Online game aspires to Pokemon success

(Business 2.0 Magazine) -- Most adults still find Pokémon difficult to grasp. The numbers are easier: The franchise, originally based on a trading-card game, has raked in a total of $15 billion for owner Nintendo. It was less lucrative for 4Kids Entertainment, the New York-based company that licensed the U.S. rights for Pokémon merchandise until two years ago. "We got a royalty, which was great," says 4Kids CEO Alfred Kahn. "But we didn't get the gross margin."

So 4Kids set out to beat Pokémon at its own game. The company formed a joint venture with Chaotic USA, which had snapped up a Danish trading-card game called Chaotic. The companies revised the game, added an online element, and are planning a U.S. launch in September that's tied in with a cartoon on the Fox network.

4Kids Entertainment hopes its new card game, Chaotic, will earn as much as the Japanese hit it licensed: Pokemon ($15 billion, total revenue)

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Each Chaotic card has a unique code that players can enter at Chaoticgame.com. That means they'll be able to play as easily online as in person. It also means that 4Kids won't lose as much money to counterfeit cards as it did on Pokémon. Indeed, every item in the Chaotic franchise - from T-shirts to action figures to bedsheets - will have its own code that can be entered online, enabling players to display and trade anything in their collections.

The idea is to mix the game-playing aspect of Pokémon with the preteen social networking of Club Penguin. Liam Burke, an analyst at Ferris Baker Watts, says it will likely soar - or sink without a trace. "This is a fad business," he says. "The highs are really high, and the lows are really low."