How Pokemon Go Can Grow From Viral Sensation to Big-Time Moneymaker

Pokemon Go has been out for less than a month yet it has redefined what it means for an app to go viral. While the hype has somewhat abated recently, the game continues to shatter records and pull in more players every day. Within days of release, the game single-handedly reversed the fortunes of Nintendo, with the stock up 70% at one point, and then sunk the company’s market value by $6.7B when Nintendo reported it would not see profit coming from Pokemon Go. Now Niantic, the creator of the game, still has a chance to ensure the app can remain more than a flash in the pan.

Pokemon Go broke the record for the highest number of iOS downloads during launch week, despite a slow rollout that only allowed the game to be available in select countries. App Annie now reports the app brings in $10M of revenue daily from people purchasing in-game items. Worldwide, revenue has topped $160M in less than 30 days of existence.

Audiences of all ages are hooked; the app has more daily users than Twitter and higher engagement than Facebook within weeks of release. Users in the US now spend around 26 minutes per day in the app (down from 33 minutes a week after launch), and open the app 6 times daily. These are staggering numbers that no other app — game, social network, or otherwise — has ever seen.

The numbers a week after launch

This is uncharted territory and exciting new ground. The game has a reach and passionate userbase providing opportunities to innovate that we’ve never seen before. With that in mind, here are some places Pokemon Go is breaking ground and Niantic can develop to guarantee further success.

Augmented Reality for All

Google began trying to bring augmented reality to the masses years ago with Google Glass. However, user demand struggled without a clear use case, and those who did wear it were labelled “Glassholes”, killing further consumer interest. While the device has found some practical business uses since, it otherwise hasn’t really caught on. Future AR devices like HoloLens and Magic Leap could face similar problems.

Pokemon Go blends the real world with the internet by having Pokemon appear overlaid on top of a map, where users have to physically travel to catch them. The game also allows Pokemon to appear in real-life locations through the phone’s camera. While it’s a very simplistic form of augmented reality, the technology has never seen so much popularity.

Some claim Pokemon Go could spell a tipping point for AR technology, particularly since the game only requires a download to begin playing, instead of fancy technology and headsets. Even people who criticized Glassholes are getting into the game.

This is great news for Niantic and could be the gateway for consumers to accept the technology. The next generation of AR may not see such a finicky audience.

Where There’s People, There’s Advertising

(PIctured: Ozlo) AI chatbots are in, so you know it’s big

For those who haven’t played the game, when the app is opened players see a map of their surroundings and traveling to real-life locations labelled Pokestops reward them with items. Niantic based Pokestops on data from their previous game, Ingress, which had players self-report special locations. Because of this, in Pokemon Go, Pokestops are a huge variety of places ranging from churches to graffiti to cemeteries.

Players can also drop “lures”on Pokestops which cause Pokemon to automatically spawn at those locations. Lures are marked by pink petals and any nearby players will also see those Pokemon. Therefore, people naturally gather around those areas.

A normal weekday afternoon in SF — do people work anymore?

With the game’s popularity, businesses began reporting a spike in foot traffic as players were gathered in certain areas. Some savvy business owners immediately began taking advantage of this traffic and buying lures to drop on their stores. Others advertised towards players, offering deals and free items for stopping by.

Perhaps the truest measure of success: Recommendation engines now have Pokestops as a filter for people looking for places to hang out.

Businesses are clamoring to become Pokestops in hopes of real revenue to follow. If Niantic moves quickly, the game can become a seamless advertising platform where businesses can pay to become hotspots for visitors. In fact, Pokemon Go launched in Japan with McDonald’s as its first sponsored location. Expect many similar partnerships to come!

Get Your Walk On

One of the reasons Pokemon Go is so successful is how it blurs the lines between traditional games and the real world. Players actually need to go outside and walk long distances to find new Pokemon or battle gyms.

Considering the influx of technology to aid personal health, this can only be welcome news. Many companies try to gamify exercise, and wearables and watches are released every year encouraging people to stand or walk, but Pokemon Go has been the most successful so far. A wristband is expected to come soon which makes it easy to move without staring at the phone’s screen. The $30 device is sold out everywhere and is being resold for almost 10 times its initial asking price.

Niantic’s success may herald a new generation of innovation in the health and fitness space. As VR, AR and other technologies becomes more prevalent, games that require more physical movement and that emphasize personal health may become the norm.

The Next Social Network That Will Never Be

Many social networks would kill for the type of engagement and the size and growth of the user base that Pokemon Go is enjoying. The game surpassed Twitter in DAUs and comprised nearly 6% of the US Android population engaged on the app within a week of release.

Despite this reach and engagement, where Niantic has fallen short is in building a community for users. There is no way to communicate with other players, whether it is targeting a gym or finding a nearby rare Pokemon. Players cannot find other players unless they happen to be in the same physical area (and then it isn’t really hard to guess who other players might be). While this is understandable as the audience caters to all ages, it’s a glaring omission and huge untapped potential by a game with so many built-in social components.

A normal night at Central Park — Just a small portion of the crowd

Because there are no in-game chat capabilities, third-party options have exploded in popularity. Apps like Go Chat saw so much demand that the servers couldn’t handle the stress, while other users turned to localized chat platforms like Yik Yak to share Pokemon locations.

This is currently the game’s greatest flaw. Finding Pokemon using in-game mechanics has been problematic since launch so many players turned to third-party apps. However, Niantic has recently faced heavy criticism as they cracked down on platforms that helped players “cheat”. The most popular was PokeVision, a site that used Pokemon Go’s API to share the exact location of Pokemon. The site reached 50M uniques, and 11M DAUs, huge numbers that speak to the missing components in the game, and the creator penned an open letter to the company echoing many user frustrations.

The online social component, whether it’s chat or allowing users to share Pokemon locations, will continue to be filled by third-party apps as long as Niantic ignores it. What’s unfortunate is it’s hard to say whether Niantic will continue to allow third-parties that don’t break the game, but do help the experience, to stay around. However, the company has claimed features like trading will be coming soon, which relies heavily on social. How this feature is integrated will likely determine the longevity of the game.

Making Real-Life Connections

With people going outside and being funneled into hotspots, real-life connections are being formed. When players actually look up from their phones, they can chat with like-minded people. Apparently, some people are even using Pokemon Go as a dating app and finding some success.

The popularity of the game has caused fans to create their own events. In San Francisco, a Pokemon Go crawl from the Embarcadero to the Mission had over 8.5k people RSVP, or almost 1% of the entire population of the city. Even businesses got involved by serving as official stops and holding giveaways. As seen in e-sports, grassroots efforts by fans are a potent tool for keeping the game alive.

Niantic plans on holding events for players to get the legendary Pokemon. Given the success of unofficial events, and the amount of people that swarm rare Pokemon locations, these will undoubtedly be another record to be broken and one more thing for players to look forward to.

In-person connections and real-life meetings fostered by a game are not something many other apps offer. It’s one of the many reasons Pokemon Go has become a cultural phenomenon and, with the right decisions, can truly change the world.

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