Digital Disruption via Pokémon GO: A lesson for brick and mortar firms

About the authors: Prasanna Satpathy, Member, Zinnov Advisory Board (Co-founder AgileMinds Inc., ex-Lead Partner & VP, IBM GBS with 25+ years of IT Strategy/ Consulting/ Transformation experience) and Shobhit Mohanty, Consultant with the Enterprise Digital Transformation Team at Zinnov


What is all the craze on Pokémon Go about?

On July 6, Nintendo released Pokémon Go, a simulated Augmented Reality (AR) gaming app based on the extremely popular Pokémon characters. Created by leveraging location based geocaching and Augmented Reality (AR) technologies, the game took the world by storm and became viral within hours of its release in a handful of countries (currently launched in Japan, US, Australia and New Zealand). That day on Tokyo’s exchange, Nintendo’s stock zoomed 36% intra-day with its market cap rising from $20 billion to $37 billion within a week!

As per mobile engagement firm Similar Web, in 2 days of the game’s release, it had become the most successful game ever with daily average user (DAU) engagement of 45 minutes, compared to WhatsApp (31 m), Instagram (25 m), Snap Chat (23 m) and Messenger (13 m). Smart Tower estimated that the daily in-app purchases in the US alone hit $2 million per day by the end of first week, and Niantic is now looking for new monetization channels including paid sponsorships and advertisements.

What is it about Pokémon Go that has made it such a viral phenomenon?

  1. It connects with the millennial generation at multiple levels. This generation grew up watching Pokémon and bingeing on the first generation of Gameboy based Nintendo Pokémon games — 277 million Pokémon games were sold between 1996 to 1998 alone. Along with all technology advancements, there is a wave of nostalgia that is currently driving game adoption for two generations of Pokémon-lovers
  2. While the adoption of AR tech seems to be stealing the limelight as one of the primary reason for Pokémon Go going viral, it really is more than that. The beauty of the game lies in the way it converges Massively Multiplayer Online Gaming principles with AR to successfully transport users into a parallel Pokémon universe– not as an individual but as an entire population of Pokémon lovers
  3. The other powerful factor working in favour of Pokémon Go is that the requirements to play are minimal. A charged smartphone, access to internet (Wi-Fi or 3G/4G), GPS, and a phone camera. Pokémon Go’s potential market is approximately 2 billion devices — or more than a quarter of the world’s population

Emotional connect, advanced technology, affordability and the affinity in bringing people with similar interests together– Pokémon Go has all the right ingredients to become a viral phenomenon and unsurprisingly it has!

So what is in it for brick and mortar businesses?

Pokémon Go offers tremendous possibilities for most B2C businesses to effectively market their services within the burgeoning Pokémon Go user base, and with minimal expense. All one has to do is purchase and drop lures inside the game, to increase the chances of Pokémon popping up in the vicinity of the lure location. Given the relative rarity of Pokémon in the game (especially the rare Pokemons like a Vaporean or Dratini), businesses can expect a steady stream of Pokémon seekers rushing into their establishment as soon as a lure is dropped.

Bloomberg reported how L’inizio’s Pizza Bar in Queens spent approximately $10 on Lure Modules and saw food and drink sales spike by more than 30 percent during the Pokémon launch weekend. Bon Appetit reported that businesses from Flying Saucer Pizza Company in Salem, Massachusetts, to Huge Café in Atlanta are seeing huge in-store traffic bumps, either from buying and dropping Lures or from the good fortune of being located near Poké-stops. Flying Saucer Pizza Company is encouraging customers to post a Pokémon Go picture to social media and then tag the restaurant to automatically enter a daily raffle for gift cards. Some establishments are also running deals on different Pokémon Go teams. CitySen Lounge in Grand Rapids, Michigan, is offering a 10 percent discount for Team Mystic. Zoe’s Kitchen in Texas is offering a $25 gift card to anyone who catches a Pokémon in one of their restaurants and tweets it.

