Strategy

Augmented reality and the rising Pokéconomy

23 August 2016 by Rebecca Chang

In most places around the world now, the scores of people circling public spaces or dashing across streets while obsessively staring at their smartphones are most certainly playing Pokémon Go. Since its debut in July, the augmented reality (AR) mobile game by Nintendo has achieved astonishing success, turning Pikachu and friends into a global internet and cultural phenomenon.

Less than a month into its release, and despite not being available worldwide, Pokémon Go has since been downloaded more than 100 million times. Its users spend more time on the game daily than on Facebook and WhatsApp, and reports say the game has earned more than $200 million in revenue since its launch and continues to generate an estimated $10 million per day.

Now released in most parts of Asia, businesses in the region are set to cash in on the game’s popularity and underlying AR technology as an opportunity to enhance the overall retail customer experience .

Cashing in on Augmented Reality

The mobile game developed by Niantic, a spin-off tech lab from Google, utilises geo-positioning services and camera capabilities of a user’s smartphone to overlay Pokémon onto real world settings.

Players navigate an animated version of Google Maps to search for Pokémon to capture and train for battle. In the process, they visit Pokéstops to stock up on critical in-game items, and battle with rival factions to take control of a Pokémon Gym.

When the game was first released in the United States, businesses discovered to their delight the ability the app has to drive real-word foot traffic. Businesses that doubled up as Pokéstops in the game or were near one, reported huge surges in customer traffic. Others who purchased a “Lure Module”, a $1 in-game purchase which attracts Pokémon to a specified location for 30 minutes, also reported an increase in sales profits.

Not surprisingly, shopping malls, retailers and businesses in Asia were already well-prepared to cash-in on the game’s location-based advertising features when it was finally released in the region.

In Japan, Niantic announced its first corporate tie-in with McDonald’s in Japan to sponsor locations in the game, with similar deals being explored with other companies on a pay-per-visit basis. Given the 10 million downloads of the game in Japan on its first day alone, at least thousands of players are expected to be driven into McDonald’s 3000 stores around the country, which have been turned into Pokémon Gyms in the game.

Singapore retailers, such as mall developer CapitaLand, who had more time to prepare for the game’s arrival in early August, went a step further beyond purchasing Lure Modules, to offer discounts and freebies to Pokémon Go players who posted screenshots of Pokémon spotted at any of its malls on Instagram along with a hashtag and location tag.

Even non brick-and-mortar businesses such as ride-hailer platform, Grab, jumped on the bandwagon. It reportedly created a Pokémon Go map of Singapore featuring locations of Pokéstops and gyms, and offered its users discounted rides to certain spots on the map.

While the major significance of Pokémon Go to businesses seem to be primarily related to the generation of foot traffic, the underlying AR technology has a lot more to offer Asian businesses.

From enhancing a retail customer’s experience through AR  supported in-store apps that deliver customized assistance to customers, to Asian beauty brands utilizing AR apps that allow customers to experiment with virtual makeup simulators before purchases, the possibilities in utilizing AR to better educate and engage customer with a seamless offline and online experience is endless.

Earlier developments of AR tech have been traditionally focused on military, industrial and workplace applications. However with the heightened mainstream consumer awareness in AR brought about by Pokémon Go, it is likely to trigger an interest in businesses to seriously look into the adoption of the technology for marketing purposes.

The future of marketing in a Pokémon Go era

Pokémon Go heralds a change in the way businesses interact with their customers, and customers’ expectations as to how information is presented and accessed.

This is especially relevant for Asia, where higher population densities coupled with deep digital penetration and smartphone usage mean massive business potential from a customer base who transact and communicate predominantly via mobile and internet platforms.

As the number of smartphones in the Asia-Pacific region hit 2.51 billion in 2015 and continues to rise, analysts say that Asia will be the fastest growing region in the global market for augmented reality, with the standout growth segment being the application of AR for marketing and advertising through smartphones.

Marketing experts forecast that as the mobile game’s user base continues to expand, businesses will start to reallocate some of their marketing budget to Pokémon Go or similarly popular AR games.

With the opportunities it brings, it is clear that businesses would have Pokémon Go on forever.  However while leveraging off the game may help businesses demonstrate relevance to their customers in the short-term, the real question is how businesses can tap on Pokémon Go’s underlying technologies to create real sustainable advantage for themselves in the long-run.

Edited by Liew Hanqing and Tan Yi Xuan