What’s the catch? How Pokémon Go is boosting local businesses

Key takeaways

  • Newly released smartphone game Pokémon Go uses augmented reality technology to blend the physical world with the digital.
  • Its success can be attributed to combining smartphone gaming technology with a highly nostalgic and popular brand.
  • A ‘Pokéconomy’ has emerged that offers myriad opportunities for businesses to generate revenue from AR technology.

If you ever needed proof that the 1990s were back with a vengeance, look no further than feel-good smartphone hit Pokémon Go.

Arriving on the 20th anniversary of the original handheld Nintendo game, the augmented reality-infused mobile app has made Pokémon, all over again, a runaway cultural phenomenon. In the United States alone, the app notched an estimated 7.5 million downloads in under a week, while Nintendo’s stock price jumped by 24.5%. It jostled past the likes of Candy Crush Saga, Clash of Clans and Angry Birds to become the most popular smartphone game in US history.

As Pokémon Go has continued its global roll-out, the app’s inherent addictiveness has seen it post higher engagement than attention-grabbing social media or messaging apps such as WhatsApp, Instagram and Snapchat.

Certainly, the speed and intensity of Pokémon Go’s rise has been astonishing. More interesting, however, are the technological innovations that made all this hype and frenzy possible, as well as the economic opportunities for savvy businesses to benefit.

Should I stay or should I Go

When 19th century French novelist Anatole France said ‘it is good to collect things, but it is better to go on walks’, he could have been talking about Pokémon Go. The game uses augmented reality (AR) to put cute and catchable digital creatures – quite literally – on the map.

Developed by Niantic, a former Google subsidiary, the game deftly combines the smartphone’s camera, GPS and the Google Maps API, to spawn virtual creatures and items based on the user’s real-time location and movement.

The end result is a game that blends digital with reality, encouraging players to interact with their physical environment in a whole new way. ‘Trainers’ (game players) wander around, checking in at real-world landmarks to collect supplies, battling fellow trainers at ‘gyms’, and catching as many of the original 150 Pokémon as possible to become a Pokémon Master.

Catching the Pokémon catchers

Like other mobile game titles, users download and begin playing Pokémon Go for free. Revenue is currently generated by in-app purchases, where players can opt to purchase items and equipment to improve their gameplay.

Because of its AR component, Pokémon Go has opened up unprecedented new opportunities to diversify its revenue streams by partnering with retail or food service businesses. The most obvious opportunity, and one that developer Niantic is actively pursuing, is for these real-life businesses to pay for their bricks-and-mortar locations to participate in the digital environment.

The main mechanisms for this are the Pokémon Lure and the Pokémon Gym. With a Pokémon Lure, rare or desirable Pokémon are generated for 30 minutes. A Pokémon Gym, meanwhile, is a digital sparring ring, where different players meet for battle.

By purchasing a Pokémon Lure or becoming a Pokémon Gym, businesses wanting to increase their foot traffic or patronage – such as retail stores, bars or restaurants – are capitalising on the game’s remarkable ability to draw crowds to specific locations. From there, they can be converted to customers by shopping or taking up special Pokémon-themed deals in between bouts of playing.

A new ‘Pokéconomy’?

This blending of hyper-local commerce and digital gaming results in what PC Mag has dubbed the ‘Pokéconomy’. In the US, early-adopting bars and restaurants are seeing increased sales and patronage by buying into the world of Pokémon Go – whether it’s offering to turn on their Pokémon Lure after goods and services are purchased, the chance to win vouchers if players post screenshots on social media, or simply hungry players buying food while they battle in Pokémon Gyms.

Similar effects are occurring in Australia. A Sydney-based Chinese restaurant announced its plans to turn on a Pokémon Lure on social media, while a Perth hamburger chain has had to increase its workforce to cope with the increased customer influx.

Pokemon Go augmented reality

Chinese restaurant Hangtui announcing its setting of a Pokémon Lure on Facebook.

Elsewhere, special Pokémon Go-themed pub crawls are being organised, while a scan of the game’s own source code reveals the likelihood that the game is poised to partner with global fast food franchises as part of its revenue strategy. There are numerous opportunities for the game to add further stickiness. Possibilities include in-app messaging, social networking and beyond. Some players are even using it as a dating app.

Why Pokémon won the battle of the smartphone AR apps

Beyond the current furore, there is no guarantee that Pokémon Go will sustain its current popularity. However, it may have been successful in finally unlocking the floodgates to AR smartphone gaming en masse.

The key was combining a cutting-edge gameplay experience with a beloved cultural franchise. Niantic’s previous game title, Ingress, is almost identical to Pokémon Go in terms of concept and gameplay, but it was far less popular. Pokémon Go, on the other hand, leverages a highly nostalgic and perennially popular brand, particularly for smartphone-loving millennials.

Pokémon Go proved that content plays a crucial role in ensuring an emerging technology achieves mainstream resonance – something proponents of AR and its cousin, virtual reality, have so far struggled with.

What’s the catch?

By hitching AR to the Pokémon bandwagon, Pokémon Go’s creators have revitalised an old property at the same time as paving the way for widespread AR adoption in the future.

It has also demonstrated the revenue-generating capabilities of an ecosystem that reaches far beyond the virtual world to involve businesses both big and small.

Mobile gaming has meant video games are no longer defined by players sitting behind screens at home. Both traditional gamers and entirely new demographics now enjoy immersive gaming experiences out of their homes and in the real world. Taking this evolution one step further, Pokémon Go’s breakthrough AR model sees these audiences interact with the real world. It therefore offers a huge plug-and-play opportunity for imaginative businesses that wish to get in on this new paradigm.