This week, Niantic launched the much-anticipated mobile game, Peridot. Featuring AR elements, it’s a cross between Pokémon Go and Tamagochi-style virtual pets. This could be a fitting use case for geo-spatial AR, and capture some of the magic that Pokémon Go created.
Much of this has already been written over the past few days, so we’ll focus on a less-discussed component of the game’s launch: one of its baked-in revenue streams. Peridot is the first partner for Amazon’s new Amazon Anywhere program for customized merch stores.
The idea is to offer app publishers an easy way to activate eCommerce. Not only does this give app users the option to browse and buy game-themed merchandise, but it helps developers monetize through affiliate revenue. This could be a primary or secondary revenue stream.
In Niantic’s case, Peridot is fitting as its AR orientation – again, like Pokemon Go – is all about blending the physical and digital. Buying physical goods within the digital game elevates that concept to another level – representing a potential new revenue stream for AR apps.
One Stop Shop
So how does Amazon Anywhere work? Like many things, there are user-facing and publisher-facing dimensions. Taking those one at a time, the user experience involves linking an Amazon account to Peridot. Once that’s done, users can go to the custom store, browse and buy items.
The point of all of this is to make the check-out flow frictionless for users. Once accounts are linked, users can check out just as they would on Amazon (see video here). And they can go straight to Amazon anytime to check things like order status, delivery info, and returns.
The UX is also meant to give users a one-stop shop for merch. This not only has a convenience factor in being able to shop without leaving the app, but it’s highly targeted. In other words, players of a given game are “prime” targets for branded merch, which can boost sales performance.
That brings us to the publisher-facing dynamics. One of the biggest selling points is supplementary revenue, as noted. Store setup is also easy, as customization happens through curating products from anywhere on Amazon, as well as a given game or app’s own merchandise.
Besides aligning the user experience, Amazon Anywhere could lower barriers for app publishers to have eCommerce functionality. The plug & play nature of the program could be appealing to smaller app publishers who don’t have the resources or abilities to do it on their own.
Stepping back, Amazon Anywhere could be additive to certain types of apps. Though Peridot is a launch partner, we’ll see it applied to several use cases where branded merch fits (literally). For example, anything fan-based makes sense, such as ticketing or sports apps.
But back to an earlier point, are there strategic implications for AR monetization? The industry is still in the process of twisting around and growing into its own skin. Part of that involves finding the right revenue models, including in-app purchases and brand-sponsored lenses.
When looking at those two prevailing revenue models in consumer AR, only the former requires users to pay for things. And that’s rare outside of Pokémon Go. In fact, as we examined recently, most consumer AR experiences are brand-sponsored versus user-purchased.
A lot of that has to do with AR’s early and unproven state: users aren’t ready to pay for it en masse. Niantic found a way around that with in-app purchases in Pokémon Go by selling digital goods adjacent to AR. We’re talking various in-game elements to advance or uplevel.
Relative to that, merch stores won’t be a terribly consequential revenue stream, but it’s a good step in experimenting with AR business models. And Niantic could be the right company to do it as one of AR’s leaders. After all, this isn’t the first time it’s diversified the AR revenue mix.