Pokemon Go Keeps On Going

launch the phenomenally successful Pokemon Go. I covered a bit of how Niantic developed another game called Ingress before it jumped on Pokemon Go. So today we're going to continue our story. We're gonna talk a little bit more about how Pokemon Go works and how it makes money, and also what else Niantic has been working on. So let's first talk about how Pokemon in general, not just Pokemon Go, but how Pokemon on in general works. From a very

high level, the Pokemon are fictional critters. They are pocket monsters, if you will, though many of them are far too large to fit inside of a pocket. Players called trainers attempt to find and catch the various Pokemon and add them to their collection or Poka decks. By the way, get used to poke a being used a lot in this episode. Uh. You use poke balls to catch Pokemon,

and trainers can even evolve Pokemon into more advanced forms. So, for example, the char Mander Pokemon will eventually evolve into a form called the char Million and then further evolve into the charas Art. Each evolution marks an increase in Pokemon power and some changes in their abilities. Trainers pit their Pokemon against other trainers into Pokemon battles, and that means in most Pokemon games you enter into a turn based combat sequence. In the standard Pokemon games, it's clear

that some trainers are bad guys. They're working to create a sort of criminal organization that leans heavily on these Pokemon critters to do nefarious things, Team Rocket being a prime example. Each Pokemon belongs to a category or a type, and each type has strengths and weaknesses against some of the other types. And it's kind of like paper rock scissors, you know, because paper beats rock, rock beats scissors, scissors beats paper. In Pokemon, however, you don't have three types.

You've got eighteen different types. Some types have no advantage or disadvantages against each other. Uh. Some Pokemon types like grass types are weak against many other types, and so knowing which types are effective against others helps a trainer win battles. And just because one Pokemon is naturally weak

against another does not necessarily mean defeat is inevitable. There's an R and G element or random number generator to this too, so it is possible, but very unlikely, that a Pokemon that's weak against another will still win in a battle if it just happens to get really good random results and the other one gets really bad results. But obviously the odds are against you in that scenario. Oh and each Pokemon has a few different moves that

you can play in this turn based system. Some moves are meant to reduce your opponent's defenses, some are meant to decrease the potency of their next attack, and some are just meant to inflict damage. When a Pokemon has taken all the damage it can take, in other words, all of its hit points are gone, it faints. There is no dying in Pokemon, which is something of a relief in most Pokemon games. If you're a creature faints, you can swap in another Pokemon from your collection and

continue the battle. But if all of your Pokemon in your in your little group faint, you lose the battle plus some money, and you head off to a Pokemon center where you can have your poor little critters recover before heading back out to do it all over again. Now there are other aspects to the game as well. Most games allow players to buy various items which can help during Pokemon battles, like it can help restore hit points,

for example. And then there's the poke ball, which is a small sphere that acts both like a net to catch Pokemon and also a storage space where your little pokemons live. It captures them and holds them wild Pokemon. If you encounter one in the wild within these games, you have a chance to try and capture them and add them to your collection, but they have a chance to escape capture. Battling wild Pokemon with one of your own can weaken the wild ones enough so that when

you grab them, they don't have the strength to escape. Charming, right, all right? So in pokem Mon Go, some of these elements made it into play early on, but not all of them did. There were some limitations on things like whom you could actually battle. You couldn't go head to head against another player for example. But Pokemon Go also introduced some elements that are not in the standard console games. For one, the types of Pokemon you encounter depend heavily

on where in the world you really physically are. Some Pokemon are unique to specific continents, meaning you could wander all over uh, well, let's say North America, and if you did, you would never see a Mr. Mine, which frankly might be a blessing. But that's because Mr. Mime is exclusive to Europe. You would have to travel to Europe to have a chance of finding one in the wild. And also the time of day matters too. You will see a different distribution of Pokemon monsters in the morning

versus the evening, for example. Now for another thing, The act of catching a Pokemon in Pokemon involves a gesture control mechanic. So you've got your little poke bowl on your screen. Then you can also see your Pokemon that you're trying to capture on your screen. If you're playing an augmented reality mode, the Pokemon actually appears as an overlay of a camera view of your environment. So you'd

be holding up your camera. Maybe you're looking at like, say a park bench, and you notice that the little Pokemon is apparently standing on top of the park bench. It's cute, but a lot of folks actually switch this mode off because it does also suck up battery life really quickly. Well, then you use a vertical swipe motion

