Do you know what Pokémon GO is? If yes, you can skip the first paragraph below.
Not in the know and curious as to why all these smartphone-carrying millennials are suddenly gathering in public places? Don't worry, we got you.
Pokémon GO is an augmented reality (AR), mobile game that was released to the U.S. public just about a week ago. Created in combination by Nintendo and VC-backed Niantic, the game layers the familiar Pokémon world on top of the real world via AR tech. Players are able to walk around their cities, catching Pokémon and collecting bonuses at certain specific geolocations along the way.
The game has made quite the splash. It’s reported that just a few days after release, the app was downloaded on over 5% of all U.S. Android devices, beating out popular dating app Tinder by quite a bit. Engagement is also off the charts, with users spending an average of 43 minutes a day playing the game, according to analytics company Similar Web. The effects don’t just stop at downloads and engagement either. Nintendo saw its stock soar by about 25% on Monday, closing at ￥20,260 ($199.70). The company has added about $9 billion to its market cap since Pokémon GO’s U.S. launch.
So could Pokémon GO mark the birth of a new gaming industry built on AR?
In previous years, we saw huge gaming empires built on the back of rising technology trends. The popularization of social media platforms in the mid-2000s gave rise to gaming giants like Zynga, which raised about $1 billion in venture capital before going public in 2011. Then came mobile games, with companies like Supercell capitalizing on the trend via enormously popular games such as Clash of Clans. Supercell has raised money from some top firms, including Accel, Index Ventures and IVP, and recently announced that Softbank plans to acquire a majority stake at a $10.2 billion valuation.
As time goes on, and technology advances, gaming has morphed to meet customer demand. This foray into AR could be just the thing to get the public introduced to and familiar with the tech, opening up opportunities for similar games in the near future. Venture capitalists are no doubt taking note of the game's quick rise, and while VR/AR has been a hot area for VC investment over the last year, Pokémon GO's success could very well lead to even more cash being pumped into this budding industry.