Pokémon Go Puts Video Game Investing On The Map

Every tech-focused newspaper, blog, website and chat room is headlining Pokémon Go as their top news story. And rightly so: according to TechCrunch, the online gaming app is the biggest ever in the U.S., with more users than Twitter (NYSE:TWTR) and higher user engagement than Facebook (NASDAQ:FB).
However, even if the app itself isn’t appealing to you, the investment opportunities surrounding this break-away hit should be. Pokémon Go has finally launched augmented reality into the mainstream. This means that the top companies in the augmented reality space are looking forward to big investment and even bigger returns. Case in point, Nintendo (OTCMKTS:NTDOY) has seen a whopping 70.98 percent increase in share price over the past five days, reaching the highest stock prices that it has seen in the past several years, in addition to the highest trading volume. But Nintendo didn’t create the app alone, which means that a lot of other tech companies are riding high on the wave created byPokémon Go’s popularity.

The players behind Pokémon Go

According to MarketWatch, Pokémon Go was developed by Niantic, a company that used to be a division of Google (NASDAQ:GOOGL) until Google created its Alphabet organization.The company has raised $25 million in two rounds of funding from a total of eight investors. Its most recent round of funding, back in February, gave the company $5 million and a $150 million valuation. How much of Niantic Google still owns isn’t public information, but sources suggest that the company still owns a chunk of equity in the company.

So what is the best way to profit off of Niantic’s success with Pokémon Go? Google appears to be the obvious first choice. Beyond being an investor in Niantic, the company’s app store has been benefiting from the number of Android downloads of Pokémon Go. Reports suggest that a remarkable 10 percent of Android users have downloaded the game and 5 percent are daily active users. Since the beginning of July, the company has seen a steady 4.37 percent growth.
By this logic, Apple (NASDAQ:AAPL) is another good stock to invest in, as the App Store has also been profiting from the Pokémon Go craze. MarketWatch reports that company receives 30 percent of profits from ever dollar spent on their app platforms and in app purchases, meaning than any activity in the App Store is a boon for the company. Since the start of the month, the company has seen 3.34 percent growth.

Niantic isn’t the only private company that’s benefiting wildly from Pokémon Go. Unity Technologies, the maker of the game engine software behind the game, is also seeing significant growth. Bloomberg Technology reports that the company raised $181 million in new funding round, led by late stage capital firm DFJ Group. This round values the company at around $1.5 billion. It’s technology essentially provides a suite of tools that help people to create video games. So far, there is only one other major competitor in the marketL Epic Games. And, while historically Epic Games was the choice of larger companies, Unity saw a real boon when it captured the Pokémon Go deal. All told, Pokémon Go isn’t only benefiting Nintendo. There are a handful of hidden players that are also profiting significantly off of the game. Savvy investors should watch out for these companies and follow them through future funding rounds, M&A activity and possible IPOs.

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