It has been just a couple of weeks since Pokemon GO was test-launched in Australia and a handful of other countries, spawning one of the craziest phenomenons of modern times.
Now businesses are scrambling to cash in on the "Pokemon effect".
What started as a smartphone game born from a 2014 April Fools' Day prank is now creating business opportunities that simply did not exist last month.
Game on
Pokemon GO is essentially the world's biggest scavenger hunt, where players, or "trainers", roam the open world looking to capture and collect little creatures called Pokemon, which move in the virtual world.
The app uses maps and GPS to guide players to a Pokemon's location. Once found, the critter will then appear on the phone superimposed on to the real world.
It can result in flash mobs of up to hundreds of people – mostly adults – arriving at locations as they chase the virtual cartoon characters.
Players navigate to PokeStops, which are often local landmarks, to receive rewards. PokeStops can also be boosted with "Lures" which attract surrounding Pokemon.
The ultimate goal and tagline is to "catch 'em all". There are currently 151 Pokemon to collect – some more difficult to find than others – and once captured players "train" Pokemon at virtual Gyms to become more powerful.
And this is where businesses are already making money.
Restaurants that want the business can spend less than $200 luring hundreds of players desperate to collect a Pikachu, Squirtle, Jigglypuff or Bulbasaur.
Soon, any business may be able to buy an in-game landmark, pretty much guaranteeing foot traffic for as long as the Pokemon GO craze lasts.
Chadstone Shopping Centre has "noticed a marked increase in shoppers of all ages hunting Pokemon" as the mall contains 15 PokeStops and four Gyms, according to a Chadstone spokesperson.
Bear in mind the game is only available in Australia, New Zealand, the US and Germany at this moment, which means Australia has a chance to be ahead of the pack on Pokemon GO marketing and tourism.
There are rumours on Chinese social media app WeChat that Pokemon fans are flying into Australia from Asia to wander around cities and play the game.
"Australia's unique wildlife and impossibly cute animals already do a wonderful job of luring international travellers Downunder, but I'm sure they'll be okay sharing their home with a few Pokemon visitors in the interest of boosting tourism," a Tourism Australia spokesman told BusinessDay.
Telstra stores are ordering extra battery packs and are now often hosting dozens of people at a time as the Pokemon GO players chat and charge their phones.
Sadly for mobile network operators like Telstra, Vodafone, and Optus the game uses little data. They are unlikely to see a bump in data revenue from all those people wandering around with mobiles.
"Playing Pokemon GO uses around the same amount of data as general web surfing," a Vodafone spokesman said.
"The average Australian monthly data allowance is two gigabytes of data, which is the equivalent of playing 200 hours of Pokemon GO."
Telstra and Virgin Mobile have focused on selling accessories and offering free phone charging in the hope that some of the popularity will rub off on their brands.
BusinessDay understands Vodafone was also in early talks with Niantic Labs about potential marketing opportunities.
Not all of the new Pokemon-generated foot traffic has been welcome.
Residents near a PokeStop in Rhodes, Sydney, have pelted unwanted crowds with eggs and water-bombs. And Frankie's by the Slice Pizza in Sydney was unimpressed to find more than 1000 people were planning a Pokemon GO Pub Crawl kicking off at the pizza bar on Saturday.
"When it was brought to my attention I guess I was picturing a scene out of revenge of the nerds," manager Jordan McDonald said.
So what the hell is going on? Why is this game taking over the world – and how can Australians get a first mover advantage?
The only way to invest directly in the craze is through Nintendo, the only listed company involved in the project. But that ship may have sailed, given the shares have already risen 56 per cent since the game's release. But as the mining boom taught us, there are always peripheral services ready to cash in.
Cashing in
It's clear that Pokemon GO is fantastic for attracting foot traffic. So shopping malls, amusement parks, venues and events can use it as part of their marketing strategies. Lost Heaven restaurant in Melbourne offers discounts for customers with certain Pokemon, guaranteeing they spend money rather than just hanging around.
