Niantic Labs has made a significant announcement regarding its future in the gaming industry. In a surprising turn of events, the Saudi Arabia-owned company, Scopely, has acquired Niantic’s gaming division for an impressive $3.5 billion. Originally founded in Los Angeles, Scopely was purchased using substantial investments from Saudi Arabia’s sovereign wealth fund, also known as the Saudi Public Investment Fund (PIF). This acquisition marks a pivotal moment in the mobile gaming landscape, as it combines the innovative technology of Niantic with Scopely’s established market presence.

The acquisition deal encompasses a majority of Niantic’s acclaimed portfolio of augmented reality (AR) games, which features popular titles such as Pokémon Go, Monster Hunter Now, and Pikmin Bloom. Additionally, it includes Niantic’s social companion applications like Campfire and Wayfarer. However, it’s important to note that this deal is still pending and will be subject to regulatory approval and other necessary closing conditions before it can be finalized.

Scopely is poised to benefit greatly from this acquisition, as they will gain access to “Niantic’s entire team of exceptional gamemakers and category-leading games.” Despite this expansive purchase, there are two notable titles that will remain under Niantic’s ownership: Peridot and Ingress. These games will continue to be developed separately, allowing Niantic to maintain a foothold in the competitive AR gaming space.

As a formidable contender in the mobile gaming industry, Scopely has established itself as the driving force behind several successful games, including Star Trek Fleet Command, Marvel Strike Force, and Monopoly Go!. This acquisition is expected to further solidify Scopely’s position in the market and enhance its portfolio with Niantic’s innovative gaming technology.

Despite the promising start of Niantic’s games division, it has struggled to maintain its previous success. Pokémon Go saw an unprecedented engagement of over 500 million players in its inaugural year; however, the game’s popularity has diminished over time. At its peak, the game attracted more than 230 million players monthly, but that figure has now dwindled to approximately 80 million active users. This decline reflects the challenges Niantic faces in sustaining long-term interest in its flagship title amidst a rapidly evolving gaming market.

In its efforts to replicate the extraordinary success of Pokémon Go, Niantic attempted to adapt its engaging gameplay to other beloved franchises, such as Harry Potter and NBA basketball, but these ventures failed to achieve the same level of traction. Nonetheless, ongoing projects like the Monster Hunter and Pikmin games remain active and are expected to continue attracting dedicated fan bases.

The challenges facing Niantic have led to the cancellation of several game projects and a decline in its overall valuation. The company’s much-anticipated vision of a “real-world metaverse” remains unfulfilled, raising questions about its future direction. Should the sale to Scopely be finalized, Niantic plans to concentrate on its standalone entity, Niantic Spatial, which focuses on creating real-world 3D maps. This new direction will be spearheaded by CEO John Hanke, aiming to leverage their expertise in augmented reality for future innovations.

The Saudi Public Investment Fund (PIF) has emerged as a significant force within the gaming industry, acquiring Scopely and its parent company, Savvy Games Group, while also holding financial stakes in major companies like Nintendo, EA, and Activision Blizzard. This strategic involvement reflects the PIF’s ambition to diversify its investments and position itself as a key player in the global gaming market.