When Pokémon Go launched on July 6, 2016, America seemed to enter into a Pikachu-fueled craze that bordered on obsession.
In its first two weeks, more than 300 million users had downloaded Pokémon Go, making it the most popular app on the App Store and Google Play. At one point, Pokémon Go boasted 28.5 million daily active users, surpassing the number of daily users on Twitter Inc. (TWTR - Get Report) or the dating app Tinder. Players leaped in front of cars while on a quest to catch 'em all, and Nintendo (NTDOY) , which developed the game in partnership with gaming software company Niantic and The Pokémon Company, added nearly $12 billion to its market cap thanks to Pokémon Go's runaway success.
While the hype mostly died out after the summer, Pokémon Go has left a lasting impression on a growing market: augmented reality technology. Pokémon Go uses a players' smartphone camera and screen to overlay life-like images of characters alongside real-world physical objects. Players would walk around a park, for example, in search of a nearby Diglet or Squirtle in the hopes of capturing one.
It was a breakthrough moment for augmented reality, and is considered a significant catalyst behind the surge in AR development across some of Silicon Valley's biggest tech companies. In the months since, Alphabet Inc.'s Google (GOOGL - Get Report) announced Lens, a product that uses a smartphone's camera to superimpose graphics on real-time video. Apple Inc. (AAPL - Get Report) released ARKit, a set of developer programming interfaces that places digital graphics on top of a real-world camera view and is due out in iOS 11. And Facebook Inc. (FB - Get Report) unveiled its Camera Effects AR platform at F8 earlier this year. Snap Inc. (SNAP - Get Report) also has its AR-powered Spectacles.
Without a doubt, augmented reality technology was being explored by numerous tech firms before Pokémon Go's release last summer. Google released its Tango AR platform in early 2016 and, years before that, Yelp Inc. (YELP - Get Report) had a hidden AR feature in its app that would show restaurant reviews on a smartphone screen when a user pointed their camera at a business. And Pokémon Go actually isn't considered a full AR experience by most experts, said Wedbush analyst Michael Pachter, which would involve a more immersive process using goggles or a headset.
Still, the app served as a noteworthy tipping point for AR. Pokémon Go hit AR right at the point where it seemed poised to break into the mainstream, said Jan Dawson, chief analyst at Jackdaw Research. Pokémon Go's AR features are relatively basic in the original version, but should become more advanced based on the version that's compatible with ARKit in iOS 11, Dawson noted. Pokémon Go put the technology in consumer's hands en masse, generating more and more buzz about AR over time.
"It certainly got a lot of people who cover the industry talking about AR on smartphones more, and we've seen a lot of press coverage of AR as a topic since then, so I'd argue the indirect effect was perhaps greater than the direct impact on consumer awareness of AR," Dawson explained.
Augmented reality has quickly developed into a massive market opportunity for many tech firms, as well as investors. Goldman Sachs predicts that AR will be an $80 billion market in 2025, with $45 billion being generated by hardware and $35 billion coming from software. AR has already begun seeping into other markets beyond gaming, such as retail, enterprise and medicine, among others.
Dawson believes we're still waiting for the "big consumer breakthrough" around AR, which may come once Apple launches iOS 11 and the ARKit at its September event in the fall.
"Those are going to make for far more compelling AR marketing than Pokémon Go ever was," Dawson added.
Editor's Pick: This article was initially published on July 6, 2017.