to virtually toss your poke ball at the Pokemon. If you first swing the poke ball around a bit like you swirl your finger around in a circle, you charge up the poke ball, which increases your chances of catching the Pokemon. It also makes a little more challenging to aim the poke ball before you throw it, which means you might miss wildly. But even if you hit the Pokemon smack dab and it's poke a face pa Poco face,

you aren't guaranteed to catch it. Some Pokemon are rare and powerful, and the odds of a successful capture are decreased unless you're using a more powerful version of the poke ball, which leads us to the next really big element of Pokemon Go. Most importantly for Niantic, Pokemon Go created lots of opportunities for micro transactions. Now in the world of games, micro transactions have become the big money

maker for certain types of games. They also can be a real pain point for players, and depending upon the implementation, players could just see it as a small price to pay in order to play a game that they really love playing, or they might see it as being really predatory. Now, let's explain the emergence of micro transactions in the old days.

Back in like the eighties, buying a computer game meant you plunked down your harder cheddar and you purchased a copy of Zork and you headed on home to play it as much as you like. You just put that five and a quarter inch floppy disc into your disk drive, loaded it up, and started playing, and you can play as much as you wanted. You owned that copy of the game, and everything associated with that game was on

the game's floppy disk. Everything that was that version of Zork was right there, forever and ever the point of purchase mark the one and only transaction involving you and that Zork game. But let's skip ahead. Games get much more sophisticated than complicated. Now. You can still buy a full game, but now developers start creating additional material based on that game build and they offer it as a

separate purchase. These could be sequels to a title, They could be side adventures, or extra levels for certain games, and typically these expansions would be built upon the same game engine, using the same graphics resources, and featuring the same gameplay elements, but with more content. So let's give an example. Let's say you really loved Ultimate seven The Black Gate, a computer RPG from back in the day. Well, you play the game, you love it, and you wish

that there was more of it. Then you find out, hey, Origin, the company behind it, has just made an expansion. They've created a game called Ultimate seven The Forge of Virtue that has more content within that game world, same graphics, same game engine. You can keep the party going, and if that weren't enough, you could go even further with Ultimate seven Part two Serpent Aisle, which was really more

like an expansion pack. If that's still weren't enough, you could also get Ultimate seven Part to the Silver Seed, even more content built on that foundation. So this was a way where you could keep players engaged. The players who really loved a title could continue buying content that tied into that title. And when massively multiplayer or online role playing games where m m O RPGs became a thing,

then we saw this idea expand further. You would have eager players who would soak up all the content of an M m O RPG, and then naturally they wanted more. They had just you know, really explored this whole environment, and they wanted to have even more experiences. The way the typical M m O RPGs made money, at least back then, was twofold. First, the developer would sell a copy of the game, just like any other computer game. You would you know, buy a game for like thirty

forty sixty bucks whatever it might be. But then you also had a monthly subscription fee that would kick in at some point. That was a monthly charge to continue to play the game online, which was the only way the game existed. So, in other words, players had to keep paying to play the game. Now, with that kind of revenue model, you obviously need to keep supplying content

to your customers or else you're gonna lose them. If someone feels like they've done everything there is to do, then they're like, well, why am I going to pay you know, ten bucks a month to keep playing this game.

So m m O RPGs like World of Warcraft would introduce new expansions that would, as the name implies, expand the scope of the game, while also typically increasing the maximum character level cap so that players could continue to progress the characters they had already created when they bought the original version and kept them invested in the game. This process would repeat many, many times, with lots of expansions for the really successful games like World of Warcraft.

But on top of that, these games would eventually promote a different type of transaction, sometimes not on purpose. There became a market for in game items, stuff like weapons or armor or potions or other things of perceived value within within the game. You know. Sometimes these were things that legit gave your character extra abilities. Originally, the idea was that players would be allowed to trade for this stuff,

you know, using in game transactions between each other. So let's say you and I are both playing this game, and I offer you gold that I have acquired within the game, and you need some gold, so in exchange, you're offering me a sort of butt kicking or whatever it might be. But before long, people started offering real world money for in game items, or more likely, people started soliciting for real world money in order to sell

an in game item. Initially, the reaction to this from the company side was to try and get a lock on it. Uh. Some players would be shelling out money to deck their characters out and stuff that they didn't find themselves, and other players saw it as almost like a pay to win kind of scenario, and it created an unbalanced environment. I'm sure I would feel a lot of resentment if I were playing, you know, the game

as intended. And then meanwhile, Richie rich is kidding himself out in magic armor and weapons that he just bought from someone else and never actually bothered to, you know, put in any work to trying to earn them himself. But that experience also illustrated how lucrative it could be to offer in game items for real world cash, and we started to see some games begin to experiment with

