Video games need to insulate players from addiction, CEO of 'Pokemon Go' creator says

John Hanke, founder and CEO of Niantic and creator of Pokémon Go, speaking at the Mobile World Congress in 2017.

Joan Cros Garcia | Corbis News | Getty Images

Video games must prioritize safety over profit to prevent gaming addiction, the CEO behind one of the world's most popular mobile games told CNBC.

Niantic â€" the Google-developed start-up that created mobile games "Pokemon Go" and "Harry Potter: Wizards Unite" â€" uses augmented reality and location data to bring gameplay into real-world scenarios.

According to market research firm Sensor Tower, "Pokemon Go" was the second highest-earning mobile game in the world in September 2019, with almost $116 million in revenue.

But game developers like Niantic are increasingly having to grapple with discussions around gaming addiction â€" a self-help book even exists to help people addicted to its mobile game "log off and avoid a troubling obsession."

Last year, the World Health Organization officially classified "gaming disorder," or gaming addiction, as a health condition, and since the release of "Pokemon Go" in 2016, clinical treatment for video game addiction has become more widely available around the world.

According to the Netherlands' Yes We Can clinic, research suggests 10% to 15% of gamers across the whole industry exhibit signs of addiction.

But John Hanke, Niantic's CEO, claims the company's approach to product design means its users are discouraged from compulsive gameplay.

"I would really look at our games as an alternative to traditional video games, because they're designed to be played in small doses as you're moving around outside, and they're meant to be played together with people in real life," he told CNBC at the One Young World conference in London last week. "They're really the antithesis of sitting at home isolated, sedentary with a screen."

"I think it's a great example of how you can design technology that leads into positive impacts," he added. "Technology is not inherently evil, but if you're being led by profit and the dollar sign and you don't have other goals, the outcome may not be great."

Niantic's games adhere to three core principles, Hanke explained: promoting community exploration, incorporating exercise into gameplay and encouraging real-world social interaction.

"In a game like 'Pokemon Go' there are hundreds of features you could build, and many would not fulfil one of those three objectives," he said. "It's about finding that balance between purpose and profit and pursuing both in the context of a private company. It's not easy â€" it's a constant challenge â€" but I do think it's possible to combine those things."

Another issue at the forefront of the gaming industry's agenda is user data. Niantic's players use their smartphones to search for items in real locations, meaning the company stores vast amounts of personal data.

Shortly after the release of "Pokemon Go," it emerged that the game was giving itself permission to access users' Google accounts. At the time, the company said the problem was caused by an error that would swiftly be rectified.

Meanwhile, cybersecurity firm Check Point Software Technologies told CNBC in 2016 that players were at risk of cyberattacks.

Hanke told CNBC that Niantic would welcome increased scrutiny, suggesting the gaming industry would benefit from more regulation.

"We operate under the European GDPR (General Data Protection Regulation) standard, and we apply that standard in every country we operate in," he said. "I personally think it's healthy for the industry for there to be a lot more scrutiny over what data can get stored, what happens to that data after it gets collected, and whether there's a risk of that data getting co-joined with information that exists in other databases."

"The thing that makes us different is that we are not primarily an advertising-based business â€" (more than) 95% of our revenue comes from in-app purchases," Hanke added. "Because we keep third-party advertising networks out of our products, we don't have the problem that a lot of companies do around those networks and the way that they work with databases and profiling â€" I feel we're well positioned as there is, rightfully, more scrutiny on data."