Apple could stand to gain $3 billion in incremental, high-margin revenue as a result of the success of Pokémon Go, claims Needham analyst Laura Martin.
In a new note issued to investors, Martin observes that the enormously successful Candy Crush raked in $10 billion at its height of success in both 2013 and 2014. Of that, Apple retained 30 percent as part of its profit sharing deal with app-makers.
Pokémon Go, on the other hand, already has 10 times the number of users Candy Crush enjoyed, and it’s growing all the time.
Considering that the augmented reality game has already grown Nintendo’s market cap by around $20 billion, and with the
possibility certainty of later games in the series, that $3 billion estimate almost sounds conservative.
“Candy Crush (the biggest mobile game before Pokémon) generated revenue over $1B in each of ’13 and ’14, based on a 2% ratio of paying users to total users (i.e., conversion rate),” Martin writes. “Pokémon Go’s conversion rate is 20% in the US so far. Nintendo own 33% of the Pokémon Company, which is the controller of all Pokémon merchandising, plus a 30% stake in game developer Niantic. We think APPL’s nearterm cash flow from Pokémon Go is higher than Nintendo, and we expect APPL’s mobile platform to participate in all future mobile content hits, not just Pokémon Go.”
Coming at a time when iPhone sales are starting to dip for the first time ever — and with a reportedly small number of people planning to upgrade to the iPhone 7 if the rumors about it’s unchanged appearance turn out to be true — that’s some great news for Apple!