From that demo video it’s a coded ‘capture the flag/base’ or ‘defuse the bomb’
Nothing wrong with that in itself
It could be put into a game format by adding elements to the mission of identifying the code (clues, cards to be collected with part of the code on each), finding the device, getting it to a location, entering the code
There are many of these around
Rather than an app that has to run on a smart device which means risking it. That can be also run on an arduino - you just need a keypad and display
There are plenty of examples across the web with builds and code (with pretty much your example available off the shelf)
To make it more interesting I would recommend a consequence for the wrong code - eg 3 fails and you’ve lost / blown up / alarm sounded and/or a continuity function eg there is a maximum time limit (the full game time) it initiates as neutral, the first hit of that button or successful code ‘captures’ the device for a selected side, the second renders it neutral
The final result is then - reds held for 5 minutes, blues held for 4:45
The continuity function is similar to a chess clock. Timing begins on the first hit, then it gets recaptured on each click
Simple device
An enhancement is to add in more than two sides, lights and sounds, a consequence alarm or pyro trigger etc