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Jan 23, 2020

Pokémon: Driving New Growth in a Mature IP

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The Pokémon IP follows a pattern of releasing new products consistently every year and maintains strong sales across industries. Every November, video game releases on Nintendo gaming hardware are used to introduce and popularize new Pokémon creatures. Coinciding with this, the manga comic books and anime television show begin new story arcs to follow these new characters. New plush toys, action figures, and other toys also become available. A few months later, the trading card game is updated with new sets for the new characters, and these continue to be iterated on a few times per year.

Pokémon generally has at least one animated film release each year. Most of these films do not get theatrical releases, but some do in a very limited fashion. There are minimal impacts on the sales of other Pokémon products when these films are released. The films’ primary purpose is to help maintain Pokémon’s significant market visibility and strong baseline sales throughout the year across its multiple product forms.

Pokémon’s traditional product release strategy has worked well to build a cross-entertainment juggernaut. However, there was a significant change in strategy in 2019: film was finally utilized as a driving force for the IP thanks to Detective Pikachu. The movie was given a full theatrical release in May 2019, and it grossed $144 million domestically at the box office, significantly higher than the $789K box office sales and $311K physical DVD sales for Pokémon the Movie: I Choose You, which then was the most recent animated release.

The film was notable for a number of reasons. It was the first Pokémon film to be produced by Legendary Pictures. Warner Bros. distributed it despite not distributing a Pokémon film since 2000. It was also the first live-action film for the IP, and the film’s main character Pikachu was voiced by Ryan Reynolds.

Prior to 2019, May had generally been a slower month for Pokémon in the Toy market, and revenue is usually down by 8% from April. Thanks to Detective Pikachu, May 2019 toy sales were instead up 15% over April 2019. Toy sales in May 2019 were 70% higher than May 2018. This growth was driven by 3 toy categories: Strategic Trading Card Games, Traditional Plush, and Action Figure Collectibles (this reinvigorated interest in the IP was not just for a single month). Regardless of whether there may be a sequel movie down the line, Detective Pikachu is a great example of future testing the IP with new forms of content to reach newer and broader audiences, and never resting on the brand’s past performance.

Likewise, the IP’s newest video games Pokémon Sword and Pokémon Shield, the first new generation of Pokémon on Nintendo Switch, are driving another significant increase in revenue for the IP.

The lesson here for any company looking to expand the reach of their IP is to make adventurous exploration of new entertainment products, emerging opportunities, and appropriate partnerships a core business activity, especially as whitespace opens up with gaming platforms like Switch.

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