Dozens of people dressed up as Pikachu, the famous character of Nintendo's videogame software Pokemon, dance with fans as the final of a nine-day "Pikachu Outbreak" event takes place to attract summer vacationers in Yokohama, in suburban Tokyo, on August 16, 2015.
Photograph by Toru Yamanaka — AFP/Getty Images

Location services will be key to catching them all.

By Kif Leswing
December 21, 2015

Pokémon fans have something to look forward to in 2016: Next year, the Pokémon Company will release Pokémon Go, in which players use iPhone and Android smartphones to “capture” Pokémon creatures they find while traveling in the real world.

It’s the first time the Pokémon franchise has been featured in a game for mobile phones, according to a wide-ranging interview between Venturebeat and John Hanke, CEO of Niantic Labs, which is developing the game.

The technology behind Pokémon Go was originally developed at Google. Niantic Labs was a Google subsidiary when it launched Ingress, a game that uses your phone’s location to battle for “control” of public spaces. Niantic Labs was spun off from Google in August.

“I feel like we’ve learned a lot of lessons from Ingress that we’ll bring to Pokémon,” Hanke said.

The same location-based technology that powers Ingress will be used to place Pokémon creatures in public spaces where players can find and capture them. Players will come across different Pokémon based on where they are in the world, and will receive a notification on their smartphone or Nintendo-made bracelet prompting them to capture the digital monster.

For example, if you’re at a beach, you can find and capture water-based Pokémon. “Very rare Pokémon may exist in very few places,” Hanke said.

That the real world will be a core part of gameplay is a direct result of Niantic Labs’ high-tech focus on games that augment reality. Google worked with Nintendo to create a April Fool’s joke featuring Pokémon in Google Maps three years ago, and is still a major investor in Niantic Labs. One reason why Google spun off Niantic Labs was so that companies like Nintendo and the Pokémon Company could acquire a stake.

Pokémon fans will be glad to hear that Pokémon Go will allow them to battle the creatures they’ve captured. “Pokémon, obviously, you’d go out into the real world and find Pokémon and battle them against other players and trade them and go to gyms. That’s how it’s going to work,” Hanke said.

Eventually, Niantic believes its augmented-reality games will go beyond smartphones and could be a good fit for new headset-oriented devices like Microsoft’s Hololens MSFT or Google goog Glass. “We don’t need [augmented reality] devices for our game, but they would make our style of game even more exciting,” Hanke said.

Pokémon Go is not the only game for smartphones that Nintendo is currently working on. Earlier this year, the Japanese company announced a partnership with smartphone game developer DeNA that will result in five mobile titles released by March 2017.

Ultimately, one of the big draws for Nintendo is that a much larger number of people own smartphones than Nintendo consoles, according to Hanke:

“You know the numbers as far as the installed base of the DS market and the 3DS market. Compare it to the installed base for smartphones worldwide. Now Pokémon is available to, what, 100 times more people in terms of market potential?”

For more on Nintendo’s mobile game plans, watch this Fortune video:

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