this in different ways. Mobile games do this a lot, and in fact tend to build in limiting factors within the game that keep players from progressing unless they pay a small amount to get more playtime or an extra item or an extra life or whatever it might be. And computer and console games began to implement it in the form of lute crates. So these are boxes that contain some in game you know, asset inside of them. It might be something common, you know, which means it

wouldn't be of great value to the player. It might be useful but not particularly valuable, or it could be something really rare, something that's really sought after. And some games only allow these items to enter the game through loot crates. In other words, you won't be able to find them through regular play unless you happen across a loot crate and you open it up and you luckily get that item. The odds of getting something rare reflect how rare it is. Because this is a video game,

scarcity doesn't really exist, right. The number of Ultimate powerful swords is limitless, despite the fact that the word ultimate would suggest that you could only have one. No, you could have limitless versions of this, so the supply is completely controlled by the developer. So if say you wanted a fancy costume for your character, like a very specific outfit, you might have less than a one percent chance of

finding it in any given loot crate situation. And of course, games began to introduce different tiers of loot crates, so a basic loot crate would rarely have anything special in it. More expensive, higher tier loot crates had a better chance of holding something you wanted, but there was no guarantee, and you were encouraged to buy these loot crates for

real money. A lot most games allow you to earn loot crates through play, but it's at a very controlled, slow pace, and the goal is to convince players to hand over real world money to buy more of these loot crates rather than just pouring extra hours, especially if you've just played a game for hours, you finally opened up the loot crates you've earned and you don't get the thing you wanted, and you still have that desire

to have that thing. Now, let me be clear, there are a lot of games out there that have loot crates, and some of them don't require you to purchase the crates with real world money. You just earned them within the game by playing the games. But a lot of them also do offer up that option to purchase additional loot crates for cash, and the more you spend, the more you get. Most of these games will offer discounts

if you buy in larger numbers. So let's say that a single loot crate might set you back a dollar, but if you spend five dollars, you get seven loot crates, so it's less than a dollar each. Right, ten bucks might get you fifteen loot crates. A hundred dollars might get you two hundred loot crates. You get the idea. Now here's the brilliant thing. From the revenue standpoint, Like I said, there's no real scarcity in the real world. Buying in bulk means that the merchant who's selling the

stuff is offloading real merchandise in the process. So if I'm selling oranges and you decide you want to buy five hundred oranges from me, I'm likely going to cut you a big deal because there's a real risk I'm not going to be able to sell all of my oranges before they start to go bad, which means I'm gonna have waste. I'll make no money from those spoiled oranges.

So even though I might charge customers for each individual orange, like I don't know, fifty cents, if I'm selling the in bulk to you, it's probably gonna be closer to like twenty cents each, less than half, because it's still guaranteed money for me, and otherwise I could end up with a lot of waste and very little revenue. Right, if I don't think I'm gonna sell those five hundred oranges, then I'm not gonna make any money from them, So of course I'm going to start cutting deals for selling

in bulk. However, once I do sell you those five hundred oranges, clearly I no longer have those five hundred oranges anymore. They don't belong to me, they belong to you. They're gone from my inventory. So I have whatever is left, and maybe I keep selling those for a fifty cents apiece, or maybe less if someone else's trying to buy them in bulk. But when it comes to stuff like loot crates, there is no scarcity. The merchant that is the game

doesn't run out of loot crates. There's no limitation on how many loot crates can be sold. The scarcity of the items inside the loot crates are determined not because there's a physical limit to how many can exist at any given time, but because the percentage of likelihood that they will be generated by any loot crate is just

really small. So if a merchant sells one thousand loot crates to someone, that doesn't mean the merchant now has one thousand fewer loot crates because they're just digital items. The merchant can sell a limitless number to customers, so the supply and demand mechanics don't really apply here because there's an infinite supply. The merchant can run specials this weekend, all loot crates are fifty off, and the merchant isn't losing any money in the process because loot crate production

is effectively free. I mean, yeah, they're the cost of doing business. There's the cost of running the computers and paying the people who are running the game. Those costs exist whether you're doing a promotion or not. But the actual generation of loot crates, it's not like that requires extra effort or or energy. The off weekend isn't really a mark down in the traditional sense. It's an effort to convince people who might not otherwise spend money on

