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AR is a “thing” in mainstream consciousness, due largely to Pokémon Go. And its parent company Niantic isn’t stopping there. It’s doubling down with continued updates, longevity, and strong revenue; not to mention launching Harry Potter, Wizards Unite and its Real World Platform.
The latter is the least discussed but most important Niantic initiative. It packages the architecture, learnings and scaling achievements of Pokémon Go into a developer platform. As examined, it’s also doing the industry a favor through large-scale UX and business-model experimentation.
At the center of all of this is Niantic’s AR lead Ross Finman. As he discusses with Jason McDowall on a recent AR Show episode (audio below), there are several learnings and lessons to extract from this massive effort. First and foremost, AR is a technology… not an app or a finished product.
Finman has been outspoken in this assertion that AR sits further down in the tech stack as an enabling technology. That realization is important as it informs how AR should be developed and deployed. It also manages expectations for the timing and nature of AR’s consumer penetration.
“Do remember that [AR] is a technology and not an application […] There are things that touch on an emotional need and there’s also, on the business side, a useful need. It’s thinking through what is that application? And can AR actually speed that up? […] There are applications being explored that may not: It’s kind of like AR got shoved in there […] AR is a good component of [Pokémon Go], and it is an AR game. But people didn’t download it for AR. It’s key to know that AR can enhance the experience. It cannot create the experience. So designing AR for AR sake is a fallacy in the AR market today”
Along these lines, AR is most successful when it (borrowing from Charlie Fink) takes what we’re already doing and makes it better. This is aligned with our “training wheels” analogy to meet users halfway with AR that doesn’t deviate widely from their comfort and cognition.
This can be seen in successful apps of the smartphone era. Finman invokes Uber, which wasn’t that much different than a taxi service in terms of fulfilling a need and getting you to a destination. But it did it much better and eliminated pain points like hailing cabs, fraud and paying with cash.
This notably pulls back from an earlier rally cry from some (including us) that AR should be “native” in terms of creating new apps that are completely unique to the technology’s capabilities. The concept is valid but baby steps need to be taken towards that goal, a la training wheels.
“Starting with an AR-first approach, I’m not sure is going to be the most successful start […] The mobile phone started off as a phone, and then it grew into becoming much more a part of our everyday lives […] The initial iPhone release: Everyone’s like… ‘It’s a phone. Yes. It’s a music player. Yes. An internet-enabled device? I don’t know what to do that.’ So start off with what people already do, and make that easier and better. There’s a small group of the population that will try out new technology for the sake of it. But it’s more for the novelty. You need to solve a need — either emotionally or use.”
Another tactic that aligns with this thinking is to focus more on the end experience versus tech specs. This approach has vaulted PSVR, Nintendo Switch (and now Oculus Quest) in their respective device classes; and is a similar lesson we recently heard from Tilt Five’s Jeri Ellsworth.
Finman similarly espouses the principle that the best technology recedes into the background, rather than creating abstraction layers for the user. And in that respect, the key performance indicator that makes the most difference to him isn’t typical usage analytics, but rather smiles.
“AR, when it works perfectly, should be invisible and no one should be able to see it and recognize it. And it’s more about the experience and the people. So with Pokémon Go — speaking as a technologist who spent many, many years in the computer vision space — what is most impressive is that hundreds of millions of people smiled. They enjoyed it. They caught their first Pikachu or Charmander or Squirtle in the real world […] That’s the emotional state, or solving a problem for them. Augmented reality is a pure technology, which is interesting. But it doesn’t solve a problem by itself. It enables problems to be solved.”
Speaking of emotion and utility, Finman segments AR’s biggest value into three main categories. The first is as an instructional tool (think: assembling IKEA Furniture). The second is for visualization (think: furniture placement). And the third is to fulfill a fantasy, a la Pokémon Go.
These use cases importantly trace back to human needs and goals. The first two are utilities for productivity or saving time. The third is for entertainment and emotion, hence the smile KPI. Apps will evolve along with the hardware, like AR glasses, but these humanistic end goals will persist.
Meanwhile, there are lots of ways Niantic thrives as a business. It brought in an estimated $3 billion to date in player revenue — a rare feat given the common longevity-arc of mobile games. It’s also creating revenue streams in in-game sponsorship, including tapping the long tail of SMBs.
Underlying all of this is a “raise all boats” ethos at Niantic. It’s a business but it knows it can succeed on a larger scale if the AR industry — and consumer AR penetration — grows. It’s paving the way and uncovering key AR product strategies, but several others will follow by design.
“In terms of the market, Niantic has the number one and number two games. So it’s a fortunate spot to be in. I hope more of you are in that race because we want to have a smaller slice of a bigger pie. It’s not good that we’re such a large percentage of the market at the moment.”
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