Forget the arena; set it up on the streets! Imagine running around through alleys shooting virtual monsters that jump out of actual doorways. There's also potential for live Art installations, interior decorating, theatre, TFP Meetups and who knows what else.
William Gibson's book Spook Country features this kind of technology, although not Gaming exactly.
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Building an artificial intelligence that appreciates Mozart is easy. Building an A.I. that appreciates a theme restaurant is the real challenge - Kit Roebuck - Nine Planets Without Intelligent Life
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