Head of marketing at Pancake Parlour, Nicole Jackson, held a meeting with staff on Monday to find out why so many customers had come in the previous weekend. Turns out seven of their Melbourne stores happen to double as PokeStops. (PokeStops are determined by the game's production company Niantic Labs).
A Facebook poster advertising a special event sold out of 600 tickets overnight. The franchise bought seven $20 iTunes vouchers to pay for Pokemon Lure Modules, which cost about $8 each and last half an hour.
That is $170 worth of marketing. Ms Jackson said they had a 40 per cent increase in customers and were planning three more events to take advantage of the craze. "By next week is everyone going to be over it? We'll see," she added.
Who else stands to make a buck?
It is also clear that, while it doesn't use much data, the game chews through a smart phone's battery power. So Telstra has seen increased sales of portable lithium ion battery chargers.
Power bank sales on Kogan.com are up 243 per cent since the game's release on July 6 and overall unit sales are up 322 per cent.
"I'm too old to understand what's going on here. The last game I played on my phone was Snake," says chief executive Ruslan Kogan.
Operations director at JB HiFi, Peter Green, says there has been an immediate and "significant increase in portable battery packs specific to Pokemon GO … It's been quite the craze!".
Augmented reality
Pokemon GO is unlike any game ever released before. Let's begin with the augmented reality.
Everyone can remember a time when they fantasised about being best friends with their favourite superhero in the backyard, or flying to the moon with Mr. Squiggle, or fighting stormtroopers with Obi-Wan. But only those who dreamed of catching Pokemon are now doing it.
While virtual reality was at the forefront of technological development at the Electronic Entertainment Expo [E3] in Los Angeles this year, Pokemon GO is beyond virtual reality. It is augmented reality.
Where virtual reality allows a participant to enter a digitally-created world, augmented reality skews the real world to a point where the line between reality and fiction is blurred.
Just a few months ago analysts at technology research firm Telsyte predicted virtual and augmented reality technology "is on the cusp of more widespread adoption".
"The strongest pent-up demand is coming from gamers, who clearly see virtual reality as the next frontier in immersive entertainment," Foad Fadaghi said at the time.
In Australia, the market will spawn an ecosystem of developers that will be looking to help businesses take advantage of this new interface, much like Web and mobile app developers have previously, he added.
The game uses a "simple but good example" of augmented reality, according to founder and director of Canberra-based company A-Positive, Amber Standley.
"Augmented reality is going to be integrated into everything we do over the next five to 10 years. In education, entertainment, training, and manufacturing," she said.
The technology has been around for years but the popularity of this game has demonstrated how well it can work with geo-tagging.
"It really comes down to being creative with the augmented reality [in] working out how to solve business problems," she said, pointing out IKEA released an augmented-reality feature in 2013.
Speaking at a TED conference recently, technology entrepreneur Meron Gribetz described augmented reality as an extension of human senses.
Every traditional operation system, such as Windows, requires every person to learn how to use it. What virtual reality offers is a "zero learning curve computer that operates on an [operating system] that you already know how to use", he said.
Augmented reality has the ability to show an interior designer what a different wall colour will look like without using a drop of paint. It can help people navigate the roads more safely and more efficiently. Tourists to learn more about a monument without having to pull out their phone and Google it. The possibilities are endless.
One California-based company called Daqri is aiming to creating a safer working environment by creating devices such as safety helmets with built-in AR. These helmets show workers how to complete their tasks in the safest ways possible as well as warning of any potential dangers.
But for now this technology has merged with a highly popular fantasy brand. Head of planning at Clemenger BBDO, Kit Lansdell, said the game's explosive popularity was unforeseen.
"It has taken everyone by surprise. It is one that is very new in terms of how quickly and rapidly people have latched onto it."
