Pokémon Go is an augmented reality (AR) game in which players travel around cities and towns in a smartphone-based quest to capture digital creatures. The phenomenal success the game has seen since its launch on July 6 is creating an opportunity for payments companies.
Pokémon Go's success. Within five hours of its US launch, Pokémon Go became the most popular app in the App Store, according to data by Sensor Tower cited by Venture Beat. Two days later, it was installed on 5.16% of Android devices, according to Similar Web. That's more than dating app Tinder's daily active users and nearing that of Twitter's.
Pokémon Go and other AR games will become merchant aggregators. The obvious revenue opportunities for game makers are in advertising and mobile commerce. In the case of Pokémon Go, sponsored locations are part of the plan to monetize the app. Players are already going into stores to catch these highly coveted digital creatures, so it’s not hard to imagine merchants paying to have them placed in stores to incentivize customer visits. Enabling users to order and purchase goods through the app before arriving at a store could increase the chances of that footfall converting to revenue. An app with this capability would aggregate purchase volume from merchants that utilize the order-ahead feature.
The payments opportunity in merchant aggregators. Payments companies able to strike partnerships with AR game makers have a payment processing and marketing opportunity similar to what we’ve seen in ride-hailing app Uber, food-ordering app GrubHub/Seamless, and other apps that aggregate payment volume from other merchants. Just to give an idea of the processing opportunity, GrubHub/Seamless processed 271,100 orders a day in the second quarter of 2016. That's about $8 million in daily food sales. For US quick-service restaurants (QSRs), we forecast that mobile order-ahead payments will grow at a five-year CAGR of 57% [...]