As shown in the annual update of our VR & AR M&A Tracker, Niantic is one of the most active companies in terms of acquisitions. Having achieved phenomenal success with the first popular consumer AR app, Pokémon GO, the company leveraged that popularity to raise some significant capital. Two rounds of funding followed swiftly after each other - $200m series B right at the end of 2017 and just over a year later in January 2019, a further $245 in a series C round. It was certainly unusual to see investors willing to throw cash at a games studio with only one hit title. Like most media sectors, the games industry is notoriously hit-driven; would you invest in a band after one hit single and hope they don’t turn out to be a one-hit wonder?

But Niantic (and its investors) were smarter than that. Pokémon GO is a game, that’s true, but underpinning that user experience is a very accurate location system with AR layered on top. What Niantic really had was the beginnings of an AR platform which can literally span the globe. The company and its investors saw the potential of this beyond gaming. That investment capital has been used to acquire half a dozen cutting edge AR and machine vision start-ups (plus an investment into AR lens company DigiLens) to boost its platform play, Real World Platform. Unveiled in 2018 and open to third party developers, the platform includes a suite of tools applicable beyond gaming, including security, POI data, social, analytics, and CRM functions.

The story of Niantic actually starts at Google/Alphabet. One of several abortive attempts by Google to address the AR space through internal development, the company was spun out in 2015 (Google/Alphabet remain an investor). Some of Google’s other attempts in the AR space include the infamous Google Glass, launched then swiftly withdrawn from the market as a consumer product, but later relaunched for the enterprise sector. Project Tango, Google’s own AR platform which started in 2012, was eventually shut down in 2018. Google had filed a patent for AR contact lenses but also ended its smart contact lens product (which in any case was limited to sensors, not AR) in 2018. Google’s AR assets today are all from internal development, but are spread across several products. ARCore is built into the Android platform, Google Translate is a standalone app, Lens forms part of its search product, and lately a beta version of AR has been integrated into Google Maps. There's a wealth of functionality but it's spread across multiple products rather than a single platform.

Apple, on the other hand, has taken the approach of Niantic and brought in expertise through acquisition. It has several years head start, with the last of its 7 acquisitions taking place in 2018. The integration of those companies is starting to bear fruit, and Apple announced a number of enhancements to its AR software at WWDC earlier this month. Most notable is the GeoAnchors feature and the QR-based project Codename Gobi, which (like Niantic’s platform) adds real-world location based abilities into the core of its ARKit platform. That platform is now really taking shape.

But what of Facebook? The company has been talking up AR and VR equally since it entered the space with the largest acquisition so far ($2B for Oculus), and has certainly been on the acquisition trail like its competitors Apple and Niantic. However, of the 12 acquisitions Facebook has made in this space, only two are really relevant to AR. As discussed in our report earlier this year, Is Facebook's Scape Acquisition a New Vision for Location or a SLAM into AR?, the functionality from the Scape and earlier Surreal Vision acquisitions could also be used to develop a location-based AR platform – or it could be simply to enhance conventional navigation. It may be a while before that acquisition is integrated into whatever Facebook has up its sleeve - I'm sure there is plenty going on behind the scenes internally. Facebook has other AR assets, notably Spark, an internally-developed SnapChat Lenses competitor – but does it risk losing its way when it comes to AR and real world locations?

Overall, Facebook has been slow in AR, and its investments also limited, relative to its VR efforts. Google has had mixed results with its internal development efforts, and actually divested Niantic. These two companies have been navigating a scenic route to real-world AR integration. It is Niantic and Apple, having found successful shortcuts via their acquisitions, who seem to have become pace-setters when it comes to an AR platform play.