Niantic Labs announced the sale of its video games division to Saudi-owned Scopely for a whopping $3.5 billion. This move comes as U.S. augmented reality companies pivot towards geospatial technology, unable to recreate the success of the 2016 sensation, Pokémon Go.
The deal, revealed on Wednesday, also propels Saudi Arabia closer to its goal of becoming the ultimate global gaming hub. The Kingdom’s Sovereign Wealth Fund acquired Scopely for $4.9 billion in 2023 as part of a broader strategy to diversify beyond fossil fuels.
As per the agreement, Niantic will distribute an additional $350 million to its shareholders. Additionally, it will separate its Geospatial Artificial Intelligence (AI) business into a new entity named Niantic Spatial, led by John Hanke, the founder, and CEO of Niantic.
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Niantic Spatial will receive $250 million in capital from Niantic’s balancesheet and an additional $50 million from Scopely. All former investors of Niantic will retain their shares in Niantic Spatial.
This move marks the end of a challenging period for Niantic, which struggled post the success of Pokémon Go, leading to employee layoffs in 2022 and 2023.
Saudi Arabia, already known for being a gaming and esports center, is steadfast in its plan to invest nearly $38 billion in gaming-related ventures through its savvy gaming group.
Savvy Games, a prominent investor in global video game companies, including Nintendo, holds a 7.54% stake despite a slight profit decrease last year.
Source: www.theguardian.com
