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July 14, 2016 02:00 AM

Will plastics firms benefit from Pokébusiness?

Rhoda Miel
Managing Editor
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    Niantic/YouTube
    The Pokémon Go app has players find virtual items in real settings.

    You may have heard something during the past week about a little smartphone game called “Pokémon Go.”

    Or maybe you've just seen people wandering past community centers, parks, churches, museums and even random businesses holding their smartphones out in front of themselves in search of characters and other items from the Pokémon franchise.

    The game, which came out July 9, hasn't just been popular, it's viral. According to research company SensorTower, it was downloaded 15 million times in its first four days and is more popular than the Facebook app. SensorTower also estimates that it's earning game maker Niantic $1.6 million a day in the U.S. alone.

    It's also causing a stir beyond the smartphone screen, as users have taken it into unexpected places — both the U.S. Holocaust Museum and Arlington National Cemetery have had to tell users not to hunt Pokémon items on their grounds — but on the positive side, the game also encourages users to get outside and walk around.

    “Pokémon Go,” you see, involves walking around, smartphone in hand, looking through the app as it uses the phone's camera to locate characters, balls and other items, then “collecting” them. Check out this article and video from vox.com for more info. (Or just ask our sales director Patrick Cannon. He's already collected Pokéballs available on the main floor of the Crain offices here in Detroit. And three Pokémen on the third floor: a Rattat, a Drowzee and a Caterpie. And no, I'm not making that last part up.)

    But what does a virtual game have to do with plastics?

    Accuform Manufacturing Inc.

    Accuform Manufacturing Inc. is now offering vinyl signs alerting Pokémon players where they can find figures, or whether they should abstain from playing in a certain area.

    Directly, not much beyond the variety of plastics that are in smartphones. (And the Pokémon Go Plus wearable electronic device that will vibrate to let you know if any Pokémen are nearby, even if you're not actively using your smartphone. It's due out later this month.)

    But expect a ripple effect to hit the molders who make collectible figurines, game board pieces and even accessories such as Pokémon-themed phone cases and boxes for the old fashioned collecting cards which are expected to benefit from the craze as well.

    One company already is hooking itself up with the Poké craze. Accuform Manufacturing Inc., a Brooksville, Fla., manufacturer of plastic and metal signs, is now offering vinyl signs that either notify players there is a "Poké Stop Here" or warns them that "Pokémon Hunting Not Permitted On Site."

    It's too early to say exactly how the new game will affect sales of toys and other items, of course, but history shows that a popular digital hit can drive sales elsewhere.

    Take Angry Birds as an example.

    The smartphone game first went public in December 2009, released by Finnish game company Rovio Entertainment.

    In 2010, it reported sales of 6.5 million euros, or about $7.2 million.

    By the end of the next year, its sales had climbed to 75.6 million euros, or about $84 million. Of that figure, 30 percent came from merchandising and licensing — a figure that took in an unknown amount of money spent on board games, figurines, stuffed animals and other items.

    Popularity dropped off for the game after a high of 173.5 million euros ($192 million) in 2014, but that figure still represented outside merchandise and licensing value of 41.4 million euros (about $45 million) for Rovio.

    And even though this summer's “Angry Birds” movie may not have been a big hit in the U.S., globally it made more than $150 million. What's important to plastic toymakers, though, may be that the movie also prompted Rovio to sign 300 different product licenses — from Lego A/S's six building sets to PEZ dispensers.

    So something popular in one medium will different play out in sales for those companies affiliated with it.

    But perhaps a cautionary tale may be in order before you try connecting your company to the next big thing. Being tied to a viral piece of the market can be a wild ride.

    Consider this: In 1994, contract manufacturer EXX Inc. decided it wanted to supplement sales of its Henry Gordy toy business beyond the cyclical sales of its Hi-Flier Manufacturing Co., which made kites. It signed a number of licensing deals to make figurines and watches based on cartoon characters, including Mighty Morphin Power Rangers.

    And Power Rangers was the next big thing for kids in the mid-1990s. The company reported second quarter sales for 1994 were $11.6 million, more than double the previous year's $4.7 million. And the quiet company with only a relative few public shares available on the New York Stock Exchange suddenly hit it big. Its share price jumped from $5.50 to $14.87 in one day. The share price would finally top $46 before settling down.

    Two years later, Power Rangers were no longer the hot toy item, however, and EXX's toy sales dropped from a high of $37.2 million in 1994 to $9.5 million. By 2003, it was out of the toy business.

    So Pokémon may not be a sustainable business. But that doesn't mean playing a virtual game is just worthless.

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