Pokémon Go generated about $35 million in revenue in its first two weeks and raises approximately 1.6 million per day from iPhone users alone. Nintendo’s stock temporarily increased by 25% or about 11 billion dollars. Even with Nintendo only owning 32% of the Pokemon Company who owns the intellectual property rights to this franchise the numbers here are still staggering. So how is a “free” game generating so much revenue?

This blog post will discuss several topics including:

  • How does Pokémon Go make money as a “freemium” game?
  • How to get the best deals for your PokeCoins
  • What’s the best deal available for each of the items available in the game?
  • Adding/Removing PokeStops or Gyms

How does Pokémon Go make money as a “freemium” game?

Pokémon Go is a “freemium” game meaning that it is free to play but you can purchase items from the shop in the game to acquire “PokeCoins” (shown below).

In the game you can get PokeCoins by capturing Gyms but the numbers are relatively small (10 PokeCoins per gym per day) and this would max at 100 PokeCoins per day (if you captured 10 gym’s). This will likely lead to players purchasing PokeCoins through the store in the game.

Once you have purchased your PokeCoins you can then use them to purchase game items including Poke Balls, Incense, Lucky Eggs, Lure Modules, Egg Incubators, bag upgrades (include the maximum number of items you can carry by 50) and Pokemon storage upgrades (increases the maximum number of Pokemon you can carry by 50). Most of these items (Poke Balls, Eggs, Egg Incubators and potions among others) can be acquired at PokeStops for free but that takes time. Some of these items are given when you upgrade your level (Incense, Lucky Eggs) but those are limited amounts and do not occur frequently. Finally, some items you must purchase to acquire them such as the Bag Upgrade and the Pokemon Storage Upgrade.

As the objects in this game do not have any costs to produce, the profit for the items is 100% (minus the cost of running the game of course).

Estimates I am seeing put the number of players for the game at between 15-21 million per day (per http://www.recode.net/2016/7/13/12181614/pokemon-go-number-active-users). This number could be increasing due to the new countries which are being added or it could be decreasing as players may tire of the game over time. With the some back of the napkin math we can see quickly that the money being made by this game is occurring due to large numbers of players doing small purchases.

  • If we have 15 million players are playing per day and 1% of players purchase the smallest set of Poke Coins that’s $.99 per week that’s or about $150,000 per week.
  • If we have 15 million players are playing per day and 10% of players purchase the smallest set of Poke Coins that’s $.99 per week that’s or about $1.5 million dollars per week.
  • If we use the small subset that I’ve surveyed on this question, about 2/3 of these players have purchased the $9.99 set of PokeCoins. If this applies to the 15 million players that would put the game’s revenue at just under one billion dollars! This really shows how powerful micro-transactions like this can be in a large enough user community.

Getting the best deals for your PokeCoins:

The spreadsheet below shows the various options available for purchase of PokeCoins and their cost per PokeCoin. They range from just under 1 cent (.0099) per PokeCoin to close to half of one cent (.0069).

Cost

PokeCoins

Cost per PokeCoin

$0.99

100

$0.0099

$4.99

550

$0.0091

$9.99

1200

$0.0083

$19.99

2500

$0.0080

$39.99

5200

$0.0077

$99.99

14500

$0.0069

The best price per PokeCoin is at the highest purchase point of $99.99 of course. When considering which option to take for a purchase in the game it’s best to think about what is the maximum amount that you will be willing to spend on the game. Knowing this up front will gain you benefits. As an example, if you choose to spend $19.99 four times you will have a total of 10,000 PokeCoins. If you spend the $99.99 all at the same time you end up with 14,500 PokeCoins (approximately ½ more). The cost per PokeCoins spreadsheet is shown below:

It’s important to remember that PokeStop’s provide free Poke Balls and other items so depending on what you need you may be better off just finding a place with a lot of PokeStop’s to hang around at for a while. If you need other items which only occur with leveling up, or are only available at the shop then it may be time to break out some cash.

TIP: There are variety of ways to buy PokeCoins including credit / debug card, PayPal, Google Pay credits or directly billed to your cell phone. If you can find situations where you can get additional credits on any of these approaches this allows you to decrease your total cost. As an example, there was a discussion going around about purchasing an iTunes gift card to get a $100 credit for $85 and then use that to buy the PokeCoins.

What’s the best deal available for Poke Balls?

Prices range from $.05 per Poke Ball down to $.03 per Poke Ball. Based on the numbers below, my recommendation is to purchase the 20 pack of Poke Balls using the $9.99 purchase if that’s the only thing that you are buying for a while.