in game stuff to go ahead and do it. And once you convince them once, you might be able to do it again. These micro transactions within games can be incredibly lucrative, and they're not always so micro. There are games that include in game purchases that can be in the one hundred dollar range, which means you'd be spending more money for in game items than you would typically spend to purchase a triple A title video game period those running the sixty to seventy dollar range. That's for

a full game. So let's just remember that, like there are one in game purchases, which means you'd be spending more within a game than you would to buy your average game. Now, an important component of this dynamic is the psychological rewards. All of these games to some extent, depend upon creating a sort of dependency, and I promise that will be coming back to Pokemon Go in a

little bit. But in order to understand revenue models and how Niantic went from a scrappy company with around forty employees to a multi billion dollar success, we need to learn about how our ding dang brains work, because trust me, game developers are all over it. But first, let's take a quick break. Okay, so I've covered the basics of micro transactions and how they work from an operational side, but we also need to look at why they work.

I mean, sure, I might play a game that offers me to the chance to, you know, purchase an item within game, or maybe just the chance to find an item, But why would I actually follow through with that? What is compelling me to spend real world money on a game? Well, maybe I just like the game and I want to

reward the developers. I have actually done this before. I have a game on my smartphone that was free to download, it was free to install, it's free to play, and I've played it for about a year without ever making any in game purchases. There's no advertising in this game either, and I thought, you know, I've had hours of enjoyment with this game. I enjoy playing it. I should at least fork over some money to the developers. That to

me seems fair. So I made a twenty dollar in game purchase, and every year or so I do the same because I'm still playing that game and I'm still getting enjoyment out of it. The developers keep adding content to it. So without any other stream of revenue from that game, I feel like, you know, I kind of owe it to pay some money since I'm enjoying the fruits of their labor. And I feel that's a pretty fair approach because that's the way I'm viewing it. That's

the perspective I'm taking. But that's not how games, even including the one I'm vaguely referring to, really make lots of cash. They depend upon a different sequence. See. Games like these really establish a reinforcement and reward system that fulfills a psychological need we humans typically have. We crave awards. It feels good to get a reward. Rewards fulfilled needs like a sense of autonomy, like in other words, yeah, I rescued the kingdom. Now I've got a pile of

gold for doing it. Or it rewards a sense of competence, like yeah, I chopped that would so well that now I'm even better at chopping wood. So video games set up cycles that present players with tasks and then rewards. Completing tasks means you get the psychologically satisfying result of getting a reward, which in turn encourages you to tackle more tasks. But let's say we tweak this dynamic a little bit. There are a few ways we could do this.

We could create a shortcut. So yeah, you can play the game and you can get a reward, or maybe you just spend some real world money and you get the reward right now, So you get sort of that psychological rush of receiving a reward without all that pesky chore stuff that leads up to it. Your character in the game, it's more powerful, or it gets a better outfit, or it gets more time to spend playing, or opens

up a new region, or whatever it might be. Or we could make the tasks more difficult to a point where most players will not be able to complete those tasks without paying for help. Maybe you have a game mechanic that gives players five minutes of playtime before there's a cool down period where they cannot play the game for a given amount of time while they recharge, and then you include a task that, on average takes seven

minutes to complete. Well, now players who engage with that task have five minutes to try and complete a seven minute task. As you can imagine, that's not necessarily possible, and they will still crave the reward that comes at the end of completing the task, but because they didn't

have enough time to actually do that, that craving goes unfulfilled. Now, they could wait to try and recharge in and see if they could complete the task in the next session, but that's leaving things unresolved, and a lot of people just really hate that feeling. Of something being unresolved. They crave having it resolved, and psychologically we need that reward. So now we've got the option to maybe pay a little bit extra for some more time so that you

can actually finish the task. It's not paying to complete the task, it's paying to get the time so you can do it yourself, and then you get the reward boom micro transaction, or you create that artificial scarcity where you make something that's really cool, like an awesome outfit. I think of lots of games out there have different skins, Player Unknowns, Battlegrounds, does it? Overwatch does it? Lots of games have this right where there's just these really nice

designed outfits that make you look really cool. Well, they tend to be pretty rare and difficult to get hold of. You can't just buy them out right or else everybody you would be wearing them, So instead you make them an item that can be found in loot crates, but you reduce the percentage of the chance that they will appear to an absurd degree. Completionists or people who just really love that design will chase after that. They crave the reward of having something that most people do not have.

