Pokémon Go is finally set to make its debut in China after its developer Niantic struck a partnership with local games company NetEase. Alongside a new Harry Potter game, the monster-hunting app’s launch in the world’s largest mobile market will help Niantic return to growth after revenues dropped in 2017, compared with the Nintendo-backed game’s blockbuster debut a year earlier. “In 2016, our hair was blown back by the launch and the after-effects of the [Pokémon Go] launch,” John Hanke, chief executive of San Francisco-based Niantic, told the Financial Times in an interview. “Revenues [in 2017] were not as high as they were in 2016 for the year but they were very strong.” Pokémon Go’s sudden surge in popularity in the summer of 2016, when hundreds of millions of people downloaded the app, “really felt like a SpaceX launch”, he said, referring to Elon Musk’s rocket company. But many of those users had stopped playing by the end of the year, leaving a smaller but “solid” community of Pokémon Go gamers who saw more regular updates and new features in 2017, Mr Hanke said, such as real-world weather affecting the virtual gameplay. “I would say 2017 was about firing the second stage and getting into a stable orbit,” he said, continuing the rocket metaphor. “2018 is about the journey to Mars.” Niantic’s fuel for that voyage is a new $200m funding round from investors including China’s NetEase, providing the partner that the US company has needed to launch legally under Chinese internet regulations. “We absolutely intend to bring our existing games into China,” Mr Hanke said. “Beyond that, there are opportunities to build games in China, both for China and for the world.”
Even before November’s fundraising, which valued the company at more than $1bn, Niantic was still “operating profitably” and had built a “very large nest egg” from Pokémon Go, Mr Hanke said. “We continue to grow our cash reserves daily as we run the business,” he added, but the extra financing gives Niantic the ability to invest in its technology platform and make acquisitions. The next big game Niantic has announced is based on the Harry Potter franchise. Mr Hanke said Niantic teamed up with Warner Bros to develop a Harry Potter title because, like Pokémon Go, it is a “real rarity” that has the potential to appeal “across generations”, to women as much as men, and to players all over the world. Harry Potter also lends itself well to the “augmented reality” format that Niantic popularised with Pokémon Go, inserting virtual objects into the real world, as seen through the lens of a smartphone camera. “The ‘muggle’ world and the wizarding world are only separated by this thin veil,” Mr Hanke said. “It’s very easy for us to imagine bringing that kind of magic into our everyday lives . . . It would be much harder to bring a convincing Star Wars game into AR in any way that is not just a gimmick.” The Harry Potter game is scheduled for release in the second half of 2018. Since Pokémon Go’s sometimes chaotic debut — in which servers were overloaded by demand, causing recurring service outages — Niantic is “so much better positioned” now, Mr Hanke said. The lessons from Pokémon Go were not just technical, though. “In terms of dealing with public locations, government policy, regulations and public reaction to people being out in the real world [playing its games], we have built up our expertise there,” he said, so that in-game hotspots that cause real-world problems can be removed or changed.
Many analysts tip 2018 to be a turning point for the augmented reality industry. Apple, Google, Facebook and Snap have all released new platforms for developers to create AR experiences in the last few months, while the secretive Google and Alibaba-backed start-up Magic Leap plans to release a “creator edition” of its long-awaited AR goggles in 2018. Apple’s ARkit technology was added to Pokémon Go in late December, allowing for more realistic positioning of its monsters on the street around the player and adding new gameplay features, such as having to sneak up on characters in order to catch them. “We wished we had been able to do that at the very beginning of Pokémon Go,” Mr Hanke said. “That was always the vision but it wasn’t as convincing as we would have liked it to be — it didn’t really feel like they were part of your world.”