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He warned that if and when in-game advertising becomes available it could backfire on both the brand and the game if overused.
Part of Pokemon's attraction is the game's innocence, so it will be the brands that respect the user's experience that are most likely to benefit.
"When brands start to leap on, a lot of them will mistake its rapid popularity with a platform where they can now inveigle themselves of its popularity," he said.
Strategy partner at The Royals, Dave King, last week advertised for a Pokemon Hunter at his Melbourne-based advertising agency – someone who would walk around with his phone all day catching Pokémon. It was a publicity stunt, but also a signal to clients that they were on top of Pokemon GO from the start.
Interest in this game has been phenomenal, he says.
"I have seen websites kick off, but that is such light interaction. To actually download it, and install and fire it up, register, walk around and use data and your battery!"
Glitchy beta
The current app was a "glitchy beta" without real opportunities for large businesses to create their own revenue stream, he added, and any money spent inside Pokemon GO flows straight to Niantic Labs.
But businesses can piggy-back off Pokemon GO's popularity to boost their own name recognition. Deakin University is offering three $100 gift vouchers for people who renamed defeated Pokemon as DEAKINUNI.
King said his agency might take over a nearby Gym and rename all the Pokemon to spell out a message. "These are silly experiments, not core revenue streams. But there is a benefit in trying things initially," he explained.
The Pokemania craze that peaked in the late '90s through the television show, comics, swap cards, and video games has never died, just laid dormant, according to a pop culture expert at Melbourne games store Minotaur.
"We've always had people coming in and asking for Pokemon gear. From plush toys to figurines to trading cards. Everything," a man called Damian told BusinessDay.
"It's the social aspect of this that has taken the craze to a whole new level. People can now team up and go searching for these Pokémon with their friends. All the people that grew up with Pokemon in the 90's are getting back into it."
Pokémon world
The man behind Pokemon GO – the app that turned our cities into the world's largest scavenger hunt – is the same man who created Google Earth.
John Hanke founded a small company in 2001 called Keyhole Inc in California, which Google bought in 2004 and rebranded "Google Earth". The tech giant wanted to keep Google Earth and Google Maps unbiased and free from commercial interests, which blocked many opportunities for further commercial development.
In 2010 Hanke was the head of a company called Niantic Inc that broke off from Google and soon released the mega-hit game Ingress. Ingress changed everything. Like a global game of capture-the-flag, two teams (The Enlightened and The Resistance) battled for control of "portals" located at notable or interesting landmarks across players' cities.
At the peak of its popularity, millions of players fought for control of cities around the world. Ingress earns money through advertising and in-game sponsorships because business can pay to have their shop a landmark or "portal", which lures players into their stores. On Wednesday Hanke told the Financial Times that sponsored locations are a possibility on Pokemon GO.
One of millions who jumped on the Ingress band-wagon and became a high-ranking player was Tsunekazu Ishihara. He also happens to be chief executive of The Pokemon Company, jointly owned by Nintendo, Game Freak and Creatures (of these, Nintendo is the only public company).
A Google promo video posted on April Fools' Day in 2014 showing people catching Pokemon in the great outdoors received millions of hits but was dismissed as a prank. However, the popularity of that video gave Hanke the confidence to approach the Pokemon Company, where Ingress-loving Ishihara was open to idea of a collaboration, according to a Business Insider interview.
In future Pokemon GO will allow players to trade captured Pokemon. This will make it much more social and also potentially create a secondary market – think of all those Pokemon cards still trading on eBay.
Naturally Americans are already starting Pokemon GO side-businesses. On July 7 a Silicon Valley startup registered the domain name pokewalk.com. This yet-to-be-launched service takes phones for walks to collect Pokeman and unlock higher levels for the phone's owner.
Three weeks ago the idea of making money out of phone walking would have sounded preposterous. Now it turns out being agile is not enough: this is a time for double-jointed lightning-fast acrobatics.
