Impact of Pokemon Go on Business

Pokemon Go is now “the most successful mobile launch in history.” Its popularity caught most of us by surprise. A cultural phenomenon of this nature and magnitude will leave a lasting impact even if the game itself does not last. In this article, I would like to explore what this impact might be. What is the message of this medium called “augmented reality”?

When you distill what makes video games interesting, you realize there are only about a dozen different types of video games. The games under each type are just minor variations of the same game. But, every now and then, a truly new game is introduced to the market like Minecraft and Pokemon Go. Pokemon Go is a game worth playing if only to understand what makes “augmented reality” (AR) work and what its potentials are. But before we go there, I need to define what augmented reality is.

There are many “real-time” apps. An augmented reality app is essentially a real-time-and-place app. The conventional definition of “augmented reality,” however, differs from this. When people use the term in other contexts, they are generally referring to the visual effect of superimposing a computer-generated image on top of live imagery. Pokemon Go has this effect too but it is not what made the app popular. In fact, many players turn off this effect because it’s easier to play without it and because it does not subtract from the enjoyment of the game. I personally think it’s better without it. Despite the fact that this visual effect is not an essential part of the game, everyone is now describing Pokemon Go as an “augmented reality” game. So, I’m going to go along with this label and use the term loosely to refer to the overall technological framework used in Pokemon Go.

Pokemon Go is not the first AR game, but it’s the first one that made the technology work. It is reminiscent of the early days of PDAs where the majority of them flopped, including Apple’s Newton, until PalmPilot eventually figured out the formula that worked. Certain technologies are solutions looking for problems, and we realize this only after applying them to countless problems. I was not sure if AR would fall in the same category, but Pokemon Go has proven it to be otherwise.

In the famous “technology adoption life cycle”, there is a big gap (“chasm”) between “Early Adopters” and “Early Majority”. It takes a major catalyst to move a new technology across that chasm. For the Early Majority, the benefit of adopting a new technology must be substantial. I would argue that Augmented Reality, before this summer, was still in the “Innovators” phase, but Pokemon Go came out of nowhere to push it across the Early Adoptor phase; it has now crossed the chasm and reached the Early Majority. The novel idea coupled with nostalgic value made it compelling enough for the majority of people to invest their time learning how to use AR. This should allow other businesses to leverage AR without investing their own resources to cross the chasm.

What Makes Pokemon Go Different

What makes Pokemon Go intriguing is the idea of tying a virtual object to a specific physical location through the use of GPS. Whether we see this object superimposed on a live camera image or not is secondary. The appearance (“spawning”) of a monster is tied to a specific latitude and longitude as well as to a specific time. In order to catch this monster, you would have to be physically there at the right time.

Also, Pokemon Go is not a zero-sum game, so when a monster spawns at a specific location, everyone will see the same monster and be able to catch it. You wouldn’t need to fight over it. The reason why people tend to rush to these locations is because monsters disappear after about 15 minutes. The fact that it is not a zero-sum game makes it a social and collaborative game where players help each other out to achieve the same goal.

The most intriguing aspect of Pokemon Go is how it impacts the physical world. All innovative technologies will eventually impact our physical world, like how smartphones changed our lifestyle, but Pokemon Go is capable of specifying exactly which locations to impact. This is entirely new. For instance, Niantic, the creator of Pokemon Go, can decide to spawn a very rare Pokemon in a little-known town for one day and send thousands of people there. It can impact the economy of the town. Although there is no data available yet, retail businesses blessed with Pokemon Gyms (where players congregate to battle their Pokemon) will likely see an increase in revenue this summer. I’m pretty sure the food cart vendors in the southeast corner of Central Park in New York City (the most popular spot for Pokemon hunting) saw a significant boost in sales since Pokemon Go launched.

Being able to target a specific physical location opens many new possibilities. If I were to draw an analogy to a game of pool, the impact of technology on the physical world before Pokemon Go was like the opening shot where you have no idea which balls would go into which pockets. Pokemon Go can now call every shot. But with power, comes responsibility.

The issues Niantic is now dealing with are so new that they must feel like they are exploring the Wild West. The placement of rare Pokemon cannot be purely random because doing so can cause public hazards. There have been some complaints in the media about racism implied in how Niantic placed Pokestops where players can collect certain rewards. In dangerous areas, there are noticeably fewer Pokestops. If I were in charge of placing them, I would probably do the same also. But dangerous neighborhoods in the US tend to have a higher density of black people, which means the density of Pokestops would correlate to the density of white people. In some sense, it is indeed racist, but what would be the correct answer? If Niantic ignored the safety of Pokestop locations, they could encourage people to unwittingly walk into dangerous areas. Suddenly software engineers are dealing with geopolitical problems.

Another problem that I had never heard of before Pokemon Go is “GPS spoofing.” Some people have figured out a way to fake the GPS data on their phones in order to make the app believe they are walking around when in fact they are sitting on their couches playing the game. This became a big problem because those who are spoofing have a huge advantage over the legitimate players in the game, which in turn can ruin some aspects of the game for everyone. Niantic then had to figure out how to detect GPS-spoofing. As more AR apps become popular, we will increasingly rely on the authenticity of GPS data to interact with one another. I believe Apple and Google will be pressured to make GPS-spoofing more difficult as we begin to use GPS data as a form of authentication.

