Pokémon Go: How the Pokéconomy Is Changing Business, One Lure at a Time

Pokémon Go($0.00 at Apple.com) is a worldwide phenomenon. It's fun, it's addictive, and it's absolutely everywhere. You can't walk down a street without bumping into a few wandering trainers flipping Pokéballs at New York City's bursting population of Doduos, or a group of strangers huddled over their smartphones on a street corner for no other reason than the Lure Module brought them together for 30 minutes at a time.

Pokémon Go is what happens when you take a beloved video game property with two decades' worth of smartphone-wielding fans, and give them a free augmented reality (AR) mobile application that forces them to walk (and keep walking) around their neighborhoods. The app has its own internal freemium monetization with its Shop, but Pokémon Go is also transforming the power of Internet-driven e-commerce for the brick-and-mortar retail and service world. The millions of US-based small to midsize businesses (SMBs) amidst a sea of Pokéstops and Pokégyms are now seeing a seemingly endless stampede of foot traffic toward the point-of-sale (POS).

The app's only been out a week, and already there are bars, restaurants, retail stores, and businesses of all shapes and sizes—from Florida to California—trying to figure out how to monetize on it with deals, promotions, special events, and an endless supply of Lure Modules. We're living in an entirely new Pokémon Go-driven economic environment: the Pokéconomy.

A Brave New 'Pokémon Go' World
After not playing Pokémon Go for the first few days it was out, walking down the main avenue near my apartment this past weekend felt like I was wandering into some kind of utopian carnival. Every popular brunch restaurant up and down the block had its usual line out the door, but brunch-goers all dropped Lures to catch some Pokémon while they waited.

At the pizza place across the street, every time I looked, it seemed as if someone had set another Lure with half a dozen Pokémon trainers camped outside and a few more making pit stops inside for a slice. The dive bar around the corner is a Pokégym, with customers flowing in and out all day and night to have a few drinks and get their battle on.

That's just one avenue in one city. Aside from offering Pokémon Go players a hub to charge their fast-draining batteries, the SMB economy around the AR app craze is pulling out all sorts of stops in every which place.

It all starts with Lures. Pokémon Go players pick up lures normally as items during gameplay and when leveling up, but buying Lure Modules is about as effective and immediate a source of hyperlocal advertising as a business could possibly ask for. One Lure Module costs 100 Pokécoins and a pack of eight Lure Modules costs 680 Pokécoins. The coins themselves you can buy with real money and 100 of them costs only 99 cents. That's 99 cents for 30 minutes' worth of guaranteed customer traffic. You can also buy Pokécoins in allotments all the way up to 14,500 for $99.99, so a business could conceivably set a Lure every half hour on the hour for the duration of its entire store hours. If you pull up Pokémon Go from the PCMag Labs in Manhattan and pan around the full 360 degrees, you can spot dozens upon dozens of Lure Modules set in parks, by monuments and landmarks, and right in front of countless businesses.

Any business can be a Pokémon Go destination, and entrepreneurs are already promoting their establishments as such. L'inizio's Pizza Bar in Queens spent approximately $10 on Lure Modules and saw food and drink sales spike by more than 30 percent this past weekend, according to Bloomberg, which also reported that Brooklyn bar Pacific Standard put up a chalkboard outside joking: "Pokémon are for paying customers ONLY!" Elsewhere in Brooklyn, the NYC Pokémon Go Bar Crawl is scheduled for Saturday, July 23, starting at Barcade, with thousands of people already signed up.

Bon Appetit reports that businesses from Flying Saucer Pizza Company in Salem, Massachusetts, to Huge Café in Atlanta are seeing huge in-store traffic bumps, either from buying and dropping Lures or from the good fortune of being located near Pokéstops. Flying Saucer Pizza Company is encouraging customers to post a Pokémon Go picture to social media and then tag the restaurant to automatically enter a daily raffle for gift cards.

From outside the restaurant where we ate dinner tonight. There was a Pokestop next door with lure constantly active. pic.twitter.com/cfQ05yIdl8

— Steve Lubitz (@WickedGood) July 11, 2016

Social media promotion is almost as important as setting Lures, and some establishments are also running deals on different Pokémon Go teams (players choose to join one of three teams: Team Mystic, Team Valor, or Team Instinct). CitySen Lounge in Grand Rapids, Michigan, is offering a 10 percent discount for Team Mystic. Zoe's Kitchen in Texas is offering a $25 gift card to anyone who catches a Pokémon in one of their restaurants and tweets it.

In California, Rosine's Restaurant in Monterey is using Pikachu to promote its pastries. Grind Coffee House in Diamond Bar pledged to drop a Lure Module for every 15 paid drinks. ShowDown, a gaming events space in San Francisco, is hosting a Pokémon Go party with non-stop Lures and live DJs.

