The CEO behind 'Pokémon Go' says the company is cash-flow positive as it becomes worth almost $4 billion

niantic ceo john hanke

  • Niantic, the
    developer of “Pokémon
    Go”
    and the forthcoming “Harry Potter: Wizards Unite,”
    announced that it’s raised $245 million in a deal valuing it at
    “almost $4 billion.”
  • CEO John Hanke tells us that Niantic is cash-flow
    positive, but the money helps it bunker down for a possible venture
    capital crunch as it starts the years-long road towards a possible
    IPO.
  • The funding round brings in Samsung and Axiomatic Games
    as strategic investors — two companies that Hanke says are very
    important for helping Niantic realize its dream of bringing tech
    closer into the real world.
  • Meanwhile, Niantic is also investing in the Real World
    Platform, which will see it license big pieces of its tech to other
    developers. Hanke says that Niantic can be both a gaming studio and
    a developer tools company. 
  • “Pokémon Go,” still Niantic’s flagship game, has
    generated more than $2 billion in revenue since launch, says Hanke,
    and will see a further investment in real-world events for
    players.

Niantic, the
developer of “Pokémon
Go”
and the forthcoming “Harry Potter: Wizards Unite,” says
that it’s now valued at “almost $4 billion,” following a $245
million funding round led by IVP, with participation from strategic
investors Samsung and Axiomatic Gaming.

John Hanke, the CEO of Niantic, tells Business Insider that the
company didn’t need the money, strictly speaking: “Pokémon Go,”

revitalized by a plethora of fan-requested features
, has
brought in over $2 billion of revenues since its 2016 launch, says
Hanke. Furthermore, he says, Niantic is cash-flow positive, and
still has lots of cash in the bank from previous investment
rounds. 

Still, Hanke says, the time was right, as he foresees a crunch
coming, where it’ll be harder for companies like Niantic to raise
investment capital amid a possible economic downturn. He’s not
necessarily against Niantic getting acquired, he says, and indeed,
Niantic itself spun out of Google. Still, it’s hard to guess how
much control a would-be buyer would exert, and staying independent
is the best way to ensure that Niantic gets to do what it wants to
do. 

So while Niantic doesn’t plan to IPO for “many more years,” the
cash helps make sure the company can weather any storms between now
and then as an independent company.

“The best way to invent the future is to be around to build
it,” Hanke said.

Why these investors?

pokemon go trainer battle

Beyond the money, Hanke says that those strategic investors were
a big reason why Niantic chose to go after new funding, serving to
“cement relationships that were already in place.” Now that these
companies have a financial stake in Niantic, the lines of
communication are much more open, and the company can benefit from
their expertise.

Samsung, Hanke notes, is an expert at Android phones, and has
made big investments in augmented reality — the technology for
overlaying digital imagery over the real world, largely introduced
to the mainstream by “Pokémon Go” itself. Otherwise, Hanke says
that he sees promise in using Samsung’s investments in smart
sensors to bring augmented reality closer to the real world, as
physical objects can have presences in the real world. 

Axiomatic, for its part, is an entertainment and sports
management firm with a controlling stake in Team Liquid, a
well-known esports organization, as well as an investment in
“Fortnite” maker Epic Games. Co-chaired by Peter Guber, Bruce
Karsh, Ted Leonsis, and Jeff Vinik — all of whom own one or more
professional, major league sports teams — Hanke believes
Axiomatic can bring a lot of expertise about how to engage fans and
throw live events. 

Combined, Hanke says, these partners can help Niantic come up
with ways to make real-world gaming events “much more fun.” He
notes that Niantic has been encouraged by the success of Community
Day, a series of events thrown by the company to encourage
“Pokémon Go” players to hit the streets en masse, and that the
company is prioritizing figuring out ways to do more big events,
indoors and outdoors — which dovetails with the company’s goal of
using tech to get people on their feet and exploring the world
around them. 

Read more:
The CEO behind ‘Pokémon Go’ explains why it’s become such a
phenomenon

“We will attempt to expand and continue to invest in events,”
Hanke says.

