As a barely 30-something, Pokémon is enshrined into my and the childhood memories of many others.
It, therefore, wasn’t surprising to see the craze that took place when Pokémon Go, a mobile game utilizing augmented reality (AR) technology, was first unveiled during the summer of 2016.
Although the hysteria around the game has largely subsided, it remains popular and continues printing money.
With that being said, let’s take a look at how Pokémon Go came to be, the joke that led to its founding, and how it did post-hype.
Life Before Pokémon Go
Naturally, one would assume that Pokémon Go is either owned by Nintendo or The Pokémon Company, which was spun out of Nintendo back in 1998.
However, neither is the case. Instead, Pokémon Go has been developed and operated by game studio Niantic Inc., itself a product of a Google spinout.
But let’s rewind the tape all the way back to 2000, shall we? A 33-year-old John Hanke just started Keyhole, a tool that would help visualize geospatial data.
The tool was so powerful that even federal agencies like the Central Intelligence Agency (CIA) vis-à-vis its venture arm In-Q-Tel signed contracts with and even invested in the company.
Meanwhile, another Silicon Valley startup was wooing investors and users alike. Its name? Google. The company quickly grew from the founders’ garage into one of tech’s fastest-growing startups.
Around 2004, Google started to realize that a significant portion of the searches that people conducted had some level of geographical association (e.g., people looking for maps).
Therefore, in October of that year, Google announced that it had acquired Keynote, with founder John Hanke joining as a full-time staff member.
The technology that it acquired, namely the 3D satellite imagery, was consequently integrated into Google Maps, which was launched in February 2005 and is now a key revenue driver for Google.
Hanke would go on to lead the division that was responsible for maintaining and enhancing Google Maps for the next 5 years.
Then, in 2010, he had an idea. At the time, smartphones were getting more sophisticated while access to broadband internet only expanded, leading to an onslaught of new location-based startups like Uber.
Hanke figured that one could use digital maps, more precisely Google’s own product, to incentivize people to go outside and explore their surroundings.
Luckily, Google incentivized its own employees to set aside time for moonshot projects they thought could advance the firm. Examples like Orkut showed that Google employees were able to build large-scale platforms that acted independently of the search giant.
So, sometime in 2010, Hanke and Phil Keslin, a Google software engineer at the time and previously Hanke’s co-founder at Keynote, started Niantic Labs within Google.
Three years later, in December 2013, they released an augmented reality mobile game called Ingress. The game, which required people to find virtual portals that resembled real-world locations, would go on to attract over 20 million players since it was launched.
One would think that the overwhelming success of Ingress sparked the idea for Pokémon Go. However, it actually all began with an innocent April Fool’s joke.
It All Started with a Joke
Companies chiming in on April Fool’s Day is all but too common. But in 2014, Google would go on and outdo itself with a joke for the ages.
The company created a ‘game’ in which users could search for Pokémon on Google Maps. The alleged game resembled many of the characteristics that made titles like Where Is Waldo? so popular.
The Pokémon would be represented as icons on the map, just like the restaurants and other venues featured on Google Maps. Players, in order to catch one of the alleged Pokémon, had to click on the said icon.
Google released a video alongside the title, which went into detail about how its game could be played.
To get people even more hyped, Brian McClendon, VP of Google Maps, announced in the video that the winner of the game (i.e., the person that caught the most Pokémon) would start at Google on September 1st, 2014.
Millions of people would watch that video within hours of its release. And although it obviously turned out to be a joke, the excitement with which it was certainly noteworthy.
People in the comment section were actively pushing Google to team up with Nintendo. And they weren’t the only ones on to something.
Hanke allegedly went to Niantic’s director of Asia Pacific, Masashi Kawashima, and asked him whether the fake game “could be done in the real world.”
And as fortune would have it, it certainly could be done in the real world. Niantic’s negotiations with Nintendo were aided by the fact that Tsunekazu Ishihara, CEO of The Pokémon Company, was an avid Ingress player.
