Business Boost | 27 July 2016 - by Henry Groom

Pokémon Go: is it a passing gimmick or a social revolution? And how are businesses getting in on the act?

It generated $4m on its launch day with more than 30 million downloads. After fifteen days and over $35m generated, it’s not showing any signs of slowing down. Pokémon Go – it’s popular, to say the least.

Resident tech expert Henry Groom shares his perspective

Origins

Originating in around 1990, the Japanese game of collecting, training and battling Pokémon (Pocket Monsters) has become an empire in itself, with a franchise of films, books, and games dedicated to it.

The partnership between its developer, software firm Niantic, and Nintendo and the subsequent launch of Pokémon Go led to an immediate rise in the latter’s share price. It took Nintendo less than a day to generate more revenue from one app than the combined earnings of all the apps on Apple App Store and Android Store. Pretty impressive for a virtualisation of an already existing card trading game.

Augmented reality

Augmented Reality (AR) apps aren’t new – we’ve already seen a raft of them over the past couple of years, including Layer, Star Walk, Google Translate and even Ingress, developed by the same makers as Pokémon Go.

Until now, uptake of AR has been slow, as the technology has lacked the “killer app” required to change our way of thinking about how we use it. In this case the already well established Pokémon has made a successful transition from a card based game to a monetisable social media based game. Nintendo and Niantic have developed something very simple into a viral hit.

The last big craze the app stores saw was Candy Crush, which generated $1.54bn for its publisher King in 2013, a serious amount of cash for what in essence is a free game. So how can a “free” game generate so much money? Welcome to the world of “Freemium apps”.

Monetisation allows developers to offer an app or game for free but places locks on or restricts access to aspects of game play, so you can only go so far without using some “coins” that you buy with the in-app purchases feature.

It’s much easier to press a button to buy than hand over physical money, and studies show that people spending using a card spend significantly higher amounts than when with cash. This goes hand in hand with making digital purchases of virtual goods, especially given the conversion of real world currency to “spells” or “incubators”. Only the top 2% of all players make in-app purchases, meaning 98% of players spend time doing, or waiting to get their rewards.

So what makes Pokémon Go different to other viral games such as Candy Crush?

One key aspect is that the game that requires players to walk to activate in-game activity. You can’t just sit on your couch and play, you have to get up and walk to areas you may never have been before, building a new social interaction platform. Some players have found their average daily step count go from the mid thousands to 10, 20 even 30 thousand in their quest to be a Pokémon Master.

Was this just part of the game to keep people playing or an underlying (and you may class this as a possible conspiracy theory) way to get a growing population of people to move more and increase their daily exercise? Who knows – but it’s got me moving more!

Another major way the developers have changed the way the app has been built is with creating partnerships with businesses and the ability to use your own business to tie into the app, attracting people to you and increasing your revenue.

The business implications

As the app encourages you to walk around to collect Pokémon, and with a higher concentration to be found in crowded areas such as shopping centres and places of interest it’s natural that these places are taking advantage of the increased footfall.

Already we’re seeing thousands of promotional offerings from businesses not only in the US with companies like Best Buy, but also here in the UK. Smaller businesses are using Pokémon Lure Modules (roughly $1 per hour) to place an in-game “magnet” for players to go to play, and some food outlets are reporting revenue growth from this method alone. This may not be a valid option for some businesses, but social-based companies like bars, cafes and restaurants can ride the wave of customer generation. Businesses will also be able to purchase advertisements or sponsored “gyms” in the next release, cementing the idea that this game is building to be something much larger than some anticipated.

Many players are creating their own public events where hundreds of attendees go on a “Pokèhunt”. We even experienced our own here in Hull at The Deep. Without prior notice of the event it may prove tricky accommodating hundreds of potential customers, but so far they have reported an increase in revenue and would even consider participating with the event organisers in future Pokèhunts.

Pokémon Go is one of the world’s fastest growing applications, and with developments such as a partnership with McDonalds and new features tipped for release next month it could eclipse all the other games that have gone before it.

But will it be short lived?

As with anything “craze” or “viral” there will be a peak beyond which people will want to move to the next game. In this case, Nintendo and Niantic have taken something that already existed in physical card gaming and created something which appeals to a much larger audience. Personally, I don’t see this going away any time soon. Plus, I’m only at level 12!

Time to refresh your business mobiles?

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