At a more abstract level, what is interesting about Pokemon Go is that it re-embodies our increasingly disembodied life. The majority of us spend the majority of our waking life staring at screens. What we see on the screen, for the most part, has nothing to do with what is going on outside of the screen. For my own business, I could be anywhere in the world as long as I have access to the Internet. Our experience within the screen is disembodied. Since Pokemon Go came out, many people have criticized the game as just another way for people to be glued to screens, but compared to other apps, it is an improvement. The vast majority of apps are entirely disembodied; what they do have no relation to the physical surroundings of the users. When we are texting on the street, for instance, we have no reason to take our eyes off the screen unless we have to. AR reconnects us to our physical surroundings. Since I started playing Pokemon Go, I’ve traveled to many places I have never been to before. Many of these places are in my own neighborhood; I just never had any reason to go there before. I have discovered many interesting things I was not aware of before.

The New Possibilities Pokemon Go Opened Up

As popular as Pokemon Go is now, if the premise of the game remains as is, it may not last long. It would depend on how it’s going to evolve in the near future. What they have released so far is basically a minimum viable product. There are some obvious features missing like trading and social networking. The reason why Minecraft remains so popular is because it has become a generalized platform to express creativity like LEGO. For Pokemon Go to sustain its popularity, it too should become more of a platform where the players can define their own goals or purposes.

As of today, I see a major problem with the premise of Pokemon Go. The “gyms” in the game where you pit your Pokemon against others are already dominated by high-level players. At the rate everyone is leveling up, in a few months, anyone just starting to play would never be able to catch up. The battling in the gyms is not necessary to enjoy the game but it is still a major component of it. If the new players have no hope of becoming competitive at the gym, they would be discouraged from joining the game. If it cannot attract new players, the overall number of active users will decline over time.

If not Pokemon Go, some other app, I believe, will eventually dominate the AR space. There are many compelling use cases of AR, but nobody has yet to successfully implement them. For instance, let’s say you hear police sirens all around you but you have no idea why. How can you find out what’s going on? Surprisingly, there is no real-time-and-place app you can use for this purpose. You could search on Twitter to see if anyone is talking about it, but it would be hard to find because Twitter is global. (It’s real-time but not real-place.) Figuring out the right word to search for would be almost impossible for this particular example. You could post the question on Facebook, like “I hear lots of sirens. Does anyone know what’s going on?” But most of your friends do not live in your neighborhood, so only a small number of them would be able to respond. Furthermore, because of Facebook’s algorithm, unless a lot of your friends start liking your post, it wouldn’t reach most of your friends. By the time your friends see your post, it would be too late (a day or two later). The best you can do is to call a friend who lives near you. The strength of Facebook is the authenticity of the users (real-people), not real-time or real-place.

But with today’s technology, this shouldn’t be the case. If you live in a city, there are thousands of people around you. Some of them must have the answer you are looking for. The only problem is that you don’t know them, and there is no way to reach them. This is where an AR app can help. What we need is an app that allows us to form an ad hoc community based on time and location. This happens in Pokemon Go when a rare Pokemon spawns and many people start running towards it. At the spawn location, a temporary community is formed with the shared purpose of catching this rare Pokemon.

Such an app would come in handy not only for communicating with others around you during emergency situations (like fire, earthquake, storm, loud noise, sirens/alarms, power outage), but also for music events, sports events, parades, and street fairs. Adding a peer communication mechanism centered on time and place can augment the reality and make it more enjoyable.

Here is another common scenario. Suppose you are about to throw away a table you no longer need. It’s a pain to dispose of it properly, and it is also a shame to dump it if the table is still fully functional. And, you know that there must be many people near you who would love to have your table. You could post it on Craig’s List, but it could take a week before you find someone to take it. Wouldn’t it be nice if you can post it on something like Pokemon Go where your table “spawns” for others to see, and if they are interested, they could come pick it up right now?

Right now, there are only virtual monsters in Pokemon Go, but I could imagine businesses giving out sample products through Pokemon Go. It can also work like Priceline.com where businesses can try to sell leftover products at the last minute. Because we cannot predict where and what products would suddenly become available at deep discounts, it won’t affect their regular prices.

These ideas are not new. There have been many attempts to make them work, but nobody has been able to package the solution in a compelling way. There are many reasons, like privacy concerns about pinpointing locations of the users and people’s resistance to communicating with strangers. But the biggest challenge is solving the chicken-or-egg problem of building any type of social network. People would not join a social network if there is nobody on it, but how can it grow if nobody wants to join?

These days, we use search engines to find anything and we take that for granted, but it took many years for people to realize that they can search for, say, “pizzeria” to find the nearest pizzeria to them. People had to be trained to think of search engine that way. By the same token, in order for an AR app to be useful in the ways I’m describing above, enough people will have to be trained to think of using an AR app to find what they want here and now. Until then, we couldn’t have a critical mass of users to make it work. This summer, Pokemon Go has pushed us closer to it. Now other apps can piggyback on their success.

Through corporatization, modern conveniences, formation of nuclear families, and labor mobility, we have destroyed our local communities. Most of us hardly know our neighbors. Even though we can stay in touch with hundreds or even thousands of people online, we still feel lonely because the concept of “friend” has been disembodied. In the old days, if we hear a siren, we could have stuck our heads out of the windows and talked to our neighbors to find what’s going on. We no longer have this type of connection with the people around us. In playing Pokemon Go, I see a glimpse of the future where AR brings us back together like how Jane Jacobs wanted our cities to be.