Breakout hit Pokémon Go has turned its game developer, Niantic Inc., into a unicorn, with the young startup now worth an estimated $3.65 billion, according to Citibank analysts.
Niantic Inc. was initially formed by Keyhole, Inc. founder John Hanke in 2010 as an internal startup at Google called Niantic Labs. The company became an independent entity when it left Google only in October 2015.
The research note, sent by the group to investors on July 19, predicted that the company will rake in around $740 – $750 million in revenue this year, reported Quartz.
The popular augmented reality app, which lets players catch virtual Pokémon in the real world, has become an international sensation since its release on July 6, easily toppling records set by previous apps and generating more than a million dollars a day in revenue. The game has become so popular that people are now spending more time playing Pokémon Go than using Facebook and Snapchat.
Pokémon Go has effectively proven how monetizing from the get-go can be an effective business model. While the game itself is free, it has in-app purchases for its millions of worldwide users.
Google’s parent company Alphabet owns 6% of Niantic which is worth around $217 million by analysts’ estimates. In making the game, Niantic partnered with the Pokémon Company and Nintendo, which has a 32% stake in the Pokémon company. As distributors of the app, Google and Apple also get a hefty share of Pokémon Go’s revenue.
According to Macquarie Capital Securities Senior Analyst David Gibson, the app’s revenue can go four ways:
“It is unclear exactly what [Niantic’s] economic interest is in the game, but we presume that out of every 100 units earned at the app store, 30 would go to Apple, 30 to Niantic, 30 to Pokémon and 10 to Nintendo.”
The game’s popularity has immediately led to massive buying in Nintendo shares, causing the company’s stocks to rise up in recent weeks. The sudden spike in interest to the company added an estimated $12 billion to its market value.
However, Nintendo later announced in a press statement that they were not the sole creators or owners of Pokémon Go and the game would actually have a “limited” impact on its finances. Nintendo’s stock consequentially fell 18%, with shares dropping to $6.7 billion, after the announcement.