Niche but Not Obscure: Analysis of the LBS Game Sector
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Niche but Not Obscure: Analysis of the LBS Game Sector
Combining LBS with gaming opens up more possibilities for social interaction in games.
Navigating Web3 tides with focused insightsAccording to IDC data, the global LBS gaming market was valued at $102 billion in 2022 and is projected to reach $115 billion in 2023. Additionally, the number of global LBS game users reached 2.75 billion in 2022, with an estimated rise to 2.95 billion in 2023. The global LBS gaming market is experiencing rapid growth, having increased by 12% year-on-year in 2022. It is expected that the market will continue this trend in 2023, growing by a further 13% year-on-year.
In July 2016, Niantic launched the AR+LBS mobile game Pokémon Go, which achieved unprecedented success. The game attracted widespread global attention and became one of the highest-grossing mobile games in history. Leveraging its revolutionary LBS gameplay and the globally recognized Pokémon IP, Pokémon Go earned $1.27 billion within its first three years. As of October 2023, it still maintains a stable daily active user (DAU) base of around 30 million and consistently ranks among the top-grossing games in multiple countries.
In fact, LBS (Location-Based Services) is not a new concept; it is a technology similar to GPS-based location services. Integrating LBS with gaming opens up greater possibilities for social interaction in games.
When people think of LBS, they often associate it with social apps like WeChat. Many game designers are increasingly incorporating social features into gameplay, hoping to achieve gamified socialization through LBS and thus adding numerous social functions. This approach, however, puts the cart before the horse. In a game, gameplay must remain the absolute core. Only when gameplay is accepted by users and a substantial user base has been established can meaningful social functionality emerge. Thus, the relative importance of social elements versus gameplay elements becomes clear.
The reason why the LBS gaming sector is described as "niche but not small" lies in the difficulty of combining game engines with mapping technologies. While location tracking itself is relatively straightforward, the real challenge lies in integrating it effectively with gameplay, requiring specialized solutions.
The dormant state of this "niche but not small" LBS market began to shift recently. We observed that Niantic’s new collaboration with Capcom, Monster Hunter Now, achieved remarkable results: in Japan alone, it surpassed one million downloads during its first week, generating approximately 40 million JPY in revenue, with peak daily revenue reaching 10 million JPY. This marks the strongest launch performance among Niantic's new titles in recent years. To date, Monster Hunter Now has accumulated over 60 million JPY in revenue and remains within Japan’s top 10 grossing apps.
According to official announcements, Monster Hunter Now surpassed five million downloads globally within its first week. To celebrate this milestone, Niantic distributed in-game rewards, including redemption codes.
A large market size is a defining characteristic of LBS games. However, developing such games involves higher technical barriers compared to other genres, presenting both challenges and opportunities:
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Technical limitations: LBS games require precise positioning and real-time data transmission technologies, posing significant technical demands.
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High costs: The development and operational expenses for LBS games are substantial, creating challenges for developers and publishers.
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User habits: LBS games require players to go outdoors, which contrasts with the sedentary "homebound" culture traditionally associated with gaming.
With technological advancements and evolving user demands, the global LBS gaming market is poised for broader development in the future.
On the technological front, advances in AR/VR will bring more realistic and immersive experiences to LBS games. The widespread adoption of 5G networks will provide faster and more stable connectivity, enhancing overall gameplay quality.
From a user demand perspective, there is increasing demand for authenticity, interactivity, and novelty in games. LBS games will place greater emphasis on these aspects to better meet user expectations.
Within the Web3 gaming space, LBS holds significant potential for mainstream breakthroughs. Real-world meetups driven by LBS can foster social behaviors, helping more Web2 players discover and engage with Web3. Prior examples include early projects like StepN, and more recent ones such as Mirror World and L3E7, all exploring the integration of LBS with Web3 gaming.
StepN’s key innovation lies in merging GameFi with real-world physical activity—its "Move to Earn" model. After downloading the app and registering, users create an in-app wallet, deposit cryptocurrencies such as SOL or BNB, and purchase an NFT virtual sneaker to begin earning money through outdoor running. Earnings depend on both the user’s physical activity and the attributes of their shoes. Shoes vary in properties, types, quality, and level. By running within specific pace ranges during valid energy periods, users earn GST tokens—a perpetually inflationary in-game currency. These tokens can be used to upgrade sneakers and gems, unlock slots, mint new shoes, or exchanged directly for stablecoins.
Moreover, projects like L3E7 have elevated LBS technology by introducing fully 3D LBS capabilities, making it one of the most talked-about projects recently. As revealed on Twitter, the project’s visual quality rivals that of current Web2 games, significantly expanding on traditional LBS mechanics with lighter, more immersive social gameplay.
Overall, the global LBS gaming market holds vast potential. With ongoing technological progress and changing user preferences, LBS games are set for even broader growth in the future.
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