Niantic raises $300M at a $9B valuation to build the 'real-world metaverse'

·3 min read

Niantic, the augmented reality platform that's developing games like Pokémon GO, raised $300 million from Coatue, valuing the company at $9 billion. The San Fransisco-based startup, which initially spun out of Google, will use this money to build what it calls the "real-world metaverse."

As early as August, Niantic founder and CEO John Hanke has referred to the metaverse -- at least, the one that renders us bound to VR headsets, like in "Ready Player One" -- as a "dystopian nightmare." Unlike Facebook, which changed its company name to Meta to signal its investment in VR technology, Niantic wants to develop technology that brings people closer to the outside world. Earlier this month, Niantic unveiled its Lightship AR Developer Kit (ARDK), which makes tools to develop AR games publicly available for free to anyone who has a basic knowledge of the Unity game engine.

“At Niantic, we believe humans are the happiest when their virtual world leads them to a physical one,” Hanke said at the time. “Unlike a sci-fi metaverse, a real-world metaverse will use technology to improve our experience of the world as we’ve known it for thousands of years.”

The funding will help expand the ARDK, which has already been used by companies like Coachella, Historic Royal Palaces, Universal Pictures, SoftBank, Warner Music Group and the PGA of America to create augmented reality experiences. So, instead of using technology like VR headsets -- which are still inaccessible to much of the population -- AR projects mostly use smartphones to encourage people to explore their outside surroundings. You might walk by the same mural every day, for example, but in Pokémon GO, a user-generated Pokéstop description might tell you what that mural actually represents. Niantic says that tens of millions of people play Niantic's games each month, walking more than 10.9 billion miles in their games since launch.

“Niantic is building a platform for AR based on a 3D map of the world that we believe will play a critical role in the next transition in computing,” said Matt Mazzeo, a general partner at Coatue. “We are excited to partner with Niantic because we see this infrastructure supporting a metaverse for the real world and helping to power the next evolution of the internet.”

The VR metaverse might be "dystopian" in Hanke's eyes, but like any technology, AR isn't without its problems. Niantic's newest game, Pikmin Bloom, is designed around walking, which can be alienating to elderly or disabled players. Pokémon GO has a community of disabled players, but they've had to speak out about how certain small in-game tweaks can make the game much more accessible for people with limited mobility.

Still, Niantic's vision offers an alternative to Meta's headset-dependent plans. Pokémon GO remains a smash success -- it earned over $1 billion in 2020 and is already on track to outpace that revenue this year, according to app analytics firm Sensor Tower. Not all of its games are as beloved -- the company recently announced it will shut down Harry Potter: Wizards Unite after in-app consumer spending and global installs dropped 57% year over year. But as independent developers get their hands on Niantic's Lightship ARDK, we'll see how far the concept of a "real-world metaverse" can stretch.

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