ENTERTAINMENT: Pokemon Go Coming to China, Set for Flop?

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Bottom line: Pokemon Go could launch in China as soon as the end of this year, but is likely to get a tepid reception due to its late arrival and fading buzz in other countries.

After months of silence in the world’s largest mobile market, Pokemon Go, the wildly popular mobile game that debuted this summer in most of the world, may be finally coming to China soon. That’s the word coming from new media reports, which are citing the CEO of Niantic, the San Francisco-based developer of the popular title that takes mobile gaming to a new level by adding global positioning (GPS) technology. But the bigger question is whether Pokemon Go will get much attention from Chinese gamers, since it seems to be well past its prime after making global headlines over the summer.

As one of the world’s top gaming markets, some were puzzled why China wasn’t included in the global launch of Pokemon Go back in July. The omission looked similar to Apple’s (Nasdaq: AAPL) previous exclusions of China from the global launch map for its latest iPhones. Such a strategy looked strange, since China is a huge market and failure to capitalize on hype at a product launch can result in millions of dollars in lost sales.

But it soon became clear from the iPhone case that China was excluded from the global launches for technical reasons rather than any kind of snub, and that appears to be the case now with Pokemon Go. In Apple’s case, the company was slowed down by China’s labyrinthine bureaucracy, which requires extensive testing of all new smartphones before they can be formally sold in the country. After realizing the big losses it was suffering due to late launches in China, Apple finally mastered the testing process and now includes China in all of its global iPhone launches.

A similar process appears to be happening with Pokemon Go. In this case, one of the biggest obstacles appears to be the game’s dependence on GPS technology supplied by Google (Nasdaq: GOOG). Anyone who lives in China will know that Google has extremely poor relations with Beijing, and that most of the tech giant’s products — including its popular mapping service — have been blocked in China for the last few years.

There are several local alternative mapping services in China that Pokemon Go could use, led by the popular service operated by leading Chinese search engine Baidu (Nasdaq: BIDU). Pokemon would probably also need one or more licenses from China’s Internet regulators to operate the game locally, though that would be relatively straightforward and less time consuming.

Battling Bureaucracy

Against all that backdrop, we can now look at the latest reports that simply quote Niantic CEO Ted Hanke saying at an industry event that either China or India is likely to be the next major global launch on Pokemon Go’s roadmap. (Chinese article) At the same time, the reporter who broke the news on his microblog said the equally bureaucratic India was slightly more likely to become the next major launch country. Chinese media are speculating that the most likely local operators for the China launch would be either Tencent (HKEx: 700) or NetEase (Nasdaq: NTES), the nation’s 2 largest gaming companies.

From the tone of the reports, it’s relatively clear that a launch in either China or India isn’t imminent and probably wouldn’t come until the end of the year at earliest. The game has been incredibly popular worldwide, with more than 500 million downloads to date. I can personally attest to that popularity, as 2 of my nephews were constantly playing it when I was home for a few weeks during the summer holidays in August.

But all that said, the game has clearly peaked in the rest of the world and started to lose its buzz. That could bode poorly for China, since many won’t realize the half-year delay was for technical reasons and will see the belated arrival as a snub to the huge market. What’s more, the kind of buzz that was critical to Pokemon Go’s early success will be mostly gone by the time it arrives in China, and there’s very little even a big company like Tencent or NetEase can do to revive the chatter. For all those reasons, I do expect the game will get a tepid reception when it finally arrives here, though it’s probably exaggeration to say it will be a complete flop.

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