Niantic is shifting focus after struggling to replicate Pokémon Go’s success, selling its video game division for $3.5 billion and concentrating on geospatial technology.
Niantic Labs to Sell Video Game Division to Saudi-Owned Company for $3.5bn
After failing to recreate the success of its ‘2016 hit augmented reality game Pokémon Go‘ , Niantic Labs is planning to sell its video game division to Scopely, a Saudi-owned company, for $3.5 billion.
Niantic Labs is a pioneering technology company that specializes in developing location-based augmented reality (AR) games.
Founded in 2010 by John Hanke, the company gained widespread recognition with its hit game Pokémon Go, which became the most downloaded mobile game of 2016.
Niantic's innovative approach to gaming involves using real-world locations as a backdrop for immersive gameplay experiences.
The company continues to push the boundaries of AR technology, releasing new titles such as Ingress and Harry Potter: Wizards Unite.
The deal announced on Wednesday marks a significant shift in focus for Niantic, which will concentrate on developing geospatial technology after struggling to replicate the success of ‘Pokémon Go’ . The kingdom’s sovereign wealth fund, via Savvy Games, purchased Scopely for $4.9 billion in 2023 as part of an effort to diversify Saudi Arabia‘s economy beyond fossil fuels.
Under the deal, Niantic will distribute an additional $350 million to its equity holders and spin off its geospatial artificial intelligence (AI) business into a new firm called Niantic Spatial, led by John Hanke, the company’s founder and CEO. Niantic Spatial will be funded with $250 million of capital, with $200 million coming from Niantic’s balance sheet and $50 million contributed by Scopely.
Niantic Spatial is a location-based game development platform developed by Niantic, Inc.
It enables creators to build immersive experiences that blend the physical and digital worlds.
The platform uses a combination of augmented reality (AR) and real-world locations to create engaging games and interactive stories.
Niantic Spatial allows developers to integrate features such as object recognition, spatial audio, and social interactions into their applications.
This technology has been used in popular titles like Pokémon Go and Harry Potter: Wizards Unite.
The move follows several challenging years for Niantic, which had to lay off employees in 2022 and 2023 after struggling to replicate the success of ‘Pokémon Go‘ . The company also axed its ‘Harry Potter: Wizards Unite video game’ in 2022. For Saudi Arabia, the deal builds on a plan to invest nearly $38 billion in initiatives related to the gaming industry through its Savvy Games Group.
The Saudi Public Investment Fund (PIF) is a sovereign wealth fund that oversees the country's investment activities.
Established in 1971, PIF has invested in various sectors, including energy, healthcare, and technology.
'The government's vision for the future of our economy is to diversify and reduce dependence on oil,' said 'Prince Mohammed bin Salman'.
The fund has also established subsidiaries such as Aramco, which manages the state-owned oil company.
Additionally, the Saudi Arabian Monetary Authority (SAMA) plays a crucial role in regulating the country's financial sector.
Savvy Games is a major investor in global video game companies, including Nintendo, with which it has a stake of around 7.54% after a small cut in its interest last year.
