On location currency, gaming mechanics and creating user value

Since the release of the iPhone, things have radically shifted in the mobile space. This is the first phone to effectively and massively across the globe allow people to stay online almost all the time. Being always online is something mobile industry has been having wet dreams about for a very long time. And it’s here, it has happened. The penetration of these phones is still relatively small, but the shift has happened and it’s just a matter of time before most phones fall into this category. iPhone is just the beginning of an avalanche of new devices that are going to radically change our lives. Just think how much the mobile phone has changed your life. Now think how much the internet has changed your life. If you are like me, you can’t even imagine living your life without these two technologies. That’s how profound the change was. Do you realize that you now have both of these life changing technologies on the same device in your pocket? The synergies of these two technologies are going to have profound effects on us as individuals and on the society as a whole. I want to explore one aspect of this change, mobile applications that use the power of location and gaming mechanics to provide users with real value.

New smartphone devices allow users to incorporate physical location into their real time online experience. All of a sudden, user’s physical location starts having value. It has value to the fashion store down the street wanting to attract customers. It has value to restaurants, cafes, bars and pubs looking for patrons. It has value to lawyers, dentists and plumbers advertising to people in their immediate area. It even has value to brands which can further their innovation and value by appealing not only to someone who they understand but also someone who they know is at a certain location.

The ability to harness user’s location is going to allow for a whole new wave of companies and products focusing on a more intimate, engaging and entertaining user experience. The whole idea behind realizing that location has value is to create products and services that provide users with something valuable and entertaining in exchange for their location. Gaming mechanics of these products are a key element as they entertain and motivate users to keep coming back for more. The power of location based games is that they connect the online world with the physical world, which means that users can experience benefits both online and offline. You can win a game badge as well as a drink at the bar down the street.

One of the pioneers and leaders of this industry is foursquare. Their application gives users their friends’ locations, tips on nearby places, awards users with badges and points among other things in exchange for users telling them where they are. With the information about user location, foursquare can tailor the user experience and make it even more intimate, engaging and entertaining. To top it off, users are so content with the service that they regularly contribute local content which gives them a sense of belonging to a place.

foursquare is well on their way of becoming the Facebook of this space. The idea that user location has value translates into the possibility of users wanting to exchange this value for something they want. Think of it as location currency. I’ll tell you where I am if you help me find my friends and grab a drink. I’ll tell you where I am if you save me some money. I’ll tell you where I am if you give me some valuable information. I’ll tell you where I am if you entertain me.

Just like Facebook focuses on the social aspect of the online experience, foursquare focuses on the social aspect of location based mobile experience. foursquare are looking at ways to monetize the platform through local business advertising, which is a great model for a company like this. Just like online today, there will be a number of other products that will provide other types of niche experiences and rewards in the mobile space, not just social ones. Today’s online dating sites, city guides, loyalty programs, entertainment info sites and many others will soon have their location aware, entertaining and user value generating equivalents. Just like Facebook Connect provides an identity platform for other products and services out there, foursquare API will try to dominate the location identity space.

Let’s not forget that concepts around these products do not only have to be commercial. There are a huge number of possibilities for community and social development as well as the future promise of helping socially disadvantaged and creating new ways to aid people in under-developed nations.

Harnessing the power of location and gaming mechanics to provide users with value (information, savings, social interaction, etc.) promises to create products and services that are more intimate, engaging and entertaining. This is something that I am definitely looking forward to experiencing.

Note: I’m a co-founder of HopShopper (http://hopshopper.com), a company which is using the concepts presented above to develop a mobile application focused on creating rewarding shopping experiences.