Tons of digital ink has been spilled hailing Pokémon GO as a cultural breakthrough and smash business success. There's no question that it's been a windfall for all companies involved, whether Nintendo, game developer Niantic, or Apple and Google, who get a cut of each sale on their app stores. Nintendo's market cap even soared $9.3 billion in one week, according to The Wall Street Journal. But what's the impact for Nintendo when we examine this phenomenon through the lens of brand strategy and innovation?
On the one hand, the success of Pokémon GO reinforces one of our core beliefs at Redscout: Innovation is the most powerful form of marketing. Nintendo is accruing invaluable brand awareness, equity and loyalty that it could never buy, even if it spent billions on marketing. In fact, it's currently enjoying a golden moment that showcases the virtuous cycle of innovation. Its hit product is making a splash, which drives up profits and share price, which in turn drives even more publicity and social media buzz around the product itself. Simply rinse and repeat, right?
Except it's incredibly hard to repeat. And that's the one shadow slightly dimming the luster of Pokémon GO for Nintendo. As a brand, Nintendo historically has not shown the ability to sustain momentum and build on its hits. Take Wii for example. Just like Pokémon GO, Nintendo's Wii was hailed as a paradigm-changer when it debuted in 2006. And yet, after riding the wave of that initial success, Nintendo largely became irrelevant for the next ten years.
The most innovative brands don't just release products. They understand that it's critical to have a "rhythm of innovation" that builds momentum over time and aligns with the overall brand strategy. Consider how Apple curates its product launches so that seemingly minor technological advances gain significance when positioned as part of a larger brand story. Or how Nike ignited the retro footwear market by coordinating its product drops in ways that maximize anticipation and buzz from sneakerheads.
On the heels of Pokémon GO’s overnight success, Nintendo should seize every opportunity to tell a story about its innovation plans in mobile gaming. While Nintendo has been criticized recently for lagging on mobile, it now has the perfect soapbox to make its pitch. And fortunately, it has recognizable franchises to catch up quickly. To establish a rhythm of innovation, Nintendo must be thinking about and talking about what comes next - whether it's breakthrough hardware advances to elevate the Pokémon GO experience, or extending this success to other franchises. Is the world ready for an augmented reality version of Mario Kart?
To be fair to Nintendo, every gaming entity goes through natural cycles driven by advances in hardware and content. Still, it feels as if Nintendo has been caught off-guard by its recent success. For example, at E3 in June, Redscout noted that while Nintendo created an amazing installation around another franchise (Legend of Zelda), there was little about Pokémon GO beyond a brief announcement. And just yesterday, Nintendo announced its next big release...a mini version of its NES console from the 80's, pre-loaded with 30 classic games. Nostalgic? Absolutely. Innovative? Meh. Building on Pokémon GO? Not at all.
As a long-time fan of Nintendo, I’m rooting for the brand to bet bigger - so that the summer of Pokémon GO extends into a decade of dominance.
Colin Chow is Managing Director of the San Francisco office of Redscout, a global brand strategy and innovation agency that specializes in inventing, prototyping and commercializing new products, services and experiences to help brands realize their potential in profound new ways.