Pokemon Go harms local economies

Kathryne LeBell, Views Editor

This is an opinion article and does not necessarily reflect the views of The Tulane Hullabaloo.

The United States and other developed economies around the world have seen a changing landscape around personal entertainment. Where individuals once spent their leisure time socializing with others or drinking, now video games and other forms of virtual entertainment have come to fill many peoples’ days.

One such game, Pokemon Go, was released July 6 and has since become incredibly popular. This is not inherently a bad thing.

Economically speaking, however, there are several consequences that must be considered looking forward. In-app purchases have completely altered local-to-regional money flows, furthering the growing income inequality that is natural under a capitalist system.

Many of the complaints surrounding the release and subsequent media explosion of Pokemon Go focus on the phone aspect — sure, people are walking more, but they are completely focused on their phones. Looking at the way Pokemon Go and other similar apps affect markets, however, one can see some problematic trends. 

While local-serving clusters (businesses that serve the region they are located in) are typically a consequence of regional development, rather than a driver, they tend to employ many more local workers. In New Orleans, for example, 61 percent of occupations were local jobs in 2014 according to The New Orleans Index at Ten.

When the entertainment portion of a person’s budget is being spent on in-app purchases that money does not flow back into the local economy. While New Orleans is relatively well-supported by its tourism industry, in other areas this could cause stagnation, a reduction in the number of new businesses, a higher local unemployment rate, and so on.

Instead of returning to the local economy, money spent on in-app purchases instead flows upwards, into already wealthy tech-driven cities. In the case of Pokemon Go, these cities are Los Angeles and Tokyo.

Again, this is not inherently a bad thing. There have been regionally-specific industry clusters in the United States for a very long time. But though Pokemon Go has provided an opportunity for local businesses to engage with consumers, that benefit does not necessarily negate the cost.

Hollywood has long been known for its film industry cluster. The movie industry has brought a lot of money to the area. But in the case of movies, local economies still benefited from movie theaters and snacks. Aside from hardware vendors and repair shops, the tech industry is very focused. The money spent on apps in particular goes solely to the firms who produce them. 

For one app, it might not seem like such a big deal. A few days after release, Pokemon Go was estimated to earn about $1.6 million a day. This has likely dropped as the app’s popularity slowed down, but that’s still a significant amount of money. When one considers all of the popular apps with the option for in-app purchases, most notably “Candy Crush,” that profit multiplies.

One could also factor in the actual product being consumed: extra lives, power-ups, etc. These things are almost immediately used up, creating an near infinite demand from individuals who continue to value those things.

All in all, Pokemon Go will likely not cause the economy to crash or millions to lose jobs. It is, however, an example of irregular and exploitative capital flows in a late-capitalist society. It is one small component of the massive income inequality steadily growing every day. I acknowledge that it’s not the game’s or the developers’ fault. It’s the system. And maybe I wouldn’t be so mad about it if I could just finally catch a Vulpix.

Kathryne is a senior at Newcomb-Tulane College. She can be reached at [email protected]