless other factors. In real dollar terms a game of this nature would cost $50,000 to create, but Pokemon Go is believed to have cost closer to $1,000,000USD (Natalaya et al, 2016).
What about the return? As of July 19 2016, Pokemon Go had passed 30 million in downloads and $35 million USD in revenue (Grubb, 2016). This is an estimated 35:1 ratio which is deemed a resounding success for any investment.
How did they do it?
What makes Pokemon Go a resounding success cannot be truly measured. They found a way to tap into nostalgia, build on an existing platform (smartphones), and tap into intrinsic human curiosity (Quora, 2016).
Love it or hate it, Pokemon is now a household name. When anyone achieves this measure of success, everyone wants a slice. McDonald’s became the first sponsored location to collaborate with Pokemon Go. Supermarket giant Woolworths followed suit by publishing directions on it’s Facebook page (see below).
Source (Woolworths, 2016)
Sedentary kids are getting off the couch to enter the world of augmented reality. Traffic is literally being stopped as millions chase down Pokemon. This impact on Pokemon and Nintendo is priceless. It has even found a way into the evening news (see link below). They have made a positive impact on their brand equity.
click here (NBC News, 2016)
Where to from here?
Pokemon Go has made Nintendo relevant again but whether or not Nintendo can maintain their relevance remains to be seen. If Nintendo has learnt one thing from Pokemon Go it is to not fear progress as more people rely on their smart phones for their gaming. Nintendo have two games slated for release later this year (Wong, 2016). This time they mean business, this time they are taking no prisoners, this time… they are using Mario.
Source (Jaworski, 2016)
Marcus Fernandez / 213362851
The views expressed in this blog are my own and do not represent the views of any organisation I am affiliated with.
Benson, M. (2016) Nintendo’s Miitomo nets 1 million downloads in Japan after just 3 days. Available at: http://www.androidauthority.com/nintendos-miitomo-already-1-million-downloads-japan-681469/ (Accessed: 21 September 2016).
Grubb, J. (2016) Sensor tower: Pokémon go has already passed 30M downloads and $35M in revenue. Available at: http://venturebeat.com/2016/07/19/sensor-tower-pokemon-go-has-already-passed-30m-downloads-and-35m-in-revenue/ (Accessed: 19 September 2016).
Iacobucci, D. (2013) Marketing management (MM4) / edition 1. United States: South-Western College Publishing Jaworski, M. (2016) ’Super Mario Run’ headed to Android, too. Available at: http://www.dailydot.com/parsec/super-mario-run-nintendo-android-confirmation/ (Accessed: 20 September 2016). Mintz, O. and Currim, I.S. (2013)
‘What drives managerial use of marketing and financial metrics and does metric use affect performance of marketing-mix activities?’, Journal of Marketing, 77(2), pp. 17–40. doi: 10.1509/jm.11.0463.
Musgrave, S. (2016) Who owns Pokemon, anyway? It’s complicated. Available at: http://toucharcade.com/2016/07/28/who-owns-pokemon-anyway-its-complicated/ (Accessed: 21 September 2016).
Natalaya, K., (2016) Apps like Pokémon go: How much does it cost to develop one? Available at: https://www.cleveroad.com/blog/how-much-does-it-cost-to-create-an-app-like-pokemon-go (Accessed: 21 September 2016).
NBC News (2016) Why ‘Pokemon go’ is taking over the world | NBC nightly news. Available at: https://www.youtube.com/watch?v=RXs_Dp71zeQ (Accessed: 24 September 2016).
Nintendo (2016) History. Available at: http://www2.nintendo.com.au/history (Accessed: 21 September 2016).
Quora (2016) The ingenious marketing strategy that made ‘Pokémon GO’ A smash hit. Available at: http://www.forbes.com/sites/quora/2016/07/29/the-ingenious-marketing-strategy-that-made-pokemon-go-a-smash-hit/#e4aa44f46e83 (Accessed: 20 September 2016).
Wong, J. (2016) How Pokémon helped Nintendo crack the mobile-game market. Available at: http://www.wsj.com/articles/how-pokemon-helped-nintendo-crack-the-mobile-game-market-1467993352 (Accessed: 21 September 2016).
Woolworths, Australia (2016) Woolworths Facebook Page. Available at: https://www.facebook.com/woolworths/ (Accessed: 22 September 2016).
Vine, A. (2016) How has Pokemon go become so successful so quickly? Available at: http://www.campaignlive.co.uk/article/pokemon-go-become-so-successful-so-quickly/1402219# (Accessed: 20 September 2016).