Or maybe they just really dig the design, and so they'll either pour countless hours into the game trying to earn it, or they'll start buying lootboxes in order to try and find it that way and just increase their

odds through you know, bulk buying. Now, the commonality here is that you as a game developer trying to figure out the ways to create a demand for in game items or effects, and then you exploit that way and creating a cycle that can be repeated specifically with each player, so that each player becomes a a source of repeated revenue. That reward cycle can become a bit addictive, and it can lead some players to becoming irresponsible with their real

world cash as they play. Now, I am not saying that micro transactions are totally evil, or at least they're not any more evil than other types of capitalist transactions. It's mostly in how they are incorporated into a game that really matters. If it's a paid to win scenario where you know, if you spend money, you get better items that give you advantages in the games, most people tend to find that to be gross or lame or whatever.

If it's purely cosmetic, then I find that most people think it's perfectly cromulent and if the game seems like it completely hinges on micro transactions. So in other words, there doesn't seem to be much of a game there unless you're paying lots of money over time, and it's really just kind of a churning transaction generator that is not a good look. So how does this all relate back to Pokemon Go. Well, the game also dips into another brilliant cash making scheme that of you know, like

fun bucks or in game currency. It always makes me think of Disney dollars or sometimes gift cards, and it's the way that companies can make a lot of money and not have a lot of cost associated with it. And here's how it works. First, you have to exchange real world money for in game currency or in world currency. So let's use Disney as an example. Disney World and Disneyland for a while allowed you to spend real cash

to buy Disney dollars. So these were bills of different denominations one, five, ten, and fifty, and they had Disney characters on them. You could use Disney dollars to buy stuff in stores at Disney World and Disneyland, but you couldn't, and this was an important part convert unused Disney dollars back into real world cash, so you can only use

Disney dollars to make transactions at Disney properties. Clearly, you would not be able to go into a non Disney store somewhere and use Disney dollars because it's not legal currency. It would be kind of like trying to buy real world stuff with Monopoly money. And also people would hold on to Disney dollars as keepsakes in their own right, which meant Disney was effectively selling slips of paper for one, five, ten, or even fifty bucks of real world money, which is

brilliant right. Well, in game currency is kind of the same. You spend a certain amount of real money to get a given amount of in game currency, then all other purchases within the game are based on the in game currency, so you've got to buy cash before you can buy say a new hat with that cash. And typically games like Pokemon Go will mark down in game currency for larger purchases, so a dollar wouldn't let you one hundred poker coins, five dollars would get you five hundred and

fifty of them. Ten dollars would get you twelve hundred coins, and a hundred bucks would be fourteen thousand, five hundred coins. You would be Poka rich and real world poor. The coins would let you buy stuff like lures, which, as the name suggests, brings out more although Pokemon critters as you walk around, so you see more of them and

in the amount of time that you're playing. UH. That would last for a certain amount of in game time, and UH you might get better poke balls, which have a higher chance of success when you use them against more powerful Pokemon, so meing you're more likely to catch that Pokemon, it won't get away and you won't lose

your chance of collecting it. Or you might use the in game cash to buy lucky eggs, which allow you to hatch a new Pokemon after you walk a certain number of steps, and potentially you might get a rare one that you otherwise may not have come across while you were walking around. All of these items have a certain number of poke coins associated with them, and it helps obvious gate how expensive each of these in game items are with regard to real world money, which is

another big part of using in game currency. It might cost you a dollar to get a hundred poker coins. But maybe an item in the game is valued at three hundred poker coins. Now that means that it would set you back three real world dollars to buy enough of the poker coins if you were just buying them

in the one dollar increments. However, as you go through it starts to become more difficult to associate the in game stuff with the real world price you're paying, particularly if you're spending more money so that you get extra

poker coins with your purchase. Now it might sound like I'm saying Niantic is trying to trick players by creating a reward system that triggers a desire in players to make purchases and then increases their chances of getting rewards, coupled with using in game currency to put some distance between an in game item's real world cost or price tag and the player's awareness of that. And I guess that is one way to look at it. However, this is also a very common an approach with smartphone games

in particular. Heck, the one I alluded to earlier uses a very similar process, and in fact it has multiple in game currencies. Pokemon go at least keeps itself to the one means of in game exchange for the store. Some games might have four or five different methods, which I would argue makes them even more guilty of fleecing players. Like I said, the game I play does this, which, yeah, I can sometimes feel a little gross or at least exploitative.