Pokémon Go phenomenon opens up multi-fold opportunities for digital marketers. It offers the kind of convergence between the digital and the physical channels that businesses can leverage. It takes digital marketing to an altogether different level because it is more than just a channel for communicating your offers and discounts. Here is an app that allows you to advertise in hyper-local scenarios, where in-game actions within the digital world directly incentivise customers to physically visit your brick and mortar outlet. Pokémon Go shows us the kind of digital-to-instore integration that any true Omni-channel tool must comprise of. It points towards the kind of possibilities that MMOG and AR based games can open up for businesses.

What is Niantic planning for the future of Pokémon Go?

We are at the cusp of a significant digital disruption, make no mistake about it. One can only imagine what will happen (and it’s a question of when and not if) once Niantic opens up the Pokémon world for businesses to advertise. Gigaom has already reported of talks taking place between Niantic and McDonalds to make their outlets official Poké-stops (where players pick up items) and Poke-Gyms (where your Pokémon fights others to take control of the gym). If the examples quoted earlier are anything to go by, it would provide McDonalds with an immensely powerful marketing tool.

Niantic hasn’t built in social media integration yet; and once players can post and tag directly to platforms such as Facebook, Twitter, Instagram, Snapchat, and Vine without even leaving the Pokémon Go app, businesses may be tempted even more to advertise within the game.

Like all other advertising channels, the popularity of Pokémon Go has a direct influence on its effectiveness. But its more than just Pokémon Go, imagine how Google Glass, smart watches, smart phones, ADAS, wearables can all be integrated into a seamless AR enabled physical reality that businesses can leverage to interact directly with consumers.

AR based futuristic scenarios for brick and mortar firms

Retail stores are already targeting near-by shoppers with coupons and rewards, using geo-locations and beacon technology. They can now build much more motivational means to lure (no pun intended) consumers leveraging such a game app that builds an emotional connection. Using smart sensors and cameras, stores were already making preliminary efforts to watch customer behaviour, plotting heat maps from their movement within the stores, using advanced analytics to direct the shopper to specific shelves/products, and influencing the shopping cart. An app like Pokémon Go can simplify these efforts and make the shopping experience fun and rewarding.

Think of combining Pokémon Go with the likes of Waze to build AR based hyperlocal mapping applications. Retailers can use them to help shoppers navigate their path to reach desired products, advertise their features, run basic budget analytics, compare with other products, etc.– all of which can be juxtaposed onto real world images. Add a layer of communication and collaboration on top of it for shoppers to exchange shopping ideas, share personalised discount offers, post reviews & tips– and you can bet that enterprising developers are already working on these!

Such AR apps can deliver for retailers where other approaches to gamification have failed thus far. It is up to the imagination of the stores to use (or even build) a game such as Pokémon Go tailored to their context. As an example, imagine friends, families and neighbours who often shop together (especially at Groceries, Dept. stores, Outlet store malls, etc.) competing among each other for Pokémon-like prizes and rewards while shopping inside the stores

ADAS or Advanced Driver Assistance System is another AR based use case that seems to be picking up quite rapidly with the pioneering work being done by industry behemoths such as Google, BMW, Nvidia, Tesla among many others (not to mention the rumours of the work that Apple seems to be doing in automotive). ADAS thus offers another potential AR based platform for physical businesses to market their offerings on. Google is already building a repository of information on physical locations that is integrated into its Maps and StreetView offerings. Imagine an ADAS based car windshield that not only helps people navigate but provides a channel for Google to advertise physical outlets of highest bidders whenever people search.

Wait, what about VR?

The opportunities are staggering, what remains to be seen is how well can businesses leverage AR technology to meet their goals. Remember AR is only a part of the story; we haven’t even begun on Virtual Reality (VR) which is an altogether different and more powerful tool. With better and more affordable AR/VR headsets coming soon from tech giants like Facebook, Google, Samsung and Sony, the 3-D high-def immersive experience will feel life-like. Microsoft’s Nadella believes that the experience can feel more natural by customers using contact lens type Hololens instead of additional gadgets like headsets.

These are truly exciting times we live in– where the physical and digital realms seem to be morphing into each other through advanced digital technologies. The question is what are you going to do about it?

- A blog by Zinnov Digital

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