At the same time, Nintendo was going through a major slump after its newly released Wii U console had gone through various quarters of poor sales performance. Nintendo had also missed the mobile wave and was traditionally very adamant in licensing its IP to outside parties.
Lastly, in August 2015, Google became part of a holding structure called Alphabet, which owned other types of businesses such as Waymo. Hanke was eventually able to convince Google execs to spin out Niantic into its own company because potential partners like Nintendo were concerned about Google’s ever-increasing power.
So, two months later, John Hanke and Phil Keslin officially incorporated Niantic Inc. as a standalone company. Google, alongside Nintendo and The Pokémon Company, invested $20 million into the company’s first funding round (they raised another $5 million a few months later).
What happened next was certainly unexpected for everyone involved.
The Global Phenomenon
After Hanke and Keslin incorporated the business, it was time to get to work. Over the course of the coming months, the small team at Niantic began work on the game.
The Pokémon Company, to let the public know what they and Niantic were up to, released a teaser video to get the public excited for what’s about to come.
Then, on July 6th, 2016, after months of waiting and amped-up excitement, Niantic released Pokémon Go in the United States, Australia, and New Zealand.
And the craziness literally started from day one. Just 48 hours into the release, CEO Hanke told Business Insider that the rollout to other countries would be halted due to the sheer number of downloads.
The hype was so immense that Nintendo’s share price jumped by over 25 percent – and ultimately came crashing down when reporters found out that Nintendo wasn’t actually making that much from the game, to begin with.
Nintendo’s stock wasn’t the only thing going crazy, though. Players would be directed to other people’s properties or ambushed by robbers. Some reported that the game put them into the ER. And one player even found a dead body in the water after being directed to a location.
This also forced Niantic to reorganize its map and PokéStops. For instance, players would often frequent the 9/11 Memorial in New York City, which caused tons of public uproar and forced Niantic to abandon the location.
Luckily for Niantic, the craze remained undeterred. Pokémon Go quickly became the fastest-growing app in both Android’s and Apple’s history. The enthusiasm would only be amplified by the game’s release in Asia, Europe, and Latin America within the ensuing two to three weeks.
However, its popularity brought on another challenge: cheaters. Developers would create third-party apps that enabled players to teleport themselves to all sorts of locations or use emulators for PC gameplay. Niantic, to combat the issue, began to hand out lifetime bans and blocked third-party software, which also decreased the load on its servers.
By early September, exactly two months after Pokémon Go was released, the game had already crossed the inaugural mark of 500 million downloads.
This also meant big bucks for creator Niantic. In 2016 alone, the game generated $832 million according to Sensor Tower. These days, Pokémon Go makes money from in-game currency sales, advertising, events, and hardware.
But as the warm weather across the Western hemisphere began to subside, so did the excitement for Pokémon Go. And although the game never saw the same level of global hype, it nonetheless remains popular across the globe.
Life After the Hype
By the time winter 2016 arrived, the interest in Pokémon Go had visibly declined. While the cooling weather certainly played a role, it only told a part of the story. Niantic was certainly to blame as well.
Many players issued complaints with regard to the speed of newly released features. For example, a key component of the classic Pokémon handheld games was the ability to fight other trainers. This crucial feature was missing for the first 2.5 years of Pokémon Go’s release, though.
Instead, Niantic tried to appease players by releasing new Pokémons. In December 2016, for example, it unveiled 100 new creatures from “Pokémon Gold and Silver.”
Niantic, to celebrate the one-year anniversary of the game, also organized in-person events throughout the United States. Ironically, those didn’t always go as planned. Due to the sheer number of people at the same speed, mobile connections started to get cut while the ones who were able to connect found themselves constrained by Niantic’s server speed.
Special in-person and virtual events remained a staple in Niantic’s toolbox to engage players. Legendary Pokémon, for example, would often be made available only during those event periods.
As a result, the game surpassed 750 million downloads in early June 2017. It has to be noted, though, that these are just downloads and not active players, which were likely much lower.
