Our investment in Niantic Labs
In every generation there are a handful of companies that will change the world and as a venture capitalist one is fortunate to work with just one of these companies in a career. As a firm, CRV has been incredibly fortunate over the last 49 years to back several of these companies: Twitter, Amgen, DoorDash, Dropbox, Udacity, Airtable, and Color Genomics to name a few.
In the last several months, we’ve been exploring three efforts of this class:
- The first is a mobile game studio which in its short lifetime has already produced one of the most popular video games in history.
- The second is a platform for geospatial massively multiplayer entertainment, unlike anything that has existed before it.
- The third is a company building some of the most sophisticated augmented reality technology in the world.
But here’s the catch: these are not three separate companies. This is one company: Niantic Labs. And today I’m excited to announce CRV’s investment in Niantic’s Series C financing*.
Pokémon GO
Niantic is best known for their hit game, Pokémon GO. It is hard to overstate the success of Pokémon GO. When the game launched in July 2016 it quickly topped the charts of both the Apple App Store and the Google Play Store and even today it frequently sits atop the Top Grossing list on both platforms. Since launch it has been downloaded over 800 million times, putting it in an elite tier of consumer internet applications that have reached that scale. It is also estimated to have grossed over $2 billion since launch. While most game producers rely on large marketing budgets to support new games, the vast majority of this adoption has happened organically, which is a reflection of the inherent virality of Niantic’s real-world gaming format.
What is most impressive about the game is the level of devotion it has inspired amongst its fan base. For instance, 100,000 players attended the Pokémon GO Fest in Dortmund, Germany, 21,000 in Lincoln Park Chicago, and 65,000 in Yokosuka, Japan… and that doesn’t even include the players in the surrounding cities on those days.
Real World Gaming
Gaming is an inherently hit-driven business where success is determined in large part by the art of game creation, and Niantic’s games are no exception. However, Niantic partners with leading IP holders to build products based on franchises with known popularity, at least partially de-risking an inherently risky endeavor. On that theme, Niantic will soon launch Harry Potter: Wizards Unite. Harry Potter is one of the world’s most valuable IPs and its books are the fifth most read pieces of literature of all time (Koran is first, Bible is second, etc.). We can’t wait to play.
“We do not need magic to transform our world. We carry all of the power we need inside ourselves already.” — J.K. Rowling
But Niantic is about much more than a single game or even two games. Its real-world platform is a novel entertainment format that we believe is just getting started. Like many of the companies we invest in at CRV, Niantic’s platform benefits from a compounding competitive advantage: as more players use Niantic’s apps, they contribute to the geospatial database which Niantic, in turn, uses to improve its products, attracting and retaining more players. In the near future, Niantic will open up that platform to third-party game developers, who will be able to benefit from the strength of that platform, adding a third dimension to their competitive advantage.
At CRV, we believe that the best companies always have a fundamental impact on society. On that theme, what is most inspiring to us about Niantic’s platform is the way that it changes what it means to play video games. Traditional video games are played in a dark room in isolation often late at night; games built on Niantic’s platform instead require players to go outside and explore the real world, getting much-needed exercise and social interaction.
In 2018 alone, Niantic’s games led to 331 national parks, rivers and trails visited, 17,000 kilometers walked at social impact events, 6.8 tons of food collected for shelters and food pantries, 7 tons of garbage picked up. 40,000 people came out to support charities and their local communities and more than 3,900 items were donated to shelters. This is the kind of future we want to imagine.
Augmented Reality
It is hardly contrarian to say that AR is an important technology with the potential to be a new generation of computing platform. We are early in this journey and similar to other technological shifts, we don’t know over what time period it will happen or exactly what form it will take. But we do believe that the biggest missing piece in AR adoption is the“killer app” where AR unlocks a truly unique experience. Pokémon GO — and hopefully Niantic’s future titles — can be that killer app. And under the hood, Niantic has been hard at work building some of the leading AR technology to bring it to life.
Lastly, no thread on Niantic would be complete without a few words on the world-class management team behind the company. There are few people in the world better suited to build this company than John Hanke and Phil Keslin. John and Phil have spent their lives thinking about mapping, having founded Keyhole in 2000, which was acquired by Google and went on to become the foundation for Google Maps. Less widely known is that before Keyhole John had already built and successfully sold two gaming companies. As we talked about future Niantic titles with John, it was obvious that he has a deep product understanding of exactly what it takes to build games capable of Pokémon GO scale, and we’re excited to continue working with his team to help make that happen.
Welcome to the CRV portfolio, Niantic!
- And ICYMI, thank you Steve Jobs for the inspiration to the opening lines!
