Wednesday, July 20, 2016

Pokemon Go: What Mobile & Gaming Entrepreneurs Can Learn from It

If you haven't heard about the success of Pokemon Go, recently, from Niantic games based on the beloved Pokemon franchise, you would have to be hiding under a rock.  It has been downloaded many millions of times, and has become the #1 top grossing app in both the Apple App Store and Google Play Store.  Millions of players are wandering around with their phones held up high looking for “poke-stops” where they can catch a “pokemon”. 

Many articles have been written about the arrival of AR (augmented reality) and location based games.  The week Pokemon Go was released I was walking with some twenty-something colleagues to lunch castro st in downtown Mountain View, in the heart of Silicon Valley, and they were of course holding up their devices and pointing out not just pokestops but excitedly chattering about the latest “pokemon” which they were trying to catch. 

I had a strange sense of déjà vu. In fact, I recalled in 2011, when the founders of another gaming company, had shown me augmented reality games on the same street.  In AR mode in both Pokemon and this game, you had the camera of the phone on which showed you the surroundings with the “augmented” elements.  In their case, they were “bombs” placed by other players at specific locations around downtown castro st.  In the new case, they were Pokestops and lures placed by other players to catch Pokemon.

That company in 2011 was one of a steady stream of location-based augmented reality games that entrepreneurs showed me for the next two years.  It was one of the things that you could do with mobile games that you couldn’t do with any other type of games (Facebook, Steam, Console), they argued, and it was bound to be the future of mobile gaming. Many investors agreed and put some seed money into these companies.

In fact, at one point (I can’t remember what year), a couple of guys out Stanford showed me their game which was a location based game where you captured cute little creatures that had different abilities and then you battlted other players – it was called Geomon, a play on “Pokemon” and “Geo” - sounds familiar, doesn't it?   

What happened to those startups? Most of these location based augmented reality startups came and went – they’re either out of business or were acquihired by other companies needing the engineers and their games shut down.

While I think it's very difficult am hesitant to compare one startup to another, there is an important lesson here: Don’t be Too Early.  Sometimes, being too early can be as bad as being too late.

If you are too early, you need lots of staying power for the market to catch up with you, and to keep creating products until one of them hits the sweet spot in the market.  It’s not easy – in fact, most of the companies that pitched location based AR games to me in 2011 and 2012 ran out of money – they couldn’t convince investors to keep supporting them, which is the dilemma of the startup entrepreneur that is too early.

Pokemon Go Studio Niantic also released their first well-known location based game, Ingres, in 2012, then released it to the public in 2013 on Andoird.  But Naintic was initially part of Google, and they were able to keep the company going for a while before they signed on Pokemon, and they got a $30 million investment before they released it.

Now I’m not saying that the AR/location mechanic was the only reason for the success of Pokemon Go; The other, perhaps just as important reason was that the IP, Pokemon, appealed to a generation who are now grown up (but not too grown up) and are heavily into mobile games, so every twenty something mobile game player probably had good memories of Pokemon and wanted to try it out.  Not to mention, the fact that their friends were playing it means it got to the critical mass.  This expression “critical mass” comes to us from the world of the atomic bomb, where it defines the amount of mass needed for a single neutron to set of a chain reaction; the neutron hits the nucleus, sending off several neutrons, who hit other nucleus, and so on, until it reaches the point where it becomes a self-sustaining chain reaction. 

But for entrepreneurs who are looking for the “next big thing” (and there are lots in Silicon Valley right now, particularly looking at VR, for example),  the real lesson is that in startups as well as in life, Timing is often the most important factor.  Hitting the market at the right time – not being too early and not being too late – are critical for the type of product that you have.  A related lesson is that sometimes, the second or third product is the more successful one.    

Similarly, Angry Birds was famously Rovio’s 51st game., and Draw Something, was the last attempt by the gamemaker OMGPop, which was sold to Zynga for $200 million.

Finally, leveraging the strengths of your company’s first product is sometimes a key part in getting out the second or third product which may be the one which vaults your startup to success!

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