You might not have heard about it yet, but you will have probably noticed it’s effects, with lots of people walking around town this past weekend staring into their cellphones, trying to ‘catch em all.’
Pokemon Go is upon us, and it’s quickly become a phenomenon. A mobile app that allows Pokemon fans to hunt for and catch pocket monsters in the real world, using augmented reality (what took them so long?), the game has done the unthinkable and actually got video game fans out into the sunshine.
Personally, I spent most of the weekend with my kids playing the game, wandering around town capturing Magikarps, Pidgeys, Zubats and the occasional Jynx. In fact, the Urban Fair grocery store across the street has become a trainer gym, guarded by a very ominous looking goldfish. But I digress.
This is a big deal. We’re talking Farmville big. Angry Birds big. The difference being, this is a game parents will actually encourage their kids to get outside and play – and play with them, if my own experience is anything to go by.
So what does that mean for your wealth situation?
Well, a load of folks have gone out and bought Nintendo stock this morning (OTC:NTDOY), leading that company to jump 35% over where it was just a few days ago.
So buy Nintendo, right?
Well, no. Look, Nintendo doesn’t have Pokemon all to itself, and it got another company (Niantic) to actually create this game for them, like it does just about everything it sells. The Pokemon Company is a three-way joint venture, with privately held Japanese video game producers Game Freak and Creatures joining Nintendo.
Niantic was an internal startup at Google some years ago, built to take advantage of augmented and virtual reality tech as that tech found its feet. The company was spun out of Google late last year as part of the Alphabet restructure and, shortly before that move, it was announced Google, Nintendo and The Pokemon Company would invest a total of $30 million into them.
If I was going to invest in anything in this brave new world, I’d be trying to find a way into Niantic, because the tech they’re using for the Pokemon game has WAY more upside than just this SKU.
Imagine a Dora the Explorer game where your kid can actually go exploring around the park. Imagine a game that rewarded hikers for hitting spots on an actual trail at a given resort, or corporate-sponsored treasure hunts where consumers are rewarded for stopping in at the Starbucks they just passed rather than driving by.
Imagine Call of Duty where you and your buddies hunt other teams in the streets of your real world city. Imagine tourism apps that talk to you as you drive by the World’s Biggest Chicken. Or an edition of The Amazing Race played by an entire nation, battling it out to hit checkpoints before everyone else. Or city-wide games of tag, where you only know someone is playing, or is ‘it’ by seeing the virtual halo around them with your phone camera.
And it’s already happening. Madame Tussaud’s wax museum in New York just released a virtual reality game where visitors can use their phones to chase ghosts around the building, in celebration of the new Ghostbusters movie. In this case, the company doing the work is called The Void, which is planning VR amusement parks.
Niantic is on the leading edge of something HUGE, and Pokemon is just the easiest implementation of it. You know those future movies like Wall-E, where people have become so attached to the virtual world that they check out completely from the present?
That’s this. It will not be a small thing.
Problem: You can’t invest in Niantic. It’s private and divied up between guys far wealthier than the level of buy-in you could make. So what’s next?
Look past Nintendo. Buying Nintendo stock today is like buying Tesla stock – the upside is already gone, and the downside is large. What’s really going to drive that coming trend is what’s under the hood.
Getting ahead on the virtual reality kick on the public markets isn’t so easy. There are a lot of little startups, a lot of VC heavy private deals, and a lot of companies that touch on the space but don’t live there.
While writing this story, however, I recalled a company that has long been coming to Canada’s public markets and fits the bill TREMENDOUSLY.
Ydreams (ALE.V).
I’ve been talking about Ydreams for a year now. The wait for them to finally get public has been rough, but coming as they are from Brazil, which is getting a bit gnarly politics and economy wise, the exchange has reportedly made them jump through a lot of hoops and ensure they’re legit before welcoming them in.
I have it on good authority, that process should be done in the next week.
Talk about great timing! Augmented reality finally emerges as the real world potential gamechanger that it’s always threatened to be, and it happens the week before Ydreams is hitting the Canadian public markets.
They’re not João Come-Latelies on this scene. The video below is of their virtual aquarium product, which they were putting in shopping malls in South America five years ago.
Here’s the virtual garden smartfloor they released as a product way back in **2008**, when your cellphone was still playing ‘Snake.’
And augmented reality tourism facilities, also in 2008.
And this one? That’s the side of a hotel that you can draw on in the real world using your smartphone app.
You can’t invest in Pokemon, or Niantic, or Game Freak. You could invest in Google (NASDAQ:GOOG) or Nintendo, but no matter how big Pokemon Go gets, that’s not going to effect either company’s bottom line.
But Ydreams is an established group that has been doing this for a decade-plus, that have done it with companies like Coca Cola and Nike and banks and oil companies and hotels and around events like the World Cup. You haven’t heard of them because they’re Brazilian. They haven’t made hundreds of millions of dollars because, again, they’re Brazilian, and that economy is about as beaten up as your average African tyrant state.
It’s a company that has a thick book of EXISTING virtual and augmented reality products that they had working eight years ago and can pop out in their sleep today.
If it were a US startup, it’d be worth $100 million and crammed to the gills in venture capital scumbag dollars, and you wouldn’t get near the stock until an IPO priced it at 20x that.
Instead, it’s coming to the Canadian markets – NOW – and you can load up on future tech at your leisure.
I’m not a consultant for Ydreams. Not an owner. No commercial contract with them.
But I know a next big thing when I see it, and I spent the weekend watching the parks fill with Pokemon hunters and the streets teem with slow-driving cars with passengers buried in phones at 2am. Honestly, my little berg, which is normally dead at 9pm, was BUSY at 2am last night with people driving in circles catching Squirtles.
And they haven’t even officially launched it in Canada yet. These are people who had to figure out how to get the app illegally, then sideload the app on their phones. When it releases officially, it’s going to get CRAZY.
Here’s an example of how crazy.
