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© nintendo Analysis | July 27, 2016

Global AR software market reach USD 30bn in scale by 2020

With download and active user numbers far exceeding other popular apps, Nintendo’s Pokémon GO has generated an enormous wave of enthusiasm for mobile gaming and augmented reality (AR) technology worldwide.
According to the latest analysis from the global market research firm TrendForce, the revenue from Pokémon GO is forecast to top USD 800 million in 2017. The game is set to become a significant contributor to the expansion of the global AR software market, which will reach USD 30 billion in scale by 2020.

“The popularity of the Pokémon brand and its character IP, rather than the AR technology, is mainly responsible for the success of this game,” said Jason Tsai, wearable device analyst for TrendForce. “Other AR games that were released earlier did not resonate with consumers because they do not have the long and famous brand history that Pokémon has. Over a 20-year period, this title has built up a franchise that spans across games, films, anime, toys and other industries. In sum, the brand’s widespread recognition and its tens of millions of fans are the driving force behind this craze over Pokémon GO.”

Tsai also pointed out that Nintendo plans to generate a lot more additional values from the game: “The revenue from the game will be divided according to the typical arrangement. Most of it will go to download platforms (i.e. Google Play and Apple’s App Store) and Niantic, the developer and distributor of the game. Though Nintendo controls part of the Pokémon franchise and will also receive a share of the revenue, making profit from the game is not company’s primary, long-term goal. The real aim is to generate continuing publicity with the Pokémon brand using the AR technology and attract potential customers to other, even more valuable areas of the franchise such as theme parks.”

Tsai added that Pokémon GO’s popularity will benefit the entire AR industry by encouraging further innovations in mobile-based AR technology: “Many software developers will try to replicate the game’s success and explore other possible applications for the AR technology. If the game Angry Bird could be seen as the takeoff point in the growth trajectory of mobile games, then Pokémon GO could also be regarded as the catalyst for the rapid expansion of AR applications on the mobile platform.

Some app developers will take the lessons from the Pokémon GO and create knockoff games. However, these titles may end up being not as successful due to the lack recognizable character IP or the poor use of the IP in game design. Nonetheless, the proliferation of mobile-based AR games will increase consumers’ contact with the technology. People will eventually become more familiar with using AR apps for different activities. Besides spurring the creation of new AR game apps, Pokémon GO will help expand AR’s role in consumers’ everyday lives.
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More can be found at Trendforce.

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