What Does Pokémon Go Mean for Investors?


Recently, reports have come in on the increasing number of disorganised crowds gathering at public places. People are converging on random places throughout the city, holding their cell phones and engaging in some form of online activity. This strange phenomenon is sparking curiosity all around the world.

The authorities have demanded answers. I’ve got the answer! They’re playing Pokémon Go!

Just what is Pokémon Go? It is a new smartphone game released by videogame giant Nintendo Co Ltd [TYO:7974]. The app utilises augmented reality technology to allow players to catch ‘Pokémon’ in the real world. And what is that? Augmented reality, or ‘AR’, is when the real world is in some way blended with the virtual world. For example, if you wear a pair of digital glasses and it helps you to drive by displaying the speedometer on the glasses, then it can be classified as a basic form of augmented reality.


And what is ‘Pokémon’? Pokémon is a franchise of games, cartoon series and merchandise; it originated from Japan in the 90s. Its cartoons and games were distributed by almost all networks around the world. Pokémon is near and dear to pretty much everyone who grew up in the 90s.

Pokémon stands for ‘pocket monsters’. These monsters were confined to the virtual world in the 90s, and are now released upon the real world via AR. The game app links the Pokémon game to the GPS system on your phone. It displays where you can ‘catch’ certain pocket monsters by physically being at those locations. For example, many rare pocket monsters are spotted at the Suburb of Rhodes in Sydney. As a result, players have physically travelled there to catch those pocket monsters.

It sounds all very bizarre and childish, doesn’t it? It perhaps it is, but it hasn’t stopped the 20–30 year olds (who were born in the late 80s and early 90s) from spending hours travelling to locations to carry out this ‘ridiculous’ exercise.

On the other hand, Nintendo’s share price is no joking matter. It surged close to 40% in just a few days due to the overwhelming response to the game. Since launching on 6 July, Nintendo’s stock is up a whopping 51%.

Pokémon Go could be seen as the latest in a trend of entertainment capitalising on nostalgia. Comic books, TV shows, videogames and movies from my generation’s childhood are big business these days.

I reached out to Richard Li, Executive Chariman of GoConnect Limited [ASX:GCN], for his view on this.

GoConnect Limited is an ASX-listed media firm with an ambitious Virtual Reality strategy in China. Richard’s reaction was simply, ‘It shows VR/AR is starting to get its message through to Wall Street instead of just staying on Main Street.’

GoConnect is another interesting tale. I have been in contact with Richard for a good few months. During this time, he has moved his firm very quickly towards developing, partnering and readying their own Virtual Reality products. The company has an interest in agricultural products, consumer retailing, media content, and now virtual reality. Richard sees virtual reality to be the binding technology between all these different segments of the business. As a result, they are developing their own virtual shopping experience and virtual media experience.

GoConnect is among the firms that are catching the Virtual Reality/Augmented Reality boat early. Nintendo is living testament to how huge and life-changing this technology can be. The eventual ‘merger’ between the virtual and the real will happen very soon, and some stocks will skyrocket because of this technology.

Digital Revolution II

Some call this the ‘new digital revolution’. To me, it is only an essential part of the new world, a world where the boundaries between ‘real’ and ‘virtual’ are completely broken. As far as Pokémon Go is concerned, I have never seen anything like it. I have seen games that utilise the concept of GPS positioning, but none at this scale and with such power to mobilise people. It does seem that Nintendo has hit the Jackpot this time.

The potential applications of Virtual Reality and Augmented Reality are too many to mention. As investors, you ought to choose companies with a solid plan to anticipate and capitalise on this trend. It’s more than likely that structural change will take place in peoples’ purchasing behaviour because of the technology. We will consume digital and real goods very differently, we will buy and sell goods very differently, and we will communicate very differently. For example, we are about as close as we can get to those ‘Virtual helmets’ imagined for education.

In essence, expect big changes in the days ahead, and invest early to capture those emerging trends in VR/AR.


Ken Wangdong,
Analyst, Emerging Trends Trader

Editor’s Note: This article was originally published in Money Morning.

The Daily Reckoning
The Daily Reckoning offers an independent and critical perspective on the Australian and global investment markets. Slightly offbeat and far from institutional, The Daily Reckoning delivers you straight-forward, humorous, and useful investment insights from a world wide network of analysts, contrarians, and successful investors. Founded in 1999, The Daily Reckoning is published in 7 countries with a worldwide readership of almost 1 million people.

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