What Pokemon Go really means

Nintendo (Tokyo 7974) jumped another 17% today, hitting a high of 26,460 Yen per share, and has now doubled in two weeks. At this value, the company is worth US$34b. That is just a whisker less than Sony, and means that Nintendo’s value has increased by 3x the US$5.9b value at which Candy Crush changed hands last year. It is now the biggest mobile game ever in the US at 21m daily active users, larger than Candy Crush, according to one broker. The share price has already moved by more than some in the financial world estimate it is worth.

So the game is fun, and lots of people are playing it. But the big picture is that the game marks the first real hit in the augmented reality space, and has significant implications for a number of other groups.

Augmented reality has been around conceptually for a while. For the benefit of those that haven’t played the game, it uses the phone’s video camera to place animated characters in real places, which are then visible on the screen. Hence reality, augmented.

This isn’t the same as virtual reality, which entirely excludes the real environment, and is a separate story for another day.

Augmented reality creates a new way of interacting with the world, and has its own compelling experience. For example, developers are talking about allowing advertisers to sponsor their own Pokemon which would then attract players to real world stores (are you listening, Messina?). For a dystopian picture of what this might look like, check out the video above. (It is worth watching more than once for the skilled understanding that it brings to the theme).

It is really easy to see how this could spin into something much larger, which is why we have exposure to it in the portfolio. Microsoft is all over this at present (as are others like Magic Leap, here which is worth a look because of the implications for Microsoft, among others). Google must be thinking about whether it could make sense to bring back the Google Glass. It will not have been lost on many that the sign-in is not through Facebook, but Google which owns a chunk of the business and co-developed it – and of course provides the mapping that is integral to the game.

Pokémon is the game for our times, the perfect meld of smartphones, global positioning AR and fun, in the same way that email legitimised so much of the web that was at the time just hanging around, or Facebook turned the school yearbook into a global advertising behemoth.