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The Pokémon Go Craze– Monetization Opportunities for Retailers

Did you join the 5,000 people who gathered in Chicago at Millennium Park last Sunday to catch Pokémons? If not, you have not caught the Pokémon fever… yet!

Since July 6, Pokémon Go is the biggest US mobile game ever. Last week, Survey Monkey registered 21 million daily active users (yes, it is competing with Twitter!), and it has been the top application on the App Store and Google Play (see AppAnnie).

Pokémon Go 101

Pokémon Go is a free mobile game mixing the real world and augmented reality. The goal is to catch Pokémons. While the player moves around in the city (they can see themselves moving in the streets just like in Google Maps), the game uses their phone’s GPS and makes Pokémon appear around them. Depending on where the player is and the time of the day, different types of Pokémon pop up onscreen, encouraging the player to move around and explore the city. By allowing the game to use the smartphone’s camera, the Augmented Reality mode is activated, and Pokémons then appear in the real world via the smartphone screen.

                                                                  PokemonGo PokemonGo2

Who is behind Pokémon Go?

Niantic Labs, San Francisco based startup and former Google company, is behind this huge success. Niantic was born in 2010 in Google. The idea of John Hanke, its founder, was to create new forms of maps interaction. He worked on Google Earth and then was appointed to the Geo department, where Google Maps and Street View were created.

Niantic Labs spun out of Google in August 2015 and announced a partnership with Nintendo one month later. Nintendo then participated in the $20M Series A round lead by Alsop Louie Partners. This investment paid out as Nintendo’s stock price more than doubled in value since the game was launched on July 6. Last but not least, Unity Technologies’ game engine was used in the creation of Pokémon Go. Last week, the San Francisco based startup closed an $181M Series C round, lead by DFJ Growth.

Sponsored locations: New revenue streams for retailers and marketers

While Pokémon Go is a free application, players can purchase in-app virtual items such as Pokéballs or Lures to attract more Pokémons.

Pokéstops are designated places such as monuments, art installations, historical buildings, coffee shops, etc. These features represent a huge opportunity for retailers and businesses as they can drive players and potential customers to a select location. Yelp has already added a filter in its search engine to let people find coffee shops or restaurants that have PokéStops nearby.

Pokemon Go Yelp tab

Niantic Labs’ CEO John Hanke is already talking about how sponsored locations will provide a new revenue stream. Indeed, marketers would pay to sponsor locations, on a “cost per visit” basis (as opposed to the usual “cost per click” basis).

How long is the Pokémon Go fever going to last? The game is pretty repetitive (catch Pokémons, battle, catch Pokémons, etc.), as a consequence Niantic Labs will have to introduce new features and new Pokémons quite regularly to keep players hooked and prevent them from getting bored. Still, the Pokémon Go hype has fine days ahead. You can now stop reading this blogpost and go back to catching your Pokémons!

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