Pokemon Go: Bringing video games into the real world

Playing Pokemon in real life.

Chances are you have heard of Pokemon GO?  It is a smartphone game where the aim is to go around the world and catch virtual creatures called “Pokemon”.  The twist is that “the world” you go around in is the real world—as you move in the real world, you find new Pokemon to catch[1].

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The game is built on an innovative operating model centered on mobility and augmented reality.  First, as a mobile game it can easily send and capture data from players, rapidly distribute games to new players, and know where users are physically.  Second, Pokemon GO’s developers, Niantic, developed new technologies to take real-world maps and rapidly integrate them into the in-game world, via both crowd-sourcing and proprietary algorithms[2].

On top of this operating model, Niantic overlaid a freemium business model, offering the game free to players but upselling items that enabled you to find more Pokemon (“lures”) and consumables needed to capture Pokemon (“pokeballs”)[3].

pokemon-go-microtransactions-store-screenshot-3-01

Bought together, these operating and business elements created dramatic results:

Rapid growth
Pokemon GO has grown quickly.  By leveraging both smartphone-based distribution and social media, the app had 130 million downloads in its first month[4], more than four times faster than the previous record-holder[5].  It hit 500 million downloads by its second month[6].

Rapid advertiser reaction
The novel use of augmented reality unlocked an entire new channel for marketing for thousands of businesses worldwide.  After only a few days, local bars and cafes spent millions of dollars buying “lures” to attract more Pokemon to their businesses.  Cities began selling themselves to tourists based on the concentration of Pokemon locations they had.  Guided tours sprung up as entrepreneurs led tourists around cities to hunt rare Pokemon[7].

New vulnerabilities
One new area of weakness is the many ways the game can fail.  Pokemon GO deals with massive cyberattacks from hacker groups, including a recent distributed denial-of-service attack in Europe[8].  Even without attacks, the game has experienced repeated server failures over time[9].  The distraction of Pokemon GO in the real world has also led to disasters.  Numerous drivers crash their cars because they are playing Pokemon GO while driving[10].  Criminals have used “lures” to attract Pokemon GO players to remote locations with the promise of Pokemon, only to rob them at arrival[11].  A driver killed two pedestrians in Japan as he played Pokemon GO while driving[12].

The way forward
What does the game go from here?  Niantic is already working to make the game more fun with new features.  However, I believe there is a broader opportunity to leverage the operating model.  For example, Niantic can leverage its backend work in augmented reality and easily extend into new games around new franchises like Harry Potter or the Disney universe.  In addition, Niantic is likely under-monetizing its base today.  With its vast troves of location and contact information[13], it can more directly extend into location-based advertising and upsell its customers into new games and tie-ins (maybe Pokemon plushies?).

More generally, the underlying augmented reality technology can greatly improve non-game apps.  Whether it is enabling fitness (Gamifying workouts?  Live posture correction?) or improving education (information on the world around you, delivered in real-time), the possibilities are endless.

 

Word count: 844 words

 

Sources:

[1] Wingfield, Nick and Mike Isaac.  “Pokémon Go Brings Augmented Reality to a Mass Audience.
The New York Times, July 12, 2016.  [http://www.nytimes.com/2016/07/12/technology/pokemon-go-brings-augmented-reality-to-a-mass-audience.html].  Accessed November 18, 2016.

[2] Goel, Vindu.  “Ingress Has the World as Its Game Board.”  The New York Times, June 9, 2016.  [http://www.nytimes.com/2016/06/09/technology/ingress-has-the-world-as-its-game-board.html].  Accessed November 18, 2016.

[3] Dayen, David.  “The Scary Way Pokémon Go Is Making Money Off You.”  The Fiscal Times, July 14, 2016.   [http://www.thefiscaltimes.com/Columns/2016/07/14/Scary-Way-Pok-mon-Go-Making-Money-You].  Accessed November 18, 2016.

[4] Swatman, Rachel.  “Pokémon Go catches five new world records.”  Guinness World Records, August 10, 2016.  [http://www.guinnessworldrecords.com/news/2016/8/pokemon-go-catches-five-world-records-439327].  Accessed November 18, 2016.

[5] “Take-Two Interactive Software, Inc. Reports Strong Results for Fiscal Second Quarter 2014.”  Take-Two Interactive, October 29, 2013.  [http://ir.take2games.com/phoenix.zhtml?c=86428&p=irol-newsArticle&ID=1869835&highlight=].  Accessed November 18, 2016.

[6] “Pokémon GO Exceeds 500 Million Downloads Worldwide.”  The Pokemon Company and Niantic, Inc.  September 7, 2016.  [http://www.businesswire.com/news/home/20160907006800/en/Pok%C3%A9mon-Exceeds-500-Million-Downloads-Worldwide].  Accessed November 18, 2016.

[7] J.J.C. “The travel industry has been quick to jump on the Pokémon Go bandwagon.”  The Economist, August 20, 2016.  [http://www.economist.com/blogs/gulliver/2016/08/game].  Accessed November 18, 2016.

