The future is now

Peering into a mobile phone is no longer an asocial experience. The Pokémon Go craze has seen millennials using their phones to scurry after virtual creatures in parks, museums and other public spaces. 

What Pokémon Go has achieved in a very short period is somewhat remarkable. Not only has it become a global phenomenon – although it has yet to be officially launched in SA – boasting well over 100m downloads since its launch on 6 July, it has also changed the way young people behave.

Millennials have often been criticised for falling short when it comes to social skills because their heads are constantly buried in their phones. But not only is the game encouraging them to interact with others in the real world, it also gets them to exercise by walking relatively long distances. 

Pokémon Go does something clever. It merges the real and virtual world. Where before gamers could play against one another online and were not required to leave their rooms, never mind the house, they now have to go out into the real world to be competitive. 

It might just be a fun game for youngsters, but it has opened up a new business model as it means players can be “lured” to specific locations, Sameer Singh, senior industry analysis manager at app intelligence firm App Annie, notes in a blog post. 

Singh says it is conceivable that a company would “sponsor” a location, which would effectively increase foot traffic to these businesses.

The notion of such a change in behaviour being brought about by a computer game may seem revolutionary, but those who have been following technological trends have been expecting this kind of development for a while. 

Strategy Worx CEO Steven Ambrose says where many other attempts to merge a real life with a virtual world have had limited traction – Pokémon Go itself is based on the game Ingress – it has succeeded because the franchise already has a large following. 

Pokémon Go is based on Japan’s Pokémon franchise, which has spawned console games, 20 animated TV series and 19 films, which has been going for 20 years. 

Though much has been made of Pokémon Go augmented reality features, Ambrose says a big part of its success comes from its existing audience’s love for the franchise. “Pokémon Go is essentially a game. But it’s a game with a huge history behind it. The current generation and generations before grew up with Pokémon across multiple platforms.” 

The difference now is that in its latest incarnation, it was launched on the most ubiquitous platform in the world – the mobile phone. “It grabbed people’s imagination, and though the augmented reality adds to it, it was essentially a game people wanted to play,” Ambrose points out. 

A platform whose time has come

Even so, many see Pokémon Go’s success as a sign that augmented and virtual reality – technology that replicates an environment and simulates a user’s physical presence in this environment – is becoming increasingly prevalent. 

Facebook CEO and founder Mark Zuckerberg is a big proponent of this kind of technology, and virtual reality in particular. Facebook bought Oculus VR, a leading virtual reality technology firm that built the Oculus Rift headset in March 2014 in a $2bn deal. 

Google is also working hard at developing this technology. The search engine developed Google Glass a few years ago. The idea was to use sensors, GPS, a camera and a small screen attached to a spectacle frame to overlay information onto the real world. 

A wearer could for instance learn to play the piano as the real chords would be overlaid by virtual ones shown on the screen. 

Google Glass struggled to get buy-in from the public and regulators because of privacy concerns. It also had difficulty getting the technology to work properly. 

Ambrose says the development of Google Glass was never really thought through: “It was extremely clunky to use and it forced people who did not wear glasses to wear glasses. I don’t think it would have worked on scale in any event.” 

Even so, where Google failed, some have continued to slog away at it. US-based start-up Magic Leap is rumoured to be working on a system similar to Google Glass, but instead of mounting the hardware on a spectacle frame, it will be inserted into a contact lens.

It has just raised $1.4bn in its latest round of funding, hired 600 people and partnered with Disney’s Lucasfilm to develop this technology. 

Magic Leap is expected to be the next big thing. With Pokémon Go, a user still has to look at their phone screen to find a creature, whereas Magic Leap’s device allows users to see and interact with the creature as if it were in the real world. At any rate, this is what the handful of people outside the company who have received permission to use it have said. 

The growing interest in augmented and virtual reality is understandable given that they are expected to become “the next big computing platform”, according to the recent Virtual and Augmented Reality report published by Goldman Sachs.

This means that these technologies may end up having as big an impact on humanity as personal computers and smartphones. “We expect new markets to be created and existing ones to be disrupted,” it said. 

The projected numbers are staggering. The global augmented reality market is expected to reach $117.4bn and the virtual reality market is expected to reach $33.9bn by 2022, according to research firm MarketsandMarkets’ Augmented Reality and Virtual Reality Market report.Pokémon Go has already turned into a money-spinner, generating $10m per day, according to App Annie.  

Investors are also getting excited. Goldman Sachs says apart from the $2bn Facebook spent on buying Oculus VR in 2014, venture capital firms have invested $3.5bn in 225 augmented and virtual reality companies over the past two years. 

Large media and tech groups have also been moving into this area, as over the past year Disney, Microsoft, Apple, Comcast and Time Warner have all invested in this technology. 

Larry Claasen is an award-winning journalist who specialises in business and technology stories.

This is a shortened version of the cover story that originally appeared in the 18 August edition of finweek. Buy and download the magazine here.