‘Pokemon,’ ‘Gears of War’ and other nostalgic video games are a multi-billion-dollar business

“Pokémon,” “Final Fantasy,” and “Gears of War” are about as different as video games can be, but what they share in common is surprising: They’re more than a decade old and still producing new, exceedingly popular games.

Keeping old franchises alive and kicking is common in the video game world, just like it is in the film industry. Some video game company portfolios are filled with legacy titles, with just a sprinkle of one-off original releases every year.

Retro franchises are a lucrative business. It’s a chance for companies to milk an established cash cow.

Nintendo sold more than 31 million copies of the 1996 game “Pokémon Red/Green/Blue.” “Pokémon Go,” which debuted in 2016, earned more than $2 billion in revenue and has been downloaded over a billion times, Niantic CEO John Hanke said during a talk at the Game Developers Conference in March.

Nintendo is cashing in once more. At E3, it teased “Pokémon Sword” and “Pokémon Shield,” two role-playing games coming later this year.

“A new ‘Pokémon’ game is all but a guaranteed mega-seller for Nintendo,” Felix Richter, senior editor at statistics platform Statista, wrote in an analysis.

Japanese video game publisher and developer Square Enix announced during the E3 video game conference in Los Angeles earlier this month that the “Final Fantasy VII” remake will launch in 2020. The 1997 game sold more copies than any other “Final Fantasy” title, including the first six games and additional spinoffs.

The top ten bestselling console games last year were all part of bigger franchises, according to IDC, including “Pokémon: Let’s Go, Pikachu!,” “Call of Duty: Black Ops 4” and “FIFA 19.” The only exception was “Spider-Man” on the PlayStation 4, although that was a standalone game in a much bigger franchise that spans movies and other Marvel video games.

“Sequels do better,” said Michael Pachter, an analyst at private financial services firm Wedbush. “New IP doesn’t sell well. Even if a sequel falls off, the floor on sales is still higher than the ceiling on new games.”

When companies notice a title is well rated, they will start to make sequels until they stop being profitable, noted IDC’s research director of gaming Lewis Ward.

Fighting fan fatigue

To keep fans interested in old titles, video game makers introduce a lot of changes to reboots and sequels.

“Our developers are so clever, right? Not only making a straight sequel, but bringing in new elements like the fact that you have this Luigi made up of goo, that they use to solve puzzles as you go through the levels,” David Young, assistant manager of public relations at Nintendo of America, said at E3, referring to the new title “Luigi’s Mansion 3.” Nintendo did not respond to further request for comment for this story.

Rod Fergusson, studio head of Gears’ developer The Coalition, told CNN Business his team wanted the “Gears of War” franchise to diverge from past games. Gears 5’ trailer is tonally different from the previous games.

Gears 4 played it a little too safe in fans’ eyes, Fergusson said. He noted that if the studio were to continue giving fans everything they asked for, fans would respond with “‘Oh, this is no different than the last one. Why did I get the same game again?’”

At the same time, too much change could alienate fans, he said.

“You have to find this middle ground, which is you take the betrayal of expectations and turn it into surprise and delight,” said Fergusson.

Gamer Jonathan Martinez tests a new "Gears of War" game at the Xbox display on the second day of the Electronic Entertainment Expo, known as E3 at the Convention Center in Los Angeles, California on June 17, 2015. The expansive E3 show floor was rich with VR offerings from developers working on games for immersive head gear expected to hit the market in force next year. AFP PHOTO / MARK RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images)

Keeping games fresh involves starting from scratch, said Pete Hines, senior vice president of marketing and communications at video game publisher Bethesda, which makes successful franchises, including “Fallout” and “Doom.”

“After you finish a game, you have to be willing to say: What do we want the next thing to be?” said Hines.

He emphasized that a developer had to be willing to start anew. “There’s nothing you won’t throw out from the last one. If you don’t want to, you run the risk of stuff feeling very stale and feeling a lot like the last one,” he said.

Throughout the many iterations of “Pokémon,” including movies, anime, trading cards, console games and mobile games, there are two concepts the franchise stays true to: “the simple but engaging concept of finding, catching, and collecting Pokémon” and the creation of creatures like Pikachu, said J.C. Smith, senior director of consumer marketing at The Pokémon Company International.

“You have to change the formula or else people do get bored,” said Laine Nooney, assistant professor and historian of video games at New York University. “While the fan pushback can indicate they just want things to be the same, if you look at the numbers, we wind up figuring out that that’s actually not true. Changes extend the fan base.”

Ignoring sequelitis

Companies take up the burden of creating sequels, because they remain safe bets, said Nooney. At a time when the gaming industry may be challenged by cloud gaming platforms and the next generation of consoles, new games with a retro spin, such as “Pokémon Sword” and “Shield,” are as close to sure winners as video game companies can get.

“A proven franchise sets a floor on sales, and few sequels flop, so they are far less risky than new intellectual property,” said Pachter, the games analyst.

Companies can save on marketing costs if they’re betting on a familiar brand, notes Richter, the Statista.

“In the age of social media, it’s very easy to create buzz for a new entry to a popular series by feeding the public bit after bit of information about the upcoming game,” said Richter. “No need for expensive billboards or TV ads if, for example, a YouTube teaser is watched a couple of million times.”