[8] T.C. “How Pokémon Go was attacked.”  The Economist, July 21, 2016.  [http://www.economist.com/blogs/economist-explains/2016/07/economist-explains-18].  Accessed November 18, 2016.

[9] Moritsugu, Ken, Satoshi Sugiyama and Sophie Curtis.  “Is Pokemon Go down? Servers crash as wildly popular Nintendo game goes live in Japan.”  Mirror, July 22, 2016.  [http://www.mirror.co.uk/tech/pokemon-go-down-nintendos-servers-8470182].  Accessed November 18, 2016.

[10] “Pokémon Go player crashes car into school while playing game.”  The Guardian, July 28, 2016. [https://www.theguardian.com/australia-news/2016/jul/29/pokemon-go-player-crashes-car-into-school-while-playing-game].  Accessed November 18, 2016.

[11] Rosenbaum, Sophia.  “Death and crime in Pokémon Go.”  The New York Post, July 10, 2016. [http://nypost.com/2016/07/10/pokemon-go-is-getting-creepy/].  Accessed November 18, 2016.

[12] Abrams, Abigail.  “Driver Playing Pokémon Go Kills Pedestrian In Japan.”  TIME Magazine, August 25, 2016.  [http://time.com/4465882/pokemon-go-driver-kills-pedestrian/].  Accessed November 18, 2016.

[13] Dayen, David.  “The Scary Way Pokémon Go Is Making Money Off You.”  The Fiscal Times, July 14, 2016.   [http://www.thefiscaltimes.com/Columns/2016/07/14/Scary-Way-Pok-mon-Go-Making-Money-You].  Accessed November 18, 2016.

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8 thoughts on “Pokemon Go: Bringing video games into the real world

  1. I loved Pokemon Go but stopped playing after a few months. I wonder how the game is doing now in term of number of active players or any new features to attract new players? I find it hard for a mobile game to sustain its user base over time. Do you know what are the next big things in pipeline of Niantic? Thanks for sharing!!

  2. Great insight into this cultural icon. I’m interested in your take on the big loser here–Nintendo. Somehow, as owners of the intellectual property, they seem to have lost out on what is now proven to be a massive opportunity to pursue monetization. This is a company slow to adopt mobile games, and clearly undervalued its existing creative assets. Do you think this is a lesson for them, or a one-hit wonder? If you look at other opportunities, it seems like this one is particularly suited for augmented reality. I’m not sure their other assets can be as transferable to this model.

  3. Thanks for the interesting post, King. I was in China during the big launch of Pokemon Go. Since google map was blocked in China, I was not able to experience this game first hand. This actually shows one of the limitation of the game, its dependency on third party softwares that may or may not be available in some regions in the world. That being said, Pokemon Go is really one of the first successfully commercialized application of augmented realty, despite the areas of improvement you mentioned in the article, it is exciting to see how this technology can be further applied into our every day life.

  4. I agree with the concerns mentioned by GL about the dependency on third parties and would be interested as Van mentioned already to see what the user base trend looks like (as the success of the game could just be a fad)
    That being said, I am sure that the VR/AR capabilities developed by Niantic could be leveraged in other games but also other industries or cross-industrial products… for example with major concerns about people’s steady lifestyles there are opportunities to develop games that as Pokemon go does require people to be active

  5. Awesome post, King! Really appreciate the balance view of the vulnerabilities of the product. Questions that come to mind are 1) what type of hacker groups would do so and why does it matter to them? 2) does it represent a broader theme of apps being back and the vulnerability in cybersecurity? 3) does learnings from this transfer to government cybersecurity?

  6. Cool post King! I side with Van. It was really fun to play for a while and then it lost it’s attraction for me. It seemed as if the game had the lifespan of a viral internet video or social media trend.

    What has Niantic done to ensure it’s long term viability?
    Are other major gaming companies entering the space of AR? If so I wonder what the effect of competition will be on games like this. People only have so many hours in the day – will they play more than one game during their moments of free time?

    AR is definitely an excited new space – can’t wait to see where it gos from here!

  7. Thanks, King! Your idea to expand the technology into new franchises has me very excited (a Harry Potter AR game would be awesome). I would be interested to know if Niantic has any plans to extend beyond the smartphone space into more robust AR platforms such as the Oculus. One of the struggles I have with this game is that I’m constantly sticking my phone out in front of me, which makes me look somewhat silly in public and also distracts me from the real world. I wonder if one day in the future we will all be wearing transparent goggles with AR technology, such that the AR and real reality can be integrated more seamlessly.

  8. Great post! Thank you!
    Is Niantic correctly adopting new AR technology – truly believe yes! Along with Snapchat (and maybe soon Magic Leap) these companies are creating history. We can criticize Pokemon Go for various elements (inlcuiding rows over people training their pokoemons near Hieroshima Peace Memorial), but in AR field there is time before Pokemons and after them. Company valuation skyrocketted after the game realease. To me the most important questions is – what will happen next – how to sutain the Niantic position on the market and engange users in the long run. Also, I do believe that AR and VR are the next industry disruptors and game changers and companies might either ride on that wave (almost similary to Windors of Apple riding on PC wave), or many of them will have to re-think their business models.

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