Google quietly wins again with roaring success of Pokémon GO

Written as editor of the New Statesman’s NS Tech and first published here.

Pokémon Go is only officially live in three countries, but app analytics monitor App Annie reckons games studio Niantic has already bagged $1 million in revenue from in-app purchases in just six days.

According to App Annie’s figures, it has beaten the former top grossing app, Clash Royale, in the pace of its rise to the number one spot across both Google Play and the App Store.

By some measures, it’s already installed on more Android handsets in the US than Tinder and it might have already overtaken Twitter too.

In fact, it’s been so successful, the roll out to places like Europe has been paused, no doubt while the team goes back to examine things like server capacity.

But that’s obviously not stopped the rest of the world grabbing their smartphones and running outside to join in the virtual-meets-real-world Pokémon hunt.

There are plenty of places that’ll tell you exactly how to work the system, by pretending you’re living in a region that you’re not. I couldn’t possibly comment.

Security firms are warning, though, that where there’s demand but no supply, there are nefarious people creating copycat apps with malware in the code. So the advice is, as ever, don’t download from an untrusted source.

$1 billion company?

In a departure from previous Niantic games, like the hugely successful real-world-meets-digital Ingress, the idea is to sell people coins so they can unlock additional powers.

In this case, that’s things like extra Pokeballs for catching your favourite Pokémon. To give you an idea of the exchange rate, $0.99 = 100 PokeCoins = 20 PokeBalls. (You’ll only know if that’s a bargain if you know how good you are.)

Sure, you can do it the long way and just play for points, but it seems like lots of people have more cash than patience.

“I can easily envision a run-rate of over $1 billion per year with less server issues, a worldwide presence and more social and player-versus-player features,” says Nicolas Beraudo, MD for EMEA at App Annie.

And that means both Google and Apple are already set to take their respective cuts of each purchase made in-app.

Google created and backed

The former Google/Alphabet startup struck out on its own back in April 2015. But it won early backing from its former parent company, to the tune of $30 million, given in partnership with Pokémon copyright holders Nintendo and The Pokémon Company.

Niantic’s CEO is John Hanke, who helped create Google Earth and led the company’s location services team before working on the AR startup internally.

Google Maps is, perhaps unsurprisingly, the mapping service of choice for Pokémon Trainers heading out on the road. And the platform offers a handy Google login as an alternative to creating a standalone account.

The latter feature has sparked early criticism, as it at least looked likeGoogle was taking over all available security permissions on iOS handsets without asking.

Niantic has since released a statement saying this was an “error” and that: “Google has verified that no other information has been received or accessed by Pokémon GO or Niantic.

“Google will soon reduce Pokémon GO’s permission to only the basic profile data that Pokémon GO needs, and users do not need to take any actions themselves.”

Solution finds problem

Augmented reality has for a long time appeared like the pinnacle of a solution looking for a problem. Google even canned its own augmented reality headsets last year. Remember Glass?

This, however, looks like a truly transformative moment for bringing augmented reality to the mainstream. People are literally getting their homes invaded and losing their jobs over this.

Next up from the Pokémon GO team is a wearable device, the Go Plus. Not a headset, but a watch-style device that’ll vibrate on the player’s wrist to let them know there’s a creature nearby waiting to be caught.

This has been promised in late July and if the price point is reasonable (whatever that means in a world where you’re technically paying for nothing) it’ll no doubt fly off the shelves. The great thing, of course, about a watch compared to a headset is, well, you don’t look stupid.

Hanke has also hinted at offering people a way to trade the Pokémon they catch, just like in the real-life game, creating a pretty virtuous circle that might see Go become the most successful AR game in history.

More widely, the company licenses out its APIs to other games developers in order to create another long-term revenue strategy, which could too be on the cards.

Alternatively, fellow gaming hit Angry Birds went down the big branding deals in-app and plush toys route. The London-based company is struggling, but the mobile app world has never been an easy one to make big bucks on.

Nintendo’s stock, meanwhile, has taken a huge leap, adding billions to the company’s valuation almost overnight.

Nintendo stock

The same cannot quite be said of Google’s stock, but this investment is just a drop in the ocean and one that it perhaps isn’t immediately obvious is a related venture.

Depending on the ultimate terms of the Niantic funding deal, which included holding $10 million of the total investment “conditioned upon the company achieving certain milestones”, this has a to be at least a mini win for Google.

As if it needed one.

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