Cost

PokeCoins

Cost per PokeCoin

Number of Poke Balls

PokeCoins

Cost Per Poke Ball

$0.99

100

$0.0099

20

100

$0.05

$4.99

550

$0.0091

20

100

$0.05

$9.99

1200

$0.0083

20

100

$0.04

$19.99

2500

$0.0080

20

100

$0.04

$39.99

5200

$0.0077

20

100

$0.04

$99.99

14500

$0.0069

20

100

$0.03

$0.99

100

$0.0099

100

460

$0.05

$4.99

550

$0.0091

100

460

$0.04

$9.99

1200

$0.0083

100

460

$0.04

$19.99

2500

$0.0080

100

460

$0.04

$39.99

5200

$0.0077

100

460

$0.04

$99.99

14500

$0.0069

100

460

$0.03

$0.99

100

$0.0099

200

800

$0.04

$4.99

550

$0.0091

200

800

$0.04

$9.99

1200

$0.0083

200

800

$0.03

$19.99

2500

$0.0080

200

800

$0.03

$39.99

5200

$0.0077

200

800

$0.03

$99.99

14500

$0.0069

200

800

$0.03


The graph above shows the cost per Poke Ball based upon both the money spent on the PokeCoins and the various numbers of Poke Balls that you can purchase (20, 100, or 200). Items 1-6 are for 20 Poke Balls, items 7-12 are for 100 Poke Balls and items 13-18 are for 100 Poke Balls.

What’s the best deal available for Incense?

Prices range from $.79 per Incense down to $.34 per Incense. Based on the numbers below, my recommendation is to purchase the 25 pack of Incense using the $19.99 purchase if that’s the only thing that you are buying for a while (of if you want to pick up both 25 Incense and 25 Lucky Eggs).

Cost

PokeCoins

Cost per PokeCoin

Number of Incense

PokeCoins

Cost Per Incense

$0.99

100

$0.0099

1

80

$0.79

$4.99

550

$0.0091

1

80

$0.73

$9.99

1200

$0.0083

1

80

$0.67

$19.99

2500

$0.0080

1

80

$0.64

$39.99

5200

$0.0077

1

80

$0.62

$99.99

14500

$0.0069

1

80

$0.55

$0.99

100

$0.0099

8

500

$0.62

$4.99

550

$0.0091

8

500

$0.57

$9.99

1200

$0.0083

8

500

$0.52

$19.99

2500

$0.0080

8

500

$0.50

$39.99

5200

$0.0077

8

500

$0.48

$99.99

14500

$0.0069

8

500

$0.43

$0.99

100

$0.0099

25

1250

$0.50

$4.99

550

$0.0091

25

1250

$0.45

$9.99

1200

$0.0083

25

1250

$0.42

$19.99

2500

$0.0080

25

1250

$0.40

$39.99

5200

$0.0077

25

1250

$0.38

$99.99

14500

$0.0069

25

1250

$0.34


The graph above shows the cost per Incense based upon both the money spent on the PokeCoins and the various numbers of Incense that you can purchase (1, 8, or 25). Items 1-6 are for 1 Incense, items 7-12 are for 8 Incense and items 13-18 are for 25 Incense.

What’s the best deal available for Lucky Eggs?

Prices range from $.79 per Incense down to $.34 per Lucky Egg. Based on the numbers below, my recommendation is to purchase the 25 pack of Lucky Eggs using the $19.99 purchase if that’s the only thing that you are buying for a while (of if you want to pick up both 25 Incense and 25 Lucky Eggs).

Cost

PokeCoins

Cost per Lucky Egg

Number of Lucky Eggs

PokeCoins

Cost Per Lucky Egg

$0.99

100

$0.0099

1

80

$0.79

$4.99

550

$0.0091

1

80

$0.73

$9.99

1200

$0.0083

1

80

$0.67

$19.99

2500

$0.0080

1

80

$0.64

$39.99

5200

$0.0077

1

80

$0.62

$99.99

14500

$0.0069

1

80

$0.55

$0.99

100

$0.0099

8

500

$0.62

$4.99

550

$0.0091

8

500

$0.57

$9.99

1200

$0.0083

8

500

$0.52

$19.99

2500

$0.0080

8

500

$0.50

$39.99

5200

$0.0077

8

500

$0.48

$99.99

14500

$0.0069

8

500

$0.43

$0.99

100

$0.0099

25

1250

$0.50

$4.99

550

$0.0091

25

1250

$0.45

$9.99

1200

$0.0083

25

1250

$0.42

$19.99

2500

$0.0080

25

1250

$0.40

$39.99

5200

$0.0077

25

1250

$0.38

$99.99

14500

$0.0069

25

1250

$0.34

The graph above shows the cost per Incense based upon both the money spent on the PokeCoins and the various numbers of Lucky Eggs that you can purchase (1, 8, or 25). Items 1-6 are for 1 Lucky Egg, items 7-12 are for 8 Lucky Eggs and items 13-18 are for 25 Lucky Eggs.

