In a monumental shift, Niantic Labs has announced the sale of its video-game division to Scopely, owned by Saudi Arabia, for a staggering $3.5 billion. This move comes as Niantic pivots its focus towards geospatial technology, following the inability to replicate the monumental success of its 2016 hit, “Pokemon Go.”
Here are the key points of this groundbreaking deal:
- Saudi Arabia’s ambitious pursuit of becoming the “ultimate global hub” for gaming propels this acquisition forward, marking a strategic move for the kingdom.
- The kingdom’s Sovereign Wealth Fund, via Savvy Games, previously acquired Scopely for $4.9 billion in 2023, reflecting Saudi’s commitment to diversifying its investments beyond fossil fuels.
- As part of the acquisition, Niantic will be distributing an additional $350 million to its equity holders, securing a profitable outcome for all parties involved.
- Niantic’s geospatial AI business will now operate under a new entity called Niantic Spatial, spearheaded by the company’s founder and CEO, John Hanke.
- Niantic Spatial will receive $250 million in funding, with $200 million sourced from Niantic’s balance sheet and $50 million from Scopely. Original investors in Niantic will also retain their stake in Niantic Spatial.
This strategic move by Niantic comes in the wake of challenging years for the company, marked by struggles to replicate the success of “Pokemon Go” and having to make difficult decisions such as employee layoffs and discontinuing other games like “Harry Potter: Wizards Unite.”
For Saudi Arabia, a nation already making waves in the gaming industry by hosting the Esports World Cup and developing as a gaming hub, this acquisition aligns with its extensive investment of nearly $38 billion in the gaming sector through Savvy Games Group. The group, a major player in global video-game investments, includes companies such as Nintendo, in which it holds a sizeable 7.54% stake.
As Niantic embarks on this new chapter and Saudi Arabia solidifies its position in the gaming industry, the future looks promising for both parties involved in this transformative deal.
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