But whatever you think about the revenue model of micro transactions, whether you think it's great or it's not, you have to admit it works. In its first month, Pokemon Go generated two hundred seven million dollars in revenue, which at the time was the most money a mobile game had made within a month of launch. And that's made all the more remarkable when you consider that Niantic rolled out the game gradually across different regions. It was not available

globally right away. The game launched in July, and by September of that year, Niantics saw more than five hundred million downloads. By July, one year after launch, it had been downloaded seven hundred fifty million times. Most of the downloads were on Android devices. There was a nearly seventy thirty split between Android and iOS, which actually find pretty interesting. Generally speaking, the trend is that you see more in

app purchases on apps that are running on iOS. It just seems like Apple users tend to be more um inclined to make in app purchases. So while Android phones vastly outnumber iOS devices throughout the world, I mean, there's just way more Android devices than there are iOS devices.

On the flip side, Apple users tend to spend more money on apps and in apps than Android users do, so I just found it really interesting that here we saw seventy thirty split between Android and iOS in the devices running Pokemon Go, and yet there's this incredible amount of in game purchases going on, which you wouldn't expect

given that split. Well, adoption dropped off fairly sharply after Pokemon first debuted, and some players dropped off the game entirely over time, including myself, but Pokemon goes still proved to be incredibly profitable. There was a dip in spending in ten players were spending less on average in twenty seventeen, but after that Niantics saw spending increase year over year. In twenty nineteen, Pokemon Go brought in eight hundred ninety

four million dollars in revenue. A truly staggering amount. But learning that bit didn't surprise me nearly as much as what happened in twenty twenty. So, of course we had the pandemic hit in and with much of the world going into lockdown and isolation by March or April of it meant that I would think Pokemon Go would have suffered. This is a game that encourages players to go outside and walk around in the real world in order to

encounter Pokemon within the game and then catch them. You would think that you would have an enormous hit on revenue when people weren't leaving their houses. I was expecting to see a really big dep How could a game so reliant on physical location be a success in a

year when most people weren't actually going anywhere. Well, I was a percent wrong, because by November of twenty ten months into the year, not even a full year, Niantic posted one billion dollars in revenue from Pokemon Go a billion dollars from in app purchases in a mobile game. Upon further exploration, I started again an understanding of what

was going on. People were spending more time on their phones in lockdown, so they were downloading more entertainment like games to mobile devices, and Niantic very very smartly implemented numerous features to let players have virtual experiences and play the game without actually having to leave the safety of their homes. One of the big changes was in how an in game item called incense works, and essentially, incense

attracts Pokemon to your location. Really, it just means that Pokemon spawn at wherever you are for a set amount of time, like half an hour, and for those thirty minutes, you're gonna see way more Pokemon spawn around you than you normally would, and it gives you a chance to collect Pokemon without having to wander physically around your region.

Niantic boosted the effects of incense during lockdown. They also boosted the effects of other in game items, which allow players to experience the game from home as long as they had those items that is. And how did you get those items? Mostly you did it by buying poke coins and then using the poke coins to purchase the

items you wanted in the in game store. Of course, now, I've got a lot more to say about Niantic, but first let's take another quick break over the course of its existence so far, Pokemon Go has generated more than four billion dollars in revenue. The US leads the way in terms of spending on the game, and Japan is not that far behind. Upon initial release, the amount of gameplay and Pokemon Go was fairly limited. You could capture Pokemon, you could evolve them over time using an in game

resource called star dust. More on that in a second. You could attempt to take over gems so that your facts and could control them. You know, the three factions or teams and Pokemon Go, but you couldn't battle head to head with other players, nor could you trade pokemon in. Niantic finally introduced trading, but it was not as simple as swapping one Pokemon for another. To trade, you had

to meet some other criteria first. Both players that would enter into a trade would first have to become friends with each other, which involves sending and accepting friend requests, using a unique identifier to link the two accounts together as friends, and that establishes a connection. Both friends would need to be within one dred meters of each other in real life before making a trade. At least before

the pandemic. They had to do that, and you needed a certain amount of star dust to power that trade. Like I said, star dust is an in game element in Pokemon Go that typically you use to level up captured Pokemon. So let's say I caught a Charmnder and to power up my char Mander and evolve it up to a char million and then ultimately up to a Charizard, I need to collect enough star dust to power that transformation. And um, you collect star dust through playing the game.