What’s the best deal available for Lure Modules?

Prices range from $.99 per Lure Module down to $.59 per Lure Module. Based on the numbers below, my recommendation is to purchase the 8 pack of Lure modules using the $9.99 purchase if that’s the only thing that you are buying for a while.

Cost PokeCoins Cost per Lure Module Number of Lure Modules PokeCoins Cost Per Lure Module
0.99

100

$0.0099

1

100

$0.99

4.99

550

$0.0091

1

100

$0.91

9.99

1200

$0.0083

1

100

$0.83

19.99

2500

$0.0080

1

100

$0.80

39.99

5200

$0.0077

1

100

$0.77

99.99

14500

$0.0069

1

100

$0.69

0.99

100

$0.0099

8

680

$0.84

4.99

550

$0.0091

8

680

$0.77

9.99

1200

$0.0083

8

680

$0.71

19.99

2500

$0.0080

8

680

$0.68

39.99

5200

$0.0077

8

680

$0.65

99.99

14500

$0.0069

8

680

$0.59

The graph above shows the cost per Lure Module based upon both the money spent on the PokeCoins and the various numbers of Lure Modules that you can purchase (1, or 8). Items 1-6 are for 1 Lure Module, items 7-12 are for 8 Lure Modules.

What’s the best deal available for Incubators?

Prices range from $1.49 per Egg Incubator down to $1.03 per Egg Incubator. Based on the numbers below, my recommendation is to purchase the 1 pack of Lucky Eggs using the $4.99 purchase if that’s the only thing that you are buying for a while.

Cost

PokeCoins

Cost per Egg Incubator

Number of Egg Incubators

PokeCoins

Cost Per Egg Incubator

$0.99

100

$0.0099

1

150

$1.49

$4.99

550

$0.0091

1

150

$1.36

$9.99

1200

$0.0083

1

150

$1.25

$19.99

2500

$0.0080

1

150

$1.20

$39.99

5200

$0.0077

1

150

$1.15

$99.99

14500

$0.0069

1

150

$1.03

The graph above shows the cost per Egg Incubators based upon both the money spent on the PokeCoins. Each of these are for a single Egg Incubator purchase.

What’s the best deal available for the Bag Upgrade?

Prices range from $1.98 per Bag Upgrade down to $1.38 per Bag Upgrade. Based on the numbers below, my recommendation is to purchase one Bag Upgrade using the $4.99 purchase if that’s the only thing that you are buying for a while.

PokeCoins

Cost per Bag Upgrade

Number of Bag Upgrade

PokeCoins

Cost Per Bag Upgrade

100

$0.0099

1

200

$1.98

550

$0.0091

1

200

$1.81

1200

$0.0083

1

200

$1.67

2500

$0.0080

1

200

$1.60

5200

$0.0077

1

200

$1.54

14500

$0.0069

1

200

$1.38


The graph above shows the cost per Bag Upgrade based upon both the money spent on the PokeCoins. Each of these are for a single Bag Upgrade purchase.

What’s the best deal available for the Storage Upgrade?

Prices range from $1.98 per Storage Upgrade down to $1.38 per Storage Upgrade. Based on the numbers below, my recommendation is to purchase one Storage Upgrade using the $4.99 purchase if that’s the only thing that you are buying for a while.

Cost

PokeCoins

Cost per Storage Upgrade

Number of Storage Upgrades

PokeCoins

Cost Per Storage Upgrade

$0.99

100

$0.0099

1

200

$1.98

$4.99

550

$0.0091

1

200

$1.81

$9.99

1200

$0.0083

1

200

$1.67

$19.99

2500

$0.0080

1

200

$1.60

$39.99

5200

$0.0077

1

200

$1.54

$99.99

14500

$0.0069

1

200

$1.38

The graph above shows the cost per Storage Upgrade based upon both the money spent on the PokeCoins. Each of these are for a single Storage Upgrade purchase.

Adding/Removing PokeStops or Gyms:

Businesses are already seeing the benefits to having PokeStops and/or Gym’s in proximity to their businesses. If you are interested in how to create or remove a PokeStop or Gym check out the article available at: https://dnreviews.net/2016/07/14/go-stop/. This points you to the support forum available at https://support.pokemongo.nianticlabs.com/hc/en-us/requests/new?ticket_form_id=319928 which allowed you to request to add or remove a PokeStop or Gym.

Summary: Pokémon Go has provided a great example of the power of large numbers of people using an application can generate an extremely large amount of revenue through small transactions. I look forward to seeing where this goes in the future and to see what other games or applications will benefit from these types of augmented reality (or location based) integration. If you want background on what this game is and how it relates to Augmented Reality check out this blog post.