How Pokémon Go brings augmented reality to mainstream (and main street) businesses

In less than a month since launch, Pokémon Go, the location-based, augmented reality game for mobiles, has become a phenomenon and a record breaker.

It’s the fastest game to ever top the App Store and GooglePlay. In its first week became the most downloaded app of all time, and it’s also become the most actively played mobile game in the US ever.

In under four weeks, the game has been made available in 35 countries and has more than doubled the share value of Nintendo, which made the original Pokémon game in the 1990s, to $42bn.

That’s incredible, not only for the sheer escalation, but because Nintendo doesn’t even produce the new game. It’s made by Niantic, of which Nintendo owns a share and from which it receives a licensing fee.

A new (augmented) reality?

For the uninitiated, Pokémon Go is, effectively, a treasure hunt that uses augmented reality to link gameplay on a smartphone to the real world. Players use online maps – in the same way they use Google Maps to navigate to real locations – to seek out Pokémon and do battle with them.

Although still at the cutting edge of mobile technology, augmented reality hasn’t arrived from nowhere. The technology has existed for a number of years and similar games have previously been launched, but to significantly less success.

All of which begs the question: why is it so popular and why now?

There are three main reasons, according to Forbes, that have contributed to the phenomenon. The improved computational power of the average smartphone, it says, works with sophisticated real-world maps and lightweight augmentation to make it possible for the game to find a wide audience.

Secondly, the game appeals to Millennials who are nostalgic for the original 1990s game. Then, thirdly and perhaps most significantly, the consumer is now generally comfortable to trade personal information (and related possible security and privacy risks) for the benefit of being geo-located and the convenience of being ‘always on’ the mobile network.

Within a fortnight of its US launch, the game had 21m active US users. While the game itself is free to play, in-app purchases of ‘PokéCoins’ from the app store are expected to bring Apple $43bn in the next 12-24 months, say analysts.

Main St benefit

Not only is Pokémon Go extremely popular with the consumer, it represents a significant opportunity for businesses to associate with the game and to dip a toe, perhaps for the first time, into the brave new world of Augmented Reality – and this association is taking many forms.

A number of businesses are making in-app purchases of ‘Lures’ to encourage other players into their premises. In the game, Lures work to entice Pokémon toward them, so buying them has the real world effect of encouraging players keen to battle with Pokémon to gather around the Lure, and perhaps also become a customer of whichever business they find themselves in.

For other firms, for whom being seen at the cutting edge of technology is important, the opportunity exists to become a designated location within the game – either a ‘PokéStop’ or ‘Gym’ – whereby entering the location in the real world brings in-game benefits.

Thomson Reuters’ London HQ at Canary Wharf is one such location. However, these locations have been limited at the moment to places of significance, by the game’s developer Niantic Labs

(NB: Reuters likes to get in early with new tech developments – you may remember it leading the charge on Second Life when it became one of the first news organisations to assign reporters to cover the virtual landscape)

Business can now even pay the game on a per customer basis for users who entered sponsored areas as they play – although, again, there are tight restrictions on the number that can do this currently. Presumably, out of a desire not to flood the game and put off potential players.

It’s interesting to note that in Japan, where the game has just launched, sponsor McDonalds said its 3,000 outlets which are being used as PokéGyms would ‘call on players not to become a bother to customers who are eating’, such is the expected deluge of players into its locations.

Besides those firms getting directly involved in the Pokémon world, there are a number of others operating on the fringes:

1. In the real world, there are businesses benefiting from just being close to a PokéStop or PokéGym location – and without knowing too much about the game itself or taking an active part. According to PC Mag, these businesses, knowingly or unknowingly, are helping transforming the world into a Pokéconomy one Lure at a time

2. There are also a number of virtual businesses that have launched as a result of the game’s popularity. A new dating service called Pokédates has been created to help players of the game arrange meet-ups at PokéStops or PokéGyms before venturing out on a joint Pokémon hunt

The Future

As with any new cultural/business phenomenon, questions have been raised about the sustainability of the game in the long term. Nintendo said the effect on its business results would be limited, but as it doesn’t make the game, that’s not such a surprise. The real reason for doubts about its long-term viability are more to do with the game itself.

Pokémon Go relies on players making series of in-game micro-payments to keep it profitable, and as they’re mostly young people who are, in time, likely to move on to other things, new ways of bringing in cash are going to be needed.

But even more crucial than that might be the weather. As the New Yorker points out, a game that is so dependent on players being out and about on the streets might be great for summertime, but are they all going to be so keen to stand outside for hours in the winter?

For the answer to that, only time will tell.