But trading likewise requires a certain amount of stardust to allow you to trade a Pokemon to another player. The more rare the Pokemon, the more stardust is actually needed to make a trade happen. Now complicating this is that friendship isn't just a binary element in Pokemon. It's not either you're my friend or you're not. Friendship has tears to it, meaning that over time you can boost your friendship levels literally over time. The longer you are friends

with somebody, the higher your friendship value is. It's kind of like going from an acquaintance to a friend to b FF two. Seriously, can you help me hide this body? I might be revealing too much about how I rank my friends. Anyway, With higher friendship levels, the startup cost for trading starts to come down. So the same trade with one person who's just like an acquaintance level is going to cost you more stardust than that exact same

trade with your BFF it'll be less stardust. So if you're training with a really good friend, you aren't spending quite as much star dust to make it happen. In addition, sometimes during play you might encounter a gift item out in the wild, and gift items are meant to be given to your friends. So if I find a gift item, I would not be able to open it for myself.

I could however, send it on to one of my friends who also plays the game, and they would not only receive this gift uh, they would then be able to open it and there would be some useful items in there that they could then put to use within the game themselves. The gameplay mechanics of trading are a bit convoluted, but they also help avoid the issues you would have if there were kind of a no holds

barred approach. In that case, players could end up spoofing multiple accounts and then just te eating back and forth with themselves in order to essentially cheat their way toward dominance. And heck, with that reward cycle built into games, you can see why people would actually do this. They're chasing that high of a perceived achievement. A reward doesn't matter

if they had to take shortcuts to get there. Now I'm getting toward the end of this episode, so I need to switch gears for a minute and talk about niantics other game they've launched since Pokemon Go. So there's Ingress, which is still going today, that was their first big

public game. There's Pokemon Go, and then there's another huge I p that partnered with Niantic to create an augmented reality mobile game that everyone at the time was thinking could be even bigger than Pokemon Go, and that would be Harry Potter. Uh. The game that Niantic created is called Harry Potter Wizards Unite. The World first learned about this partnership back in November, just a little more than

a year after Pokemon Go had launched. According to the press release, Niantic promised a game in which quote players will learn spells, explore their real world neighborhoods and cities to discover and fight legendary beasts, and team up with others to take down powerful enemies. End quote from the

press release. It sounded like this would be in many ways very similar to Pokemon Go, but with a Harry Potter kind of overlay, and Pokemon Go players choose one of three teams to join their either Team Valor, Team Instinct or Team Mystic. There's no option to join Team Rocket,

and yes I have written letters about it. These are the teams that compete to control sites like gems, which are tied to points of interest in the real world, and Harry Potter would change that up so that instead of Team Valerie, Team Instinctive, Team Mystic, you would choose one of the four Houses and Hogwarts, so of course Slytherin, which we all know is the best house, Raven Claude, Griffin, Door,

or Hufflepuff. When the game finally law punched in twenty nineteen, two years later, this was essentially confirmed, and in addition, players the game can choose a profession. The three professions are magic, zoologist, orror, or professor. They can also select their own wands, which frankly is against Cannon because we all know the wand chooses you, but then the ones

don't have any real effect. On gameplay at all. They're purely cosmetics, so it's not like it actually matters beyond aesthetics. Like Pokemon Go, the intended gameplay for Harry Potter Wizards Unite is to walk around your real environment and encounter confounded creatures or items. You are then to cast spells to reverse this confounding curse on these things, and casting spells involves tracing a pattern shown on your screen dependent

upon whichever spell you're casting, and different ones have different powers. Uh, it's kind of like Pokemon Go. You can actually have the set to a R mode so that you get a digital overlay of critters that appear to be in your real world environment, or you can just turn that off Savior Battery life and just play on the screen. Tracing the pattern correctly increases your chances of unconfounding things,

or at least that's what's supposed to do. In my experience, the gesture detection is a little bit wonky, and sometimes I'm told that I didn't do a very good job when I am sure I nailed that gesture, and other times I'm like, whoo, I really really messed that one up, and yet get a perfect result. So there's a lack of consistency there now. Granted, I have not played this game in a long long time, so it may be that it has improved over time, but when it first

launched I was having real issues. The game has a lot of other gameplay features in it, many of which are clever and fun when you can, you know, go outside without a care in the world. So, for example, they have port keys in this game, and you can find a port key essentially like a chest, and you can open it with a one of your keys, and that creates a portal, uh that appears in your view, so you can actually hold your phone up and you

see that there's a portal in front of you. To go through the portal, you actually do have to take steps and walk through the thing, which is why I recommend that you do this somewhere really safe, like not next to a busy road where the portal would have you walk into traffic. Anyway, once you go through the portal, you collect in game stuff that gives you special items that you can use within the game play. Like Pokemon Go, you can also purchase things within the game to give

you boosts and unlocked items much more quickly. The launch of Wizards Unite was a far cry from what Niantics saw with Pokemon Go. With Pokemon, Niantic generated more than two hundred million dollars in revenue in that launch month. Harry Potter was closer to twelve million dollars. Now that's not chump change. Don't get me wrong. I would love twelve dollars, but it wasn't a grand slam home runs

the way that Pokemon Go was. You know, everyone was thinking, Harry Potter is such a recognizable intellectual property, for sure, this game is gonna be just a license to print money. Um So, while the Harry Potter franchise is huge and and is bigger than Pokemon, has a rabid fan base as well, but the game just didn't see as much adoption early on. Whether that was because of a failure in marketing or just a lack of interest among Harry

