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Google (GOOGL) Acquires Owlchemy, Strengthens VR Portfolio
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Alphabet Inc. (GOOGL - Free Report) owned search engine giant Google recently acquired virtual reality (VR) video game developer Owlchemy Labs. The terms of the deal, however, have not been disclosed.
Founded in 2010, Owlchemy is a VR-focused games studio that created popular game titles like Job Simulator and Rick and Morty: Virtual Rick-ality. It raised $5 million in seed funding from Capital Factory, Qualcomm Ventures, Colopl VR Fund, HTC and The Venture Reality Fund.
Coming to the price performance, in the last one year, shares of Alphabet have been treading higher. The stock returned 30.5% compared with the Zacks categorized Internet Services industry’s gain of 20.6%.
Backed by Google, Owlchemy will continue to create content for other game platforms namely HTC Vive, PlayStation VR and Oculus Rift.
Deal rationale
With Owlchemy, Google is further trying to boost its ambitious VR and augmented reality (AR) efforts.
The tech giant has been gearing up to solidify footprint in the AR/VR market for a long time now. It has been making huge investing toward development of video games and apps, licensing sports leagues and shooting 360-degree videos. The company already has its own VR headset, the Daydream, as well as the Google Cardboard headset. The company also creates VR content like Tilt Brush and Google Earth which works across platforms.
The addition of Owlchemy will help the company to develop a larger VR community by getting the expertise and knowledge of Owlchemy. Also, the deal could potentially contribute to Google’s experimental Daydream Labs program, thereby boosting its competitive prowess in the untethered VR market.
Bottom Line
VR has been touted as the next “happening” computing platform with massive growth potential. Per IDC’s Worldwide Semiannual Augmented and Virtual Reality Spending Guide, worldwide revenues will increase 130.5% over 2016 to $13.9 billion in 2017. Further, worldwide revenues will grow at a compound annual growth rate (CAGR) of 198% (over the 2015–2020 period) reaching more than $143.3 billion by 2020.
Competition is already rife in the virtual reality headsets’ space, with tech giants like Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) and Facebook being the strong players here. Other Silicon Valley companies in the space include Sony's Project Morpheus and Samsung’s Gear VR such head. Reportedly, Apple Inc (AAPL - Free Report) has also been accelerating its efforts in the AR space, though a retail launch is unlikely to happen in the near future.
While companies are investing heavily to secure their own position in the virtual reality space, the latest deal with Owlchemy is definitely expected to bear fruit and help Google dominate the virtual reality market.
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Google (GOOGL) Acquires Owlchemy, Strengthens VR Portfolio
Alphabet Inc. (GOOGL - Free Report) owned search engine giant Google recently acquired virtual reality (VR) video game developer Owlchemy Labs. The terms of the deal, however, have not been disclosed.
Founded in 2010, Owlchemy is a VR-focused games studio that created popular game titles like Job Simulator and Rick and Morty: Virtual Rick-ality. It raised $5 million in seed funding from Capital Factory, Qualcomm Ventures, Colopl VR Fund, HTC and The Venture Reality Fund.
Coming to the price performance, in the last one year, shares of Alphabet have been treading higher. The stock returned 30.5% compared with the Zacks categorized Internet Services industry’s gain of 20.6%.
Backed by Google, Owlchemy will continue to create content for other game platforms namely HTC Vive, PlayStation VR and Oculus Rift.
Deal rationale
With Owlchemy, Google is further trying to boost its ambitious VR and augmented reality (AR) efforts.
The tech giant has been gearing up to solidify footprint in the AR/VR market for a long time now. It has been making huge investing toward development of video games and apps, licensing sports leagues and shooting 360-degree videos. The company already has its own VR headset, the Daydream, as well as the Google Cardboard headset. The company also creates VR content like Tilt Brush and Google Earth which works across platforms.
The addition of Owlchemy will help the company to develop a larger VR community by getting the expertise and knowledge of Owlchemy. Also, the deal could potentially contribute to Google’s experimental Daydream Labs program, thereby boosting its competitive prowess in the untethered VR market.
Bottom Line
VR has been touted as the next “happening” computing platform with massive growth potential. Per IDC’s Worldwide Semiannual Augmented and Virtual Reality Spending Guide, worldwide revenues will increase 130.5% over 2016 to $13.9 billion in 2017. Further, worldwide revenues will grow at a compound annual growth rate (CAGR) of 198% (over the 2015–2020 period) reaching more than $143.3 billion by 2020.
Competition is already rife in the virtual reality headsets’ space, with tech giants like Microsoft (MSFT - Free Report) , Apple (AAPL - Free Report) and Facebook being the strong players here. Other Silicon Valley companies in the space include Sony's Project Morpheus and Samsung’s Gear VR such head. Reportedly, Apple Inc (AAPL - Free Report) has also been accelerating its efforts in the AR space, though a retail launch is unlikely to happen in the near future.
While companies are investing heavily to secure their own position in the virtual reality space, the latest deal with Owlchemy is definitely expected to bear fruit and help Google dominate the virtual reality market.
Alphabet Inc. Price and Consensus
Alphabet Inc. Price and Consensus | Alphabet Inc. Quote
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Alphabet carries a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>