With Andy Serwer, Editor-in-Chief of Yahoo Finance, Former Managing Director of Fortune
Just when the real world got comfortable with the idea of virtual reality, along comes this thing called augmented reality.
Besides the Bento box and karaoke, many aspects of Japanese culture have seeped into the American lifestyle. But perhaps nothing can equal the impact of Pokemon Go, a by-product of the Nintendo game Pokemon. If someone walks into you on the street these days and he doesn’t have a walking stick and a guide dog, chances are he’s playing Pokemon Go, the craze that has captivated millions and is lifting the Japanese economy up from the doldrums.
Andrew Serwer, Editor-in-Chief of Yahoo Finance and former Managing Director of Fortune, has written a thing or two about Japan in his career as a journalist. He recalls that before it began to unravel in the early ‘90s, the Japanese stock market, real estate market, the economy, in general, was booming. Now, after several stagnant decades, Japan is coming back, to a large degree because of the popularity of Pokemon Go and to LINE, a giant messaging app.
Although both are products belonging to the tech world, Pokemon Go is the one causing bodily bruises and mishaps as well as initiating the world into augmented reality, the combination of virtual reality and the real world. In such a short time, a game that’s obviously fun for millions has become a boon to some enterprising businesses who have capitalized on it as a lure to attract customers. A character just might be located in a pizza parlor or coffee shop where—Surprise, Surprise!—a discount could be offered.
Andrew says this is the first of many applications of augmented reality and that CEOs of major corporations are already thinking of how it can be used in their lines of business. The potential and possibilities are enormous and most certainly will be popping up in areas beyond games, such as dating apps, exercise apps, and for educational purposes.
In the meantime, as walkers and drivers addicted to Pokemon Go struggle to pay attention to the sidewalk and the road, Japan is experiencing a much-needed boost in the stock market, which is a good dose of reality for the once-wobbly economy.
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Steve Pomeranz: My guest is Andy Serwer. He is the editor-in-chief of Yahoo Finance, and he’s best known for serving as a managing director of Fortune from 2006 to 2014. He’s based in New York City where he’s on the line with me today. Andy Serwer, welcome to the show.
Andrew Serwer: Thanks, Steve.
Steve Pomeranz: You wrote an article where you mentioned Pokemon— and, of course, in the last week or so, Pokemon has exploded onto the scene—but you also mentioned that coming out of Japan (and some other things coming out of Japan) the Japanese stock market rose dramatically, it’s almost like the ’80s again in Japan. Just quickly tell us about that.
Andrew Serwer: Well, if you remember, Steve, back in the 1980s, it seemed like Japan was taking over the world economically. Remember, they came in and bought Rockefeller Center in the United States and Pebble Beach, the golf course. Their stock market was booming, real estate values there boomed, and then, in 1990, it all began to come apart, and the economy crashed, and it’s been a zombie economy for all those years and years. Never really true because it’s still been an awfully big market, but kind of a backwater until maybe this week.
Steve Pomeranz: What happened?
Andrew Serwer: Well, a bunch of things happened. First of all, you mentioned Pokemon Go, and we can talk about that a little bit. There was also a giant IPO this week, Line, l-i-n-e, which is a giant Japanese messaging app, not unlike Wii Chat and Snapchat and all of those. It’s huge in Asia. The IPO, which was here in New York, did really, really well, billions of dollars reaped in that initial public offering, so that was one thing. The Japanese stock market took off, in part, because of Pokemon and this Line IPO, some excitement there. Former Fed chairman Ben Bernanke visited Japan, which got a lot of attention focused there, in a positive way.
The Prime Minister, Abe—abenomics, you’ve probably heard about that. There’s always been a lot of talk about that. He made some moves that, again, were received positively by the global markets. All of these things sort of coalesced into a great week for this country. Oh, and I didn’t even mention, Monday was 7/11, the 11th day of July, that’s the same name, of course, of the convenience store chain, 7/11 of Slurpee fame, and 7/11, many people don’t realize that it’s owned by the Japanese.
Steve Pomeranz: Well, I think you’re really reaching for that one, Andy, but I’m going to give you …
Andrew Serwer: Did you get your free Slurpee, Steve, on Monday?
Steve Pomeranz: No, I really didn’t. I’m going to give it to you because it’s the first time you’re on the show, and I want to make nice. Okay, so let’s go to Pokemon because this is on the surface. I’m sure the first reports that came out are how people are hurting themselves and that gets your attention. What’s going on, these games that people are hurting themselves? They’re small bruises on their legs and on their hands and things like that. Then it came out that someone found a dead body, so that’s interesting, and then there was one where they actually stopped someone from committing a crime, and then some Pokemon Go users were the victim of crimes as robbers figured out where these people were and then when they were in isolated conditions or areas, they hit them. Well, there’s a lot of warnings, but there’s so much more to this story. First of all, tell us a little bit about Pokemon Go, what is it, and why do you think it’s blowing up so much.
Andrew Serwer: First of all, Pokemon, of course, is the series of characters from Nintendo, the Japanese company, which has been around for decades. Video games going all the way back, and it’s not unlike Japan itself. The economy has been more abundant, again, a backwater. Pokemon Go is an app game; it’s augmented reality. You load it on your phone, either your Android or your iPhone, and what it does is it creates or puts characters into the real world in which you are walking, say. You open the app, and you’re walking down the street, and you see ahead of you characters, and you have to walk down the street to try to get them, and then you swipe the phone, and then you collect them and get them.
Here in New York City, this has led to literally thousands and thousands and thousands of people walking around New York with their heads in their phones, looking for these Pokemon characters.