Potter fans, I can't say. Maybe Pokemon fans were already used to interacting with Pokemon within the context of the game world and the game like like revenue structure, so the transition to playing Pokemon but in the real world had a greater appeal for those folks. But whatever the reason Harry Potter has not paid off the same way Pokemon has. Nyantik, however, continues to develop games, you know,

in between cashing enormous checks from Pokemon Go. Next up is a game that's based around the popular board game Settlers of Katan, which you know. I've never actually played. I think that means I have to hand over my geek card. I know we've got some Katan players in our office. I think Tyler and Matt might play it, but I have never sat down to a session. I only have a vague idea of how the game works. Anyway.

Nyantick announced it was working on this Katan related title back in November twenty nineteen, but we haven't yet seen the game come out, presumably really through a wrench in the works because Niantic had to dedicate a lot of resources toward optimizing Pokemon Go and Harry Potter in order

to have the play at home approach. Very very recently, just back in March of this year, this year being one, in case you're listening to this from the future, Niantick announced it was making a game in the Pickman franchise. This game will come out of the Tokyo based branch of Niantic, which was first set up back in but I think it's safe to say that the bread and

butter of Niantic continues to be Pokemon Go. While the game saw a lot of players migrate away, particularly before stuff like trading was introduced, Niantic has incorporated a lot of in game and real world incentives to bring people on board and to keep existing players engaged. That includes introducing more Pokemon. There are hundreds of Pokemon, and it's

kind of like controlled releases. So the initial Pokemon that were available in Pokemon Go, we're all like first edition Pokemon, but lots of them have been introduced over subsequent games, and Pokemon Go has capitalized on that. Uh. They also have held really large events which used to be you know, physical. It used to bring people together in the same physical location.

These days they run more towards the virtual. However, some people have started using Pokemon recently as you know, an excuse to get out in the world again as vaccination numbers are on the rise. And of course it also has included finding incentives to encourage players to purchase those dang poker coins. Now, I would say that the augmented reality nature of these games is a fairly light touch, particularly in the pandemic. The game world does correlate in

some measure to the real world. I mean, you can only encounter certain things within the Niantic games based on where you are physically on Earth. You can't find Mr Mime in the USA, you can't find Taurus in Asia unless you're trying to cheat the system through spoofing your location.

But I think most folks turn off the A OUR view of gameplay to conserve battery life, so that augmented reality part of the game is really more about just wandering around in an effort to encounter more game elements. But you aren't experiencing the game as if it's overlaid on top of the reality you exist within. So it's kind of a baby step in a R. But the success of Pokemon Go indicates that there just might be

something too augmented reality games. Clearly, the best approach is going to require the right i P, the right gameplay mechanics, the right technology to create the a R experience, and the right integration of digital elements with the real world. And that is a secret sauce that's really hard to achieve.

I mean, even if we just look at Niantic, they've really only hit the jackpot once, and even Harry Potter, which seemed like a guaranteed success story and came after Pokemon Go did, just hasn't made a huge splash compared to Pokemon So it might be a while before we see another real juggernaut in the space. Oh Marvel augmented reality game, Now, I'd be so into that. But that

wraps up our episodes about Niantic. The company, as I said, is still going like gangbusters, still developing games, and still making an enormous amount of revenue from Pokemon Go, so we're likely to see them be a big player for some time now. Hopefully they'll continue to innovate. I would hate to see it by a company that just relies solely upon Pokemon Go, but as we've seen, repeating success is never a guarantee. I hope you enjoyed these episodes.

If you have suggestions for topics I should cover in future episodes of tech Stuff, reach out to me on Twitter. The handle is text Stuff h s W and I'll talk to you again really soon. Text Stuff is an I Heart radio production. For more podcasts from My Heart radio, visit the I heart Radio app, Apple podcasts, or wherever you listen to your favorite shows.