Pokémon Go creator Niantic Inc. and Japan’s Capcom Co. unveiled Monster Hunter Now, a fantasy-themed geolocation game in the industry’s latest attempt to make augmented reality mainstream.

The role-playing game lets players find each other via their smartphones and then work together to trap or kill monsters overlaid on a fantasy version of the real world. In this alternate reality, Tokyo’s Shibuya entertainment district can become a vast desert or a swamp, teeming with the Capcom franchise’s creatures.

Players can also continue the hunt from home, bringing with them monsters they encounter on their travels, the companies said. The free-to-play game is scheduled to launch in September and will feature in-game purchases without making them critical to advancing in the game, executives said.

San Francisco-based Niantic has for years experimented blending computer-generated content with the real world using geolocation. It’s tapped story lines from the Harry Potter books, piggy-backed on the NBA and distributed software development kits largely free of charge. But the technology remains niche. Players often turn off AR features because of their drain on a phone’s battery.

"If Niantic’s serious about making AR a pillar of social infrastructure, the company should keep investing aggressively and score more partnerships with powerful movie, game and anime franchises,” UBS analyst Kenji Fukuyama said. Niantic can only push the boundaries little by little, he said.

For Capcom, the new game is a low-risk bet to capture a share of the expanding global smartphone game market. Mobile games accounted for half of the entire game industry last year at US$92bil , outweighing both console and PC games combined, Newzoo data show.

"We decided on the spot that we needed to do this when Niantic approached us four years ago,” said Capcom Chief Executive Officer Kenzo Tsujimoto. "This is a completely new way to play Monster Hunter.”

Osaka-based Capcom is Japan’s top maker of big-budget titles for consoles and PCs, but has been slow to monetize its franchises via smartphone gacha games, which nudge players to spend more for in-game items or upgrades. The maker of Resident Evil and Street Fighter earned ¥4bil from smartphone games in the fiscal year ended March 2022, while Square Enix Holdings Co. earned ¥130 billion and Bandai Namco Holdings Inc. made ¥186 billion.

The old monetization model may have peaked, giving Capcom room to grab new audiences abroad, said Hideki Yasuda, an analyst at Toyo Securities.

"Even a minor success in the mobile game market would have a big impact for Capcom’s overall earnings, because its current smartphone revenue is so tiny,” he said. "Capcom’s best bet is to license its IPs to a proven mobile game maker that can reach a global audience.”

 - Bloomberg