How Pokemon Go is Realigning the Perception of Augmented Reality

More than a few media pundits went from trumpeting Pokémon Go as the hottest trend on the planet to lamenting its decline without pausing to take a breath.

One week, they couldn’t stop talking about how Pokémon Go had topped the Google Play and Apple Store download charts, generated millions of dollars in in-app purchases and surpassed Twitter in daily active users. The next, they were piling on a report by SurveyMonkey Intelligence that said the app’s popularity in the U.S. had peaked a week after its release, on July 14, when 25 million smartphone users played the app.

But Pokémon Go is refusing to follow the scripted character arc. This morning it’s being reported that the city of Brisbane, Australia, is attributing a 25% spike in usage of its free wi-fi network to the app’s popularity.

No matter how it plays out, it has been a huge win for Pokémon Go’s developer Niantic, which is now estimated to be worth approximately $3.65 billion. But the more intriguing question is how its success will affect the further development of the type of augmented reality (AR) technology used by the app, which seamlessly grafts computer-generated imagery on to real world objects and environments.

It’s already had an effect on Blippar, which makes software for brands to create AR experiences. Within a few weeks of Pokémon Go’s release, the company was reporting that applications for its API suite had already grown threefold.

Until now, AR has largely been ignored in favor of virtual reality (VR) technology, which totally immerses viewers in an explorable 360-degree environment. But the hype surrounding VR obscured the fact that AR was being picked as the winner all along.

Back in April 2015, Digi-Capital released a report predicting that AR and VR technologies would be generating $150 billion by 2020, with AR accounting for $120 billion and VR trailing with an impressive but comparatively small $30 billion. A year later, Digit-Capital revised its predictions, but AR was still favored over VR, with $90 billion in projected revenues in 2020 compared to VR’s $30 billion.

Companies focused on AR technology had attracted some big investments — notably Magic Leap, dubbed “the world’s most secretive startup” by Wired magazine, which raised $1.4 billion — but, generally speaking, VR was treated like AR’s sexier older sister by industryites, investors and the media.

“Most of what I’ve seen at the conferences around virtual experiences has been tied to headgear, whether its games or movie-based entertainment experiences,” said Ned Sherman, CEO of Digital Media Wire, Inc., which puts on media and technology conferences such as Digital Entertainment World in L.A. and the NY Media Festival. “There’s good reason for that. There’s been a lot of money being driven into this ecosystem around the headgear, and there are some big companies in the game, from Facebook/Oculus Rift, Samsung Gear VR and HTC Vive to Sony PlayStaytion VR. Any time there’s so much investment and so much competition between powerhouses, you’re going to see a lot more media coverage.”

It didn’t help that AR lent itself to unsexy, practical applications such as healthcare or that the most high profile piece of gear to make use of the technology, Google Glass, was deemed an “epic fail.”

But, in the end, AR’s “everyday” character will be what allows it to win the day, according to Peter Csathy, founder and chairman of tech and media investment and consulting firm Creatv Media.

“Virtual reality is fully-immersive, which is limiting,” said Csathy. “AR can be used in our everyday lives in practically any setting, both personal and professional.”

In the meantime, Pokémon Go is awakening the world to AR’s potential in the world of entertainment.

“Brands will all want to have their own app, because they saw how massively it worked for Pokémon Go,” said Csathy. “Those investments will happen immediately, and you can bet that [the result] will be this real smorgasbord of things that are forgotten and wasted, but also some new ways to engage with consumers. Pokémon Go is AR’s breakout moment and it points the way to some of the possibilities, but just the very early-stage possibilities.”