CNBC:
Needham & Co. Managing Director Laura Martin estimates that “Pokemon Go” could generate $3 billion in revenue for Apple in the next 12 to 24 months as the game expands into more countries. Since the game achieved penetration of 6 percent of the U.S. population after just 10 days, Martin predicts 20 percent penetration at maturity.
And here’s the key:
“I think the point is that while Nintendo has gone up 20 billion and they do have IP risks, Apple does not,” Martin said on CNBC’s “Halftime Report.” “It is hedged because the next genius that makes a hit game, Apple shares on that one too. So while this one may be transitory, Apple has an option on all future hit games over the iOS platform.”
At the core of the App Store’s business model is this risk disparity. Apple took the vast majority of their risk at inception, when they built the App Store infrastructure. Now that risk has been paid for and the current risk all lies with the developers.
Everyone, of course, forgets about overhead, operating expenses.
The risk has been abated, though. The revenue is so high at this point that the overhead/OpEx represents zero risk. If revenue dropped to the point where risk become a realistic threat, Apple would have a decision to make.
Apple took all their App Store risk at the beginning, when they built the App Store. Once it boomed, Apple’s risk disappeared.