Could ‘Pokemon Go’ Really Pull In $3 Billion for Apple Over the Next Two Years?

Apple stands to be a big beneficiary of the global Pokemon Go craze. But could the blockbuster augmented-reality mobile game actually yield up to $3 billion in revenue from purchases in the App Store within the next 24 months?

That’s the eye-popping estimate by Needham & Co. analyst Laura Martin. In a research note Wednesday, she noted that King Digital’s Candy Crush generated more than $1 billion in revenue in both 2013 and 2014, and that Pokemon Go’s ratio of paying users to total users is 10 times higher. Apple’s standard cut of sales in the App Store is 30%, “suggesting upside to earnings, plus valuable options on future hits” from the Pokemon franchise, Martin wrote.

But the projected $3 billion revenue from Pokemon Go going into Apple’s coffers seems almost unbelievably high, given that according to Apple, consumers spent a total of about $20 billion on the App Store in 2015. Yes, the world has gone nuts for Pokemon Go, which lets users catch virtual monsters in the real world by throwing balls at them. But Martin’s projection optimistically assumes that players will continue to flock to the game — and spend money on it — while it’s possible the popularity of the app will die down over time.

Meanwhile, Citi analyst Mark May’s estimate for Google Play’s potential revenue from Pokemon Go is more conservative: Google could pull in $77 million from the game Go within the next 12 months, he wrote in a note Wednesday. In addition, Alphabet, Google’s parent company, will benefit from its ownership stake in Niantic Labs, the company that developed and released the app after it spun off from Google last year.

Unquestionably, Pokemon Go is a worldwide sensation and almost overnight became the most popular mobile game in history. It’s free to download, offering in-app purchases for premium items. The game’s PokeCoins currency starts at 99 cents for 100 coins; items for purchase include PokeBalls, Incense to attract Pokemon to your location and Lures to attract other users to a specific location.

To date, Pokemon Go has been downloaded more than 30 million times worldwide on iOS and Android, and has earned more than $35 million in net revenue, according to estimates from data-analytics firm Sensor Tower released Tuesday. Currently the game is available in 35 countries, including most of Europe and Canada, after launching July 6 in the U.S., with its debut in Japan set for this week.

In her analysis, Needham’s Martin noted that after 10 days of release, Pokemon Go’s U.S. user based was 21 million, or 6% of the total population. She got to the $3 billion figure by assuming 20% penetration of the game worldwide; Martin calculated about 5 cents of revenue for Apple per Pokemon Go user per day, based on Sensor Tower data for the first six days of U.S. release that implied spending of 16 cents per person per day, of which Apple would keep 30%. She added the caveat that the magnitude of upside for Apple from the game depends “on consumer adoption timing.”

On July 11, the average iPhone user spent 33 minutes playing Pokemon Go, according to Sensor Tower — more than any other app analyzed, including Facebook, Snapchat, Instagram or Twitter. But again, it’s early days for the game, and the novelty of Pokemon Go may wear off sooner or later.

Pokemon Go fever has hit Nintendo investors, as the company’s market cap has roughly doubled since the game’s release (although the stock fell 6% in trading Wednesday). Nintendo owns a 30% stake in Niantic, as well as 33% of the Pokemon Company, which controls all licensing for the franchise.

Popular on Variety

More Digital

  • Netflix - Apple TV

    Netflix Stock Drops After CEO Acknowledges 'Tough Competition' Coming From Disney, Apple

    Netflix shares fell as much as 7% Friday to a nine-month low, coming after CEO Reed Hastings commented that the November launches of Disney Plus and Apple TV Plus will introduce a “whole new world” of competition. Hastings, speaking at the Royal Television Society conference Friday in Cambridge, England, said, “While we’ve been competing with [...]

  • Facebook

    Facebook Suspends Tens of Thousands of Apps During Privacy Investigation

    Facebook has suspended tens of thousands of apps ever since it began investigating potential privacy abuses, the company said Friday. The apps in question had been built by around 400 developers, and a suspension doesn’t necessarily indicate actual privacy violations. Facebook began combing through millions of apps that made use of its platform after the [...]

  • tivo logo

    Tivo Plans to Launch Android TV Dongle, Tivo+ Curation App

    DVR maker Tivo is getting ready to release a new device that may not record television at all: The company plans to launch a $50 Roku-like TV dongle early next year, its new CEO Dave Shull revealed in a conversation with CNN this week. The new device will be powered by Google’s Android TV platform, [...]

  • Still from "Andhadhun"

    Microsoft Streaming Deal Lifts Shares in India’s Eros

    Shares of leading Bollywood film distributor Eros International soared by 38% on Thursday following news of the company’s link up with Microsoft to develop a new generation of video streaming platform. The multinational company said that its Eros Now video operation would work with Microsoft Azure to develop its technology in three ways. They seek [...]

  • Comcast X1 DAZN

    Comcast Adds DAZN Sports-Streaming Service to Xfinity Flex, Sets Launch on X1

    DAZN, the digital sports service headed by ex-ESPN boss John Skipper, is now available to Comcast broadband customers on Xfinity Flex and will be available on Xfinity X1 this fall. It’s the first distribution deal for DAZN with a major U.S. provider since it debuted the combat-sports-oriented service in the States a year ago. In [...]

  • YouTube logo

    YouTube Raises Bar for Channel Verification, Stripping Some Creators of Verified Status

    YouTube is making it harder for channels to receive a verification badge indicating their authenticity — and the program’s new requirements mean that some channels won’t be eligible for verification. Like other internet platforms, YouTube indicates to viewers that specific channels are officially run by the creator, artist, celebrity or company they represent with an [...]

More From Our Brands

Access exclusive content