Pokémon Go is an major success for Nintendo, the Pokémon franchise, and its developer Niantic. But there’s another company that might be secretly smiling over its success.
Long before Pokémon Go became a sensation, getting people of all ages to walk around town to find and train digital Pokemon characters overlaid in the real world thanks to augmented reality technology, an entrepreneur named John Hanke started a company named Keyhole. The startup was ultimately acquired by Alphabet’s Google (GOOGL) in 2004 for an undisclosed sum and eventually became the basis for Google Earth, the online mapping service.
After Keyhole’s acquisition, Hanke stayed on at Google, serving as the company’s vice president of product management for the company’s Geo division, which included Google Earth, Google Maps, and other services. However, in 2010, as part of Google’s initiative to breed to entrepreneurial spirit within its walls, Hanke founded an internal Google startup known as Niantic Labs, a company that would use the aforementioned augmented reality technology to create a popular, Android-only game known as Ingress.
Then something happened.
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In 2015, Alphabet spun off Niantic into an independent company. Hanke was once again in charge of an independent startup.
By September 2015, Niantic and Pokémon Company announced that they would collaborate on a title to be known as Pokémon Go. In October of that year, Google, along with Nintendo (NTDOY) and the Pokémon Company, announced that they would invest $20 million in Niantic in a Series A financing round. Niantic could also receive an additional $10 million if it reached unidentified milestones.
Then Pokémon Go happened.
On July 6, Niantic finally premiered Pokémon Go. The game gained huge momentum within just a couple of days, even exceeding dating app Tinder in downloads on Android, according to digital-tracking service Similarweb. The game is also on its way to topping Twitter in daily active users, according to Similarweb.
On Monday, Sensor Tower, a company that analyzes mobile apps, toldForbes that the free Pokémon Go had more than 7.5 million iOS and Android downloads in the U.S. And was generating $1.6 million in daily revenue from in-app purchases from Apple’s App Store, alone. The game, in other words, has become a cash cow for Niantic, and along the way, it’s added billions of dollars in value to Nintendo after its shares rose 24.5% between the game’s launch and Monday.
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But Google has been the forgotten winner in this story. While the company did not respond to a request for comment, and a Niantic spokesperson declined to provide details about how involved Google is or about any stake it has in Niantic, it’s likely that Google is getting some benefit. After all, it was the place where Niantic began, and it now owns a slice of what might just be the world’s hottest mobile app developer.
In an interview with Coins2Day, Global Equities Research managing director for equity research Trip Chowdhry was clear: “from an investment point-of-view, definitely Google is the winner.”
So far, Google hasn’t gloated about Pokémon Go’s success, and it’s unknown how Niantic’s reported revenue growth will ever benefit the search giant, but somewhere in Mountain View, Calif. Someone at Google headquarters must be smiling and remembering the day the company decided to acquire a small startup named Keyhole and unleash what has become this year’s breakout game.