Niantic Labs has announced the sale of its video game division to Saudi Arabia-owned Scopely for $3.5 billion. This huge change for the U.S.-based augmented reality (AR) company as it moves away from gaming and focuses on geospatial AI technology. Niantic became famous for its 2016 hit, Pokémon Go, but struggled to create another game with the same success.
The deal was announced in a Saudi company statement and it includes an extra $350 million that Niantic will distribute to its equity holders. Along with the sale, the company will launch a new business called Niantic Spatial, which will focus on geospatial AI.
This new company will be led by Niantic’s founder and CEO, John Hanke. To fund Niantic Spatial, $250 million will be set aside, with $200 million coming from Niantic and $50 million from Scopely. The company’s original investors will remain shareholders in Niantic Spatial.
Saudi Arabia is working to become a global gaming leader. The country has been investing heavily in the gaming industry as part of a broader strategy to move beyond its dependence on fossil fuels. In 2023, Saudi Arabia’s sovereign wealth fund, through Savvy Games Group, bought Scopely for $4.9 billion. With this new acquisition, Saudi Arabia further strengthens its gaming industry presence.
Savvy Games Group has already invested billions of dollars in gaming companies around the world. It owns a stake of around 7.54% in Nintendo and has committed $38 billion to gaming initiatives. The kingdom has also launched the Esports World Cup, which brings together professional players and fans from around the world.
Niantic has faced many challenges since the success of Pokémon Go. The game was a global hit, attracting over 500 million players in its first year. Since its release, the game has earned an estimated $7.9 billion in revenue. However, Niantic struggled to maintain that level of success.
The COVID-19 pandemic hurt the game’s popularity as lockdowns kept people indoors. The company also had to cancel several projects, including Harry Potter: Wizards Unite, which was shut down in 2022. To cut costs, Niantic laid off more than 310 employees between 2022 and 2023.
Despite these struggles, Niantic’s gaming business remained profitable. Reports suggest it generated $1 billion in revenue last year. The sale to Scopely includes major gaming titles such as Pokémon Go, Monster Hunter Now, and Pikmin Bloom. Social companion apps like Campfire and Wayfarer are also part of the deal. However, some of Niantic’s games, including Peridot and Ingress, will stay with Niantic Spatial.
With this acquisition, Scopely will take control of Niantic’s gaming team and portfolio. Scopely’s leaders have described this as a “megadeal,” suggesting it could bring in at least $1 billion in annual revenue. The deal strengthens Scopely’s position as a major player in mobile gaming. The company, which also owns the hit game Monopoly Go!, has been expanding aggressively in recent years.
Niantic will now focus on geospatial AI technology, an area where it has deep expertise. Niantic Spatial will work on advanced mapping and AR experiences, shifting the company away from traditional game development as said in the company press release.
The acquisition is still subject to regulatory approval and other closing conditions. If approved, the deal will further increase Saudi Arabia’s influence in the gaming world.
