By this point I’m sure you’re one of three people. You’re either person A who has downloaded Pokémon Go and is probably playing it while reading this article; person B who hasn’t downloaded or played Pokémon Go but is an interested observer; or person C who’s life is being personally ruined by Pokémon Go. Whatever the case, you’ve probably interacted with the new hit phenomenon in one way or another. Spoiler alert: I am a proud person A. Even as a proudly biased “A,” the business person in me thinks that Pokémon Go represents a watershed moment in technology.
Generally speaking, person C hates Pokemon Go because of person A.
In case you haven’t noticed, there’s a war on. For the past few years, technology has been silently embattled between two visions of the future. One, which up until now has absorbed 99% of the hype, is virtual reality. Led by industrial heavy hitters such as Samsung (Gear VR), Facebook (Oculus), and Google (Cardboard), VR has been the favorite to define the next stage in content consumption. However, about a week ago, VR was put on notice – a bounty was put on its head and it was put there by Pikachu. When Pokémon Go was launched it was met with astounding reaction – it reached thetop downloaded app in under 5 hours and Nintendo stock jumped 10% when the markets opened the morning after the launch. At the end of the day, I predict VR will go the way of Betamax and HD-DVD in favor of augmented reality (AR) for three fundamental reasons.
For Nintendo stockholders I guess Christmas really does come in July.
1. Augmented Reality utilizes what’s already in your pocket
The simple beauty of Pokémon Go is that the requirements to play are incredibly small. A charged smartphone, access to internet (WiFi or 4G), GPS, and a phone camera. In other words, the thing you already spend 51% of your time on. With such a small barrier to consumption, Pokémon Go’s potential market is 2 billion devices – or more than a quarter of the world’s population. Compared to the fact that virtual reality headset sales are expected to reach just 10% of that number by 2020 it is pretty easy to see the absolute power that Pokémon Go’s AR platform has in terms of economies of scale when compared to its competitor.
But let’s talk nickels and dimes, shall we? The average cost for a VR headset alone is around $700 (okay, $699. Have fun with that dollar). But that’s not the only cost you’ll most likely incur if you want to enjoy all that virtual reality has to offer. These headsets are not “plug-and-play,” they require incredibly powerful desktop computers to be used effectively – somewhere in the $1,000 - $2,000 range. So, all told, jumping on the VR train will cost you, on average, around $2,000.
Here is Scrooge McDuck preparing to pay for his VR equipment.
How much will Pokémon Go cost you? Well, micropayments for in-game items anddata usage aside, nothing. It’s a free mobile app and it will likely remain that way for a majority of its users. The cost-benefit analysis between AR and VR, then, is pretty simple: AR costs less and has more benefit. No doubt that VR offers an interesting experience for the technologically-capable few, but if history has taught us anything it’s that an appeal to the masses generally works better than an appeal to the elite.
2. Augmented Reality let’s humans do what they do best – be social
In the opening to his famous work on political theory, aptly named Politics, Aristotle says “man is by nature a political animal . . . therefore the impulse to form a partnership is present in all men by nature.” Now, on one hand, I just wanted an excuse to quote Aristotle. On the other, however, I believe this quote says something that is fundamentally true about human nature.
Aristotle was also very worried about cake. And flutes. (Source)
If you think back to the technological phenomena of the last few decades – social media, online gaming, smart phones – they all have one very important thing in common: they brought us closer together and fostered community. Every technological innovation that stuck has always had this in common. This is precisely the point at which AR trumps VR. Virtual Reality, for all of its technological marvel, has this one Achilles Heel. Whenever you put on the headset you become separated from the world around you – it takes you out of real community and puts you into digital isolation, creating a world of virtual facsimile; something which can even be dangerous to your health.
"Did no one tell them I was coming? This is so awkward."
Contrast that with Augmented Reality. Instead of having to create an entirely digitized world separated from the actual world, AR leverages the world around us and overlays a minimal digital coat of paint to enhance (not replace) it. For example, Pokémon Go is helping to bridge the gap between law enforcement and citizens and is getting people active and interacting with their local community in ways they’ve never done before. AR wins simply because it taps into what human beings crave according to our nature – community and socialization.
3. Augmented Reality incentivizes third parties to buy into the hype
For all of the other interesting reasons why Pokémon Go was a (literal) overnight success, there’s only one reason in my mind why it represents a truly disruptive point in mobile gaming and content consumption. For the first time in history, a game has succeeded in incentivizing non-players to readily interact with the game. By designating real world destinations as Poke-Stops (where users can refill on necessary in game items) and Gyms (where users can directly interact with one another) Pokémon Go has very purposefully created an interested third party to the game’s success. Already, there are multiple reports about how Pokémon Go is skyrocketing traffic and sales (And here.And here. And here.) to local small businesses – and the game only came out a week ago.
The app's only been out a week, and already there are bars, restaurants, retail stores, and businesses of all shapes and sizes—from Florida to California—trying to figure out how to monetize on it with deals, promotions, special events, and an endless supply of Lure Modules.
We're living in an entirely new Pokémon Go-driven economic environment: the Pokéconomy.
Honestly, we probably overuse and misuse the term “disruption” in business now-a-days (much to Clayton Christensen’s chagrin), but Pokémon Go represents a true disruption. It fundamentally turns the current content consumption model on its head. For years, we’ve heard about brick-and-mortar, online, and mobile – all different “channels.” One of the main problems in marketing is how to engage a customer across all channels, an“omni-channel” strategy. However, Pokémon Go throws that conception of consumption out the window – instead of worrying about tying together disparate channels, the AR platform collapses mobile, digital and brick-and-mortar into one pan-channel and allows the digital world to break into the physical and share space instead of competing for it.
If I'm that close to a Dairy Queen I'm probably buying a blizzard either way.
By incentivizing an otherwise disinterested third party such as small businesses to engage with the game, Pokémon Go (and more widely Augmented Reality) expands it’s reach and overall penetration into the market much more quickly than any other type of technology in recent history. By merging the digital and the physical, Pokémon Go has forced almost everyone in technologically advanced societies to engage with, and have an opinion on, it in one way or another. In the past, games have been confined to people’s own personal space – but now, for the first time, a game is being experienced, shared, and enjoyed in the public space. Where games and content platforms go from here is anyone’s guess.
In the well-documented history of the format wars, it’s clear that the better technology does not always win. Instead, technology adoption follows critical mass theory. Whichever technology can penetrate a majority of the market quicker will almost always win the war. With the advent of Pokémon Go and its almost-overnight dominance of mobile gaming, AR is well on its way to putting the final nails in virtual reality’s coffin. The war is far from over, but virtual reality is mortally wounded and on the retreat – hearing the sounds of Pokémon in the distance on all sides.
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