Here comes Harry Potter

The next big game launch for Niantic is “Harry Potter: Wizards
Unite,” developed in conjunction with Portkey Games, a subsidiary
of Warner Bros. Interactive Entertainment. All we know is that it’s
expected to launch this year, and Hanke was tight-lipped about
sharing any details. 

He says that there’s a simple reason why the stewards of
“Pokémon” and “Harry Potter,” two of the most valuable franchises
on the planet, have chosen to go with Niantic: Nobody else puts the
same level of polish or care into a smartphone game, let alone one
that involves exploring the real world, and the extra effort pays
off in fan engagement, he says. 

When the likes of The Pokémon Company or Warner Bros. come to
Niantic, they’re saying “let’s do it big, let’s do it right,
let’s invest in it,” says Hanke. “There’s no comparable
companies.”

Otherwise, Hanke hints that Niantic has more games coming, even
as it invests further in its existing lineup, including “Pokémon
Go” and “Ingress Prime.”

The cloud connection

The other facet of Niantic’s business is the Real World
Platform, which the company teased in the middle of last
year. 

Essentially, the Real World Platform will enable software
developers to take advantage of the technology Niantic created for
its own games. Developers will be able to use Niantic’s augmented
reality tech, as well as the company’s secret sauce for multiplayer
gaming and for connecting gameplay to real-world locations. 

“You put so much tech into those games, it makes sense to
leverage it,” says Hanke. 

pokemon go kyogre raid santa monica

However, Hanke also sees it as having a variety of other uses,
which nobody has yet foreseen. That could be in business software,
or consumer software, or even robotics — but not necessarily in
gaming, entirely. The company has announced a $1
million contest for early developers on the Real World
Platform
.

He says that while the Real World Platform is a major focus for
Niantic going forward, he thinks that it can be both a gaming
studio and a developer tools company.

“We really want to be both,” says Hanke. 

As he points out, Epic Games is both the developer of
mega-phenomenon “Fortnite,” and the proprietor of the popular
Unreal Engine software for game developers. 

pokemon go trading

Pokémon, go on

For Hanke, 2018 was a pivotal year for “Pokémon Go,” which he
says has finally become the game Niantic envisioned all along.

In the last year, Niantic has introduced long-awaited features
to “Pokémon Go,” including Pokémon battling and trading with
friends. In November, too, Nintendo launched “Pokémon: Let’s Go”
for the Nintendo Switch, which offers an integration with “Pokémon
Go.”

All of this has led to Pokémon Go seeing a resurgence in
popularity. But it took a great deal of effort within the
company.

Niantic spent the months after its
rocky 2016 launch
“on our heels,” trying to patch the game up
on the fly.

He says that 2017 was characterized by taking a step back,
making new hires, and building a plan. But 2018 was when the team
achieved a “regular pace of updates,” which he says will carry into
2019. Player engagement, for instance, was way up in 2018 from
2017. And that’s giving Hanke optimism for the new year.

As it continues this goodwill tour with fans, Hanke says that
Niantic keeps up with the “Pokémon Go” community via Reddit. While
Hanke says that Niantic tries not to let fan feedback drive its
overall product strategy, he says that it’s very useful in
fine-tuning an idea once it’s out. When Pokémon trading and
battling came out, Hanke says, fans highlighted all kinds of little
problems that Niantic had missed in-house, guiding it to
solutions.

Finally, Hanke says that Nintendo and the Pokémon Company —
the Nintendo joint venture that owns the trademark — have been
very pleased with both “Pokémon Go” and “Pokémon: Let’s Go,” and
are looking for more “synergies” between the game and the core
franchise. That’s good news for Niantic, too, Hanke says. 

“We’ve benefitted in a lot of ways,” says Hanke.

SEE ALSO: Apple
is about to have a big year — here’s what to expect it to launch
in 2019


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The CEO behind 'Pokémon Go' says the company is cash-flow positive as it becomes worth almost billion