Steve Pomeranz: That’s not a very attractive mental image if you ask me, right? I mean, we’ve all got our heads in our phones to begin with. It’s a game, and people are really having a lot of fun playing this game, from what I’m reading. I signed up for it yesterday, and I happened to not be in an area where there were any characters around, but I did notice that in the distance on my screen, there was an object. I pressed the object, and a shopping center, like a small strip shopping center, came up, or some object of that nature, and then I got this big revelation that, “My goodness.”
Companies and stores, retail outlets, can now start trying to gather people at these different locations where these virtual characters are, offer discounts for coffee, if it’s a Starbucks or Dunkin Donuts, or something like that. Then, my head exploded, and I realized, “This is something really revolutionary and brand new.” I think we’re going to start to see a lot more. Can you fill us in on your take on this, as well?
Andrew Serwer: Well, Steve, you are absolutely correct. I mean, it is the beginning of something, as they say, and what you were referring to specifically with those stores is a feature called “lures,” like a fishing lure. What that means is say a pizzeria, pizza parlor, could put a lure into the game, which essentially would be putting a character around, or near, or in its store, and then you would go there, and, yes, they might have a discounted slice, and/or you might just happen to want a soda there, so the commercial applications are just beginning. They’re going to be coming into the game, and Nintendo is obviously very keen on that because that’s how you would monetize the game.
Again, this is just the very beginning. This is the first application of augmented reality, and it just sort of happened to burst upon the scene through this game, but even thinking just about the game and the apps, I mean, you could do this for exercise, for instance. You could do it for dating apps. Already, speaking of exercise, young people are saying they’ve never walked so much in their life, walking around with this thing, but my understanding is that even in a company like General Electric, GE, and Jeffrey Immelt, their CEO, was talking about looking at this. Every creative CMO, chief marketing officer type at big companies thinks, “How can we use this in our line of business?”
Steve Pomeranz: You know, by the way, let’s make a distinction in terms here. We all know about virtual reality, or VR, which is really an immersive experience. You wear those big goggles. AR, augmented reality, is just that. It’s reality, you’re out there in the real world, but through the computer, through your phone, you’re seeing in an augmented way. The term is AR, or augmented reality, versus VR, or virtual reality. That’s something that I learned when I was looking, was researching this. You mentioned this pizza shop, and actually, the New York Post mentioned there was one in Long Island City. The store manager spent $10 to have a dozen Pokemon characters placed in the location, and his sales jumped 75%.
Andrew Serwer: Right, exactly. Now, that kind of advantage won’t last forever, but people will keep doing things like that. I think that distinction between VR and AR was a really good one, and it’s funny, because we’ve focused a lot on VR with those big sweaty goggles that you described, and you know, this AR thing is much closer to life. My understanding is that Caterpillar has an AR function for their people who are looking at their big machines, their tractors, and such, where you would hold the phone up to say a part of one of their machines, and then it would say, “Oh, turn this dial to 9 instead of 3, and things will work.” We’re talking about applications here that we can’t even imagine at this point.
Steve Pomeranz: I was also thinking that if, in the upper right hand side of your windshield in your car, perhaps, way out of the way of looking at the road, and so on, you may have some kind of an AR function on the glass itself which would tell you where a gas station was, or whether there was a special offer at the Target that you were passing by, or whatever it may be. In a sense, taking it to its fullest extent, it’s possible it could be part of our everyday lives, just like our phones are.
Andrew Serwer: Absolutely. That mapping is an interesting example because we all use either GPS or our phones when we’re driving, mounted on our dashboards, I hope. But think about the traffic patterns, traffic jams, people use them to know where the police are, in terms of speed traps, then, of course, the shopping that you mentioned. Where would that go on a car? You can just see, again, all these people scrambling, at all these different companies, from car companies to phone companies, to try to understand how to integrate this augmented reality, all because of these Pokemon characters. Getting back to this game Pokemon Go, Steve, for a minute, I haven’t seen excitement like this by consumers since the launch of the iPod.
I remember that here in New York, again, they were so revolutionary. People would walk up to someone else, you’d see someone with one, and you’d talk to them. I’ve seen people talking to each other playing Pokemon Go, strangers.
Steve Pomeranz: I was talking to a toy manufacturer today who has been in the business a long time, and he licenses brands and so on and makes toys out of them. He says he’s never seen anything like this, and he’s been involved in some huge winners himself, is very involved in the industry. One caveat, however, is that in order to sign up for Pokemon Go, you have to give your Gmail address, and, so, I guess Google is gathering all this data as to where you are, where you’re going—which I guess they’re doing anyway—but one should look into that and make sure that that’s okay before you start getting involved because they’re tracking you even more. Final words?
Andrew Serwer: The company did have to make a disclaimer about privacy, and then another point, I guess, is how this is such a boom to Nintendo. The stock was up over 30%, adding, I think, close to 10 billion dollars of market capitalization.
Steve Pomeranz: That’s amazing. There are other companies, too, that— we do not recommend companies here—but I read that Oculus, which is the maker of the VR goggles, had bought a company a year or two ago which is in the AR field and does something special, so they may, in a sense, be gearing up for something in this, too. It’s going to be an exciting field. My guest, Andy Serwer, Editor-in-Chief of Yahoo Finance. Next time we have on the Andy on the line, by the way, Yahoo Finance created a live streaming capability for the Berkshire Hathaway annual meeting, and Andy Serwer interviewed Charlie Munger. I guess you interviewed Warren, as well?
Andrew Serwer: Yeah, I did. Yep. It was great fun.
Steve Pomeranz: That’s great. We’re going to get more involved with that when you do it next year; we’re going to learn more about that. Andy, thank you so much for joining us.
Andrew Serwer: Thanks, Steve.