Niantic Labs to Sell Gaming Division for $3.5 Billion
In a strategic shift, Niantic Labs is set to divest its video game division to Scopely, a company backed by Saudi Arabian interests, for a substantial $3.5 billion. This move signals a renewed focus for the augmented reality firm on geospatial technology, following challenges in replicating the monumental success of its 2016 hit, Pokémon Go.
Saudi Arabia’s Gaming Ambitions Take Center Stage
This acquisition underscores Saudi Arabia’s growing ambition to establish itself as a prominent global hub for the gaming industry. The kingdom’s sovereign wealth fund, through Savvy Games, previously acquired Scopely for $4.9 billion in 2023, reflecting a broader national strategy to diversify its economy beyond traditional fossil fuels.
Niantic to Distribute Funds and Launch New Spatial AI Venture
As part of the agreement, Niantic will distribute an additional $350 million to its equity holders. Furthermore, the company will spin off its geospatial AI operations into a new entity named Niantic Spatial, with founder and CEO John Hanke at the helm.
Niantic Spatial: A New Chapter
Niantic Spatial will receive $250 million in funding, comprising $200 million from its parent company’s reserves and $50 million from Scopely. All original investors will maintain their shareholder positions in Niantic Spatial.
Challenges and Strategic Realignment
This decision follows a period of adjustment for Niantic. Despite the initial triumph of Pokémon Go, the company faced difficulties in creating subsequent hits, leading to workforce reductions in 2022 and 2023. The company also discontinued the Harry Potter: Wizards Unite game in 2022.
Saudi Arabia’s Growing Gaming Footprint
For Saudi Arabia, already a rising force in the gaming world and the host of the Esports World Cup, this deal reinforces its commitment to invest nearly $38 billion in gaming-related initiatives through its Savvy Games Group.
Stay ahead of the game in the Arabian Online Casino world – get the latest insights at ArabianOnlineCasinos.com.
