Niantic Labs, the maker of the highly successful “Pokémon Go”, announced on Wednesday that it would sell its video game division to Saudi Arabia-owned Scopely for $3.5 billion. This move marks a significant shift for Niantic, which will now focus on geospatial technology after failing to replicate the overwhelming success of its 2016 mobile game hit.
The sale is part of a broader strategy by Saudi Arabia to bolster its gaming sector. The kingdom’s sovereign wealth fund, through Savvy Games, had already acquired Scopely for $4.9 billion in 2023, as part of its effort to diversify its economy away from fossil fuels. The transaction will advance Saudi Arabia’s ambitions of becoming the “ultimate global hub” for the gaming industry.
In addition to the sale, Niantic will distribute an extra $350 million to its equity holders. Furthermore, the company will spin off its geospatial AI business into a new entity, Niantic Spatial, led by Niantic founder and CEO John Hanke. Niantic Spatial will be funded with $250 million, of which $200 million will come from Niantic’s balance sheet and $50 million from Scopely. Niantic’s original investors will continue to hold shares in Niantic Spatial.
This strategic shift follows several challenging years for Niantic. After the phenomenal success of “Pokémon Go”, the company struggled to replicate that magic with other titles, including the “Harry Potter: Wizards Unite” game, which was shut down in 2022. Niantic also had to make layoffs in 2022 and 2023, further signaling the company’s struggles.
For Saudi Arabia, the deal aligns with its plan to invest nearly $38 billion in the global gaming industry through Savvy Games Group, which is already a significant investor in major video game companies, including a 7.54% stake in Nintendo.