Steamboat Willie’s highly anticipated entrance into the public domain had the industry paying close attention to Disney’s vulnerability to IP exploitation. So far, the frantic coverage and one-off creative reinterpretations have lost steam. However, another IP giant is unquestionably holding some emergency brand management and IP protection meetings at Nintendo HQ this week due to the wildly popular overnight success of an indie game that shares a controversial resemblance to Pokémon.
Welcome to Palworld: A Totally 100% New-IP Game That Definitely Isn’t Pokémon
A little-known Japanese game studio called Pocketpair captured the gaming zeitgeist this past weekend after launching an early access build of Palworld, a primarily PC-based survival game described by fans as “Pokémon with guns.”
In just five days, Palworld has sold over 7 million copies on Steam alone, outselling Pokémon Legends: Arceus (6.5M copies in its first week) with a couple of days to spare. Excluding Game Pass and Xbox contributions, that translates to roughly $189M in revenue for an indie game that cost an estimated $7M to make.
Palworld is now the 2nd most played game in Steam’s history, surpassing juggernaut AAA titles like Cyberpunk 2077, Elden Ring, and the best-selling game of 2023, Hogwarts Legacy*. The hype for Palworld only continues to build: on Monday, it surpassed Fortnite in DAUs on Xbox Series X|S consoles in the U.S. (with a staggering average playtime of over 3 hours), and on Tuesday night, the game set an even higher all-time peak of 2 million concurrent players on Steam.
Factors Driving Palworld’s Record-Breaking Success
Some players and developers have very vocally decried Palworld, alleging that Pocketpair plagiarized Pokémon’s character designs. There’s no question that Palworld’s similarity to Pokémon—and the resulting controversy—played a part in driving the bulk of early interest for the game. However, in a market flooded with endless titles that include decades of failed Pokémon clones and mods, Palworld’s unprecedented success may actually stem most from what it’s chosen not to borrow from Pokémon:
A Fresh Spin on a Behemoth Legacy Brand: As the most financially successful franchise of all-time, Pokémon has had little incentive to deviate from an approach that’s grossed over $16B in video game sales since 1996. With the exception of Pokémon Go, however, the conservative and repetitive recycling of Pokémon games has led fans to bemoan an increasingly stale slate of “incredibly average sequels”. Palworld exploits this void with irreverence and risk that Nintendo could never take (e.g. outfitting adorable monsters with guns, using them as ammo in rocket launchers, and even allowing players to butcher and enslave them).
Jack of All (Gaming) Trades: Palworld takes “heavy inspiration” from more than just Pokémon, cherry picking key elements from other popular games to successfully Frankenstein a singular gaming experience that mashes up multiple modern gameplay mechanics (survival crafting, open world roaming, shooting) with Pokémon’s famous monster collection formula.
Well-Timed, Undercut Pricing: Priced at a flat $27 and also included free in Xbox Game Pass, Palworld is significantly cheaper than most AAA titles (typically $60-$70). For some context, one cosmetic skin in Diablo IV costs as much as Palworld itself. Palworld is also a welcome breath of fresh air for an industry that’s become increasingly saturated with live service games specifically engineered to siphon money from gamers’ wallets via endless microtransactions.
Concentrated Creator Coverage: Since its original announcement in 2021, Palworld kept a relatively tight lid on the game’s details outside of a few trailers and updates. The team instead let the game do the talking through a diverse group of smaller-name streamers in fandoms adjacent to Pokémon. Just one week prior to launching, Palworld granted select creators early access to the game to drum up actionable interest that could be sustained and converted into downloads just days later.
Palworld Isn’t Done Peaking
Barring legal intervention, the Palworld phenomenon is primed to continue. We believe a number of tailwinds could propel Palworld to challenge and even eclipse PUBG’s peak of 3.2M concurrent players as soon as this weekend and remain atop the gaming charts throughout 2024:
Updates and improvements are in tow for this early access build of Palworld. Less than a week after launching, Pocketpair has already impressed gamers with a robust roadmap of future updates including PvP, Steam/Xbox crossplay, and additional content including the introduction of new worlds and pals.
Well-constructed gameplay loops and multiplayer compatibility are supercharging the game’s replayability and ability to compete with live service games over a longer period of time.
Interest from platforms and players alike signal potential for increased monetization and lasting relevance: Sony has expressed interest in bringing Palworld to PlayStation consoles, and fans are now already growing attached to specific pals like Depresso.
What’s Next for Nintendo
Nintendo hasn’t been shy about taking legal action against previous attempts to exploit its IP, and the company has already issued a DMCA takedown for a video of a rogue Palworld mod that blatantly features actual Pokémon.
The likelihood of a potential lawsuit against Palworld is less clear. For example, Microsoft’s publishing and promotion of Palworld in Game Pass and its store may serve as a tacit endorsement of the game’s legal standing. Ultimately, speculation is better left to experts in IP law, but Nintendo’s incentives to find a smoking gun are growing by the day.
From a gaming standpoint, the PC gaming market has had little appeal to Nintendo. Focused on developing games for its own hardware, Nintendo secures larger profit margins, exercises greater creative control, and maximizes the value of its own, verticalized gaming ecosystem. So, while fans shouldn’t expect Pokémon on PCs anytime soon, Palworld’s success is reaching enough of a fever pitch that Nintendo’s own developers might want to start thinking about what they can copy from Palworld.
* Shout out to Warner Bros. Discovery, an illum client since 2022 and the first company since 2008 to publish a best-selling video game in the U.S. that isn’t Call of Duty or developed by Rockstar Games.