The Impact of an Augmented-Reality Game on Local Businesses: A Study of Pokémon Go on Restaurants

Abstract

Augmented reality (AR)–based applications have been growing in prominence. Pokémon Go, one of the most popular AR game applications, has been engaging in strategic partnership with businesses. The game combines geospatial elements with gamification practices to incentivize user movement in the physical world. In this study, we examine the value of such strategic partnerships between Pokémon Go and associated businesses. Specifically, we use data of the online reviews for a firm to study consumer engagement and consumer perception after the release of the game on its associated businesses. We find that restaurants associated with Pokémon Go do indeed enjoy a higher level of consumer engagement and more positive consumer perception. We also find that characteristics of the business significantly moderate this impact overall. Using a parsimonious analytical model, we also demonstrate the mechanism behind these results. Our study provides insights into consumer economic behavior in the context of AR applications. We further inform the business owners and policymakers regarding the potential value of such strategic business partnerships with such applications.