Throwing a Pokemon GO Party at this Pokestop tomorrow with @ShowdownGG - Lures all night - DJs 6pm to 12pm pic.twitter.com/Uw3aykAMvW

— G?IMΞCRAƒT (@GRIMECRAFT) July 12, 2016

The Pokéconomy is booming in Florida, too. In Palm Beach, the Palm Beach Zoo and the Morikami Museum are posting the different types of Pokémon players can catch there. The Grasslands Brewing Company in Tallahassee partnered with local bars to host a Pokémon Go bar crawl of their own. The Orlando tourism industry is gearing up a city-wide campaign. In Tampa Bay, a vintage fashion store called La France discovered it was a Pokéstop location, and responded with the sign below.

The list goes on and on, and it's only just the beginning. Larger retail and restaurant chains may be the next domino to roll out Pokémon Go promotions and Lure strategies on a larger scale. Heck, this might even be the boost Chipotle needs to dig itself out of its E. Coli-induced hole.

Will Niantic Turn the Ad Hoc Pokéconomy Into a Real One?
Despite its massive popularity and Nintendo's skyrocketing valuation, from a technical perspective and consequently a business one, Pokémon Go is still very much in beta. There's a pile of issues with the game, from constant server crashes, GPS issues, and gameplay errors, to an extremely basic feature set that lacks many of the elements Pokémon fans are used to, such as battling other trainers (outside gyms) and the inability to actually "train" their Pokémon outside of leveling up using "candies." Then there's the major Google account permissions and privacy issues, for which Pokémon Go publisher Niantic issued a fix on Tuesday.

This buggy, basic state of affairs is doubly true for businesses. Niantic Inc., a software development start-up spun off from Google as Niantic Labs (and counting Google, Nintendo, and Nintendo subsidiary The Pokémon Company as investors), built Pokémon Go on the same geolocation database used to run its first AR release, location-based massively multiuser online game (MMOG) Ingress. Niantic CEO John Hanke is a Google veteran who worked on Google Maps, but the issue with the Ingress database is that the location data can be outdated and that, as of now, there's no crowdsourced way to add or apply for new Pokéstop or Pokégym locations.

Hanke told Mashable that, when building the mapping technology that powers Ingress and Pokémon Go, Niantic began by populating Ingress "portal" locations (the same geolocations now used for Pokéstops and Pokégyms) based on historical buildings and markers, unique or famous local businesses, and a data set of public artwork mined from geo-tagged Google photos on Google. Niantic then asked Ingress players to submit new portal locations.

"There have been about 15 million submissions, and we've approved in the order of 5 million of these locations worldwide," said Hanke.

Hanke said there are a ton of upcoming features in the pipeline, including trading capabilities and more immersive Pokéstop and Pokégym experiences. But the question for businesses is whether Niantic will embrace its true Silph Co. destiny and begin letting SMBs pay to mark their establishment as a Pokéstop or Pokégym. If (and probably when) Niantic opens those floodgates (assuming the company can keep improving the app experience and keep the daily active user numbers high), the Pokéconomy has the potential to graduate from small-time Lure buying to a game of true "AR Monopoly."

From there, the possibilities are endless. Niantic could charge a flat fee for a Pokéstop or Pokégym, or even charge a low monthly rent. Businesses could buy evergreen Lure Modules that never run out, and might even begin charging trainers for entry and battles to make up the difference. The company already has a form for establishments to submit a request to remove their location as a Pokéstop or Pokégym; all they need to do is flip it.

The advertising and hyper-local marketing efforts around Pokémon Go have thus far happened on-the-fly in response to a tech and cultural phenomenon the likes of which we've never seen before. As soon as Niantic decides to take ownership of it, the economic game will drastically change. Update: Niantic did tweak the form. Businesses can now request new Pokéstops and Pokégyms. Simply enter the type of business (single or multiple), what you'd like to name the stop, and the address along with your email address and a brief explanation, and Niantic's business development team will review the request.

If the app's historic launch and the first wave of local business promotions are any indication, SMB owners will pay. Niantic hasn't even built in social media integrations yet but, once players can post and tag directly to Facebook, Twitter, Instagram, Snapchat, and Vine without even leaving the Pokémon Go app, businesses may be even more apt to pay for prime virtual real estate. According to The New York Times, Hanke has confirmed Niantic will announce sponsored locations for Pokémon GO in the future. For now, businesses seem perfectly willing to drop a few bucks at a time on highly effective AR advertising, making it rain pink and purple petals as far as your app's geolocation can see.

For more, see Pokemon Go: How to Get Started and Catch 'Em All.

Editor's Note: This story was updated on July 14 with new information about how businesses can request Pokéstops and Pokégyms.