According to a report released on Wednesday, Niantic, the developer of the globally popular augmented reality game Pokémon GO, is in negotiations to transfer its gaming division to Scopely Inc., a company owned by Saudi Arabia’s Savvy Games Group.
According to sources involved in the discussions, this possible agreement is estimated to be worth around $3.5 billion.
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Niantic’s struggles and future prospects
Despite Pokémon GO’s initial success, which saw over 232 million active users at its peak, Niantic has faced significant challenges in maintaining player engagement and generating revenue.
The game’s user base has dwindled to about 80 million monthly players, resulting in a revenue drop from nearly $1 billion annually to around half that amount.
Niantic has struggled to replicate the success of Pokémon GO with other titles; games like Harry Potter: Wizards Unite and NBA All World failed to gain traction and were eventually shut down.
The company has also faced financial difficulties, leading to layoffs and project cancellations. In 2022, Niantic laid off 8 per cent of its workforce and cut another 230 jobs in 2023 as part of a broader trend of layoffs in the gaming industry.
These challenges have prompted Niantic to consider selling its gaming division while retaining its augmented reality technology capabilities.
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The potential buyer: Scopely Inc.
Scopely, which was acquired by Saudi Arabia’s Savvy Games Group in 2023 for $4.9 billion, is reportedly interested in acquiring Niantic’s gaming division as part of its strategy to expand its portfolio of mobile games.
The deal would include rights to Pokémon GO and other titles developed by Niantic. Although both companies have declined to comment on the negotiations, an agreement could be finalised within weeks if discussions progress positively.
Saudi Arabia has actively invested in gaming as part of its broader economic diversification strategy. The acquisition of Niantic’s gaming division would align with these efforts and further establish the kingdom as a significant player in the global gaming industry.
As the talks continue, the fate of Pokémon GO and Niantic’s future remains uncertain, but this potential sale marks a pivotal moment for both companies involved.
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