Business Technology

Monday 5 December 2016

Can Pokémon Go save Nintendo?

James Titcomb

Published 19/07/2016 | 07:36

The Pokemon Go app launch screen
The Pokemon Go app launch screen

Walk through a city centre or park this weekend and you may notice groups of smartphone users looking even more engrossed in their devices than usual.

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Occasionally, one of the phones will buzz. Its owner will hold it up, as if taking a photo, and with intense concentration and a dexterous flick of the finger hurl a virtual ball at a creature on the screen. If successful, they will have taken one more step towards becoming a Pokémon master.

The scene has been repeated many millions of times around the world in the last week. Almost overnight, Pokémon – short for “pocket monsters” – has gripped the world once again, 21 years after Nintendo released the first video game featuring Pikachu, Bulbasaur and Charizard.

The culprit has been Pokémon Go, a smartphone app developed by San Francisco’s Niantic Labs and published by the Pokémon Company, a joint venture in which Nintendo – the fabled Japanese video game firm behind Mario, Zelda and others – has a minority stake.

Within days of the game being released, it had become a mega viral success. By the end of the game’s first weekend in the US, the game had been downloaded an estimated 7.5 million times. Two days later, it was 15 million. The game only made it to British shores by Thursday, but by then many eager British gamers had devised ways to download it.

Read more: Hacker group threatens to take Pokémon Go offline on August 1

It also became a social phenomenon, possibly unmatched by any game in such a short space of time. A BBC reporter at Downing Street was spotted playing it, even as Theresa May travelled from Buckingham Palace to give her maiden speech as Prime Minister. Figures from SensorTower, an app data provider, showed users were spending more time on it than Facebook. Police resorted to issuing warnings about crossing the street when playing and transport departments urged people not to play when driving.

Feelings about its success were naturally mixed, but nobody could have been happier with its success than Nintendo. The once mighty but struggling video game company’s fortunes have waned in recent years due to rise of the smartphone, which now promises to be its saviour.

Founded in 1889, Nintendo has spent most of its 127 years as a conglomerate whose businesses range from playing cards to taxis. It wasn’t until the company hired a prodigious developer named Shigeru Miyamoto in the 1970s that its modern incarnation began. A handheld console, 1980's Game & Watch, was followed by Miyamoto’s epochal arcade game Donkey Kong, which introduced a squat, dungaree-wearing carpenter named Jumpman. The character was soon reinvented as an Italian plumber named Mario and a legend was born.

Years of success followed for Nintendo: 1983's Famicom home console, known as the Nintendo Entertainment System in the West, brought video games to living rooms at a time when few personal computers existed in homes or offices and created household names out of Mario and Zelda. In 1989, Nintendo released the portable Game Boy, which allowed on-the-go gamers to play Tetris and later Pokémon itself, a franchise that has become second only to Mario in company's canon.

The rise of Sega, then Sony and later on Microsoft in the console wars challenged Nintendo, but the company’s ingenuity always prevailed. After the disappointment of 2001’s GameCube console, Nintendo followed it with the Wii, whose innovative wand-like controller saw it sell more than 100 million units, easily outselling rivals. The Nintendo DS handheld console introduced touchscreens and internet chat before smartphones and fared even better.

Read more: Gamer given 'words of advice' after calling 999 over 'stolen Pokemon'

But recent years have been less kind to the company. The strategy behind the Wii and DS, pioneered by Nintendo’s genius president Satoru Iwata, was for Nintendo to stop competing for the dedicated gamers who Microsoft and Sony were after and go after non-traditional players: children, parents and grandparents.

While successful at first, casual gamers are fickle. The rise of smartphone apps and then tablets brought a rush of cheap, addictive and accessible mobile games. Suddenly, much of Nintendo’s target audience was playing Angry Birds and Candy Crush Saga. The follow-ups to the Wii and DS, the uninspiring Wii U and 3DS, have been critical and commercial disappointments.

Despite struggling, Nintendo was a company steeped in Japanese tradition (Iwata was the first boss not from its founding family when he was appointed in 2002) and it was reluctant to shift to mobile gaming. But pressure mounted. One of Iwata’s last major decisions before his premature death from cancer last year was to move the company into smartphone gaming by signing a partnership with mobile developer DeNA.

Pokémon Go is a separate play, released by the independent Pokémon Company, which Nintendo has only a 32 per cent stake in, rather than the corporation itself. But it shows that Nintendo’s potential in mobile is enormous, at least if the 90 per cent rise in its share price since the game was released is anything to go by.

Analysts have questioned how much difference Pokémon Go, which is free but charges for upgrades, is likely to make to Nintendo’s bottom line. Although it is already believed to be making millions of dollars a day, mobile gamers are notoriously mercurial.

But Seth Pierrepont, an investor at venture capital firm Accel, which has backed several mobile games companies, says Nintendo’s household names gives it a much better chance of success in the app market than new entrants. “The challenge for games is to get noticed and to maintain a position in the App Store,” he says. “Pokémon is a brand, that’s been one of the drivers behind what’s created such a big success.”

Piers Harding-Rolls, head of games research at technology analysts IHS, says that while smartphone games may not instantly translate into revenue for Nintendo, the company will see it more as a way to bring back gamers who have stopped buying its consoles. “They are thinking: ‘We’ve got to go where the audience is, we’ve got to engage with users and then we can entice them onto our proprietary platform.’ It’s very hard to be unique in the mobile space, but they believe they can bring unique experiences with the combination of hardware and software, which is what they’ve always done.”

Nintendo is by no means finished in the console business. Last week, with excellent timing, it announced a retro-themed “mini NES” featuring 30 1980s titles which would be released by Christmas. More significant will be the release of a new generation of console, the mysteriously-codenamed NX, set to be released next March.

If nothing else, Pokémon Go has got people interested in Nintendo again, many of them for the first time in years. For the company that has inspired millions, it may represent the start of another gilded era.

Telegraph.co.uk

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