The continuous success also enabled Niantic to tap into the capital markets. It capped 2017 off by raising $200 million, led by Spark Capital, in November. Fundraising then enabled Niantic to snap up a variety of different startups, which helped improve the gameplay of Pokémon Go.
In June 2018, for example, it scooped up Matrix Mill, a startup building image recognition technology that renders real-world objects and allows virtual characters to interact with them.
Apart from acquiring companies, Niantic continued to refine the whole game experience. In late 2018, it finally introduced P2P battles, thus allowing players to battle each other for supremacy. Niantic also revised its banning practices, for example giving players three strikes until they would be banned completely. Meanwhile, Niantic released other AR-related titles, such as Harry Potter: Wizards Units, as well.
Some of Niantic’s decisions weren’t met with too much fanfare, though. In June 2019, it shut down the dedicated Pokémon Go Apple Watch app, which enabled players to sync their progress and play the game on separate devices.
However, Niantic’s greatest challenge was yet to come. Throughout 2020 and beyond, it had to gripe with the effects of an event that humanity had not seen in over 100 years.
Although Niantic never disclosed the impact the Covid-19 pandemic had on its suite of AR-based games, there’s no denying that it played a key role.
When the pandemic finally hit the Western world in March 2020, Niantic was quick to react. In an interview with Polygon, it stated that it would be “prioritizing updates to Pokémon GO features and experiences that can be enjoyed in individual settings.”
For example, it changed the dynamic of the Raid battles, which previously required players to meet at a certain location and specific time. Now, Raids could be conducted remotely and without the need to meet up in person.
Pokémon Go also doubled the radius with which players could interact with each other, thus ensuring proper distancing. Even steps that were taken indoors, for instance on a treadmill, would contribute to the distances recorded within the game.
To Niantic’s credit, it also began promoting small businesses, which were hit particularly hard by the pandemic, by allowing them to advertise for free on its platform (i.e., become an in-game location such as PokéStop or Gym).
Interestingly, the move from in-person to virtual did not affect Niantic’s bottom line whatsoever. Sensor Tower reported that Pokémon Go generated a whopping $1.12 billion throughout 2020, up more than 50 percent from the year prior.
Unfortunately, not everything was always going according to plan. Niantic, in August 2021, faced a player revolt after it prematurely rolled back the above-mentioned safety features. A Change.org petition even garnered close to 200,000 signatures from users against those changes.
Due to the mounting pressure, Niantic retraced and kept its previous safety measures in place. “We should be communicating and engaging more with [players],” one of Niantic’s employees told Venture Beat. “I hope that, with your patience and understanding, we can do better here. There are many ways we can improve, but to start, we’re making the following commitments.”
One of those commitments was a developer diary that Niantic would publish every month. The written piece would consequently update the player base on any changes the company aims to undertake.
Niantic, with a valuation of $9 billion and hundreds of millions of dollars in raised funding, certainly has the necessary firepower to double down on Pokémon Go.
Additionally, the firm has shelved multiple titles, including Harry Potter: Wizards Units or Catan: World Explorers.
This consequently means that more focus is being put towards the development of Pokémon Go and Ingress while titles for franchises like Marvel and the NBA are in the works.
With regards to Pokémon Go, this primarily means that Niantic is focused on introducing new social features to the game (on top of the existing battle modes or the ability to connect with friends).
The firm’s various acquisitions have also enabled it to enhance the appearance of the game. In October 2022, for instance, it unveiled a visual upgrade that would better reflect the environment a player finds himself or herself in.
Niantic is also engaging in initiatives that might benefit Pokémon Go and its other titles going forward. Its Lightship platform gives third-party developers access to tools for creating real-world AR experiences. Some of those creations may eventually be integrated into its games, too.
Additionally, Niantic is working on an AR-based headset together with Qualcomm, which could drastically alter the Pokémon Go and other AR experiences for the better.
One thing remains certain, though: the quest to catch ’em all remains exciting as ever…