Pokémon Go, gamers and easy money
PERSONALLY, if I wanted to go to a park and chase around something small and cute, I’d buy a dog.
But we dismiss Pokémon Go at our peril and specifically the potential for gaming companies to generate revenue from in-game (or ‘in-app’) purchases by the millions of users that are out there.
These happen in the midst of playing a computer game, and offer the option to pay extra to get things that will help you play better, longer, and/or prettier – additional lives, a sword to use in your quest, virtual money to spend on a new pair of virtual trainers for your virtual hero.
It is because the sums are small, and gamers are emotionally invested in completing the puzzle, that they will generally pay to progress.
These small purchases add up to big profits. Harnessing the spending power of gamers has helped companies such as Activision Blizzard, Ubisoft and Electronic Arts perform well and their shares to re-rate significantly over the past year or so.
Pokémon Go isn’t special merely because it represents a further broadening of the scope of gaming from the traditional tied-down console model into the hands of anyone with a phone (so more people spending more money), the key is that it shows augmented reality actually works, meaning it can be adapted for many other purposes.
One function of the game right now is that those playing can follow a map which leads them to less visited tourist attractions – where money can be spent on entrance fees and in gift shops.
So there is significant potential for us all to be using augmented reality at some point soon, not just for gaming – maybe to buy the add-on guidebook as we use the phone to navigate a cathedral tour, or paying to download part of a recipe book as we are guided to the correct section of a supermarket.
Think about that next time you laugh at those poor gamers who have walked into ponds whilst looking for invisible animals – that will be you soon. John Wyn-Evans is head of investment strategy at Investec Wealth & Investment