Nintendo's new Pokemon GO game is certainly going gangbusters, dominating headlines and charting at the top of app stores, but Apple is the big winner, reportedly making triple the revenue of the Japanese icon from its own game.
While the new game is free in the United States and Australia, players are enticed by what's called in app purchases -- the ability to buy virtual items while in the game itself. In this case players are buying virtual currency and like all software sold through the store, Apple collects a portion of the revenue.
"As users build their Pokemon inventory, spending money becomes needed to store, train, hatch, and battle," Macquarie Capital Securities analyst David Gibson told clients.
While the mechanics do lead to money being spent, Nintendo itself is only projected to receive 10 percent due to a complicated history of licensing. Pokemon GO title is based on previous work in augmented reality gaming developed by Niantic, formerly part of Google.
Niantic was spun off into an independent company last October as Google restructured itself, and formed a $30 million partnership with Nintendo and the Pokemon Company, a joint venture developed to license Pokemon characters, which Nintendo owns a third of.
"We presume that out of every 100 units earned at the App Store, 30 would go to Apple, 30 to [software developer] Niantic, 30 to Pokemon and 10 to Nintendo,"Gibson explained.
While invetors were excited about the game's prospects, sending Nintendo's shares up by $7 billion, the success of the title benefits Apple by a much larger amount, without involving an initial multi-million dollar risk in developing the software.
