Deal Talk: Scopely to Acquire Niantic’s Gaming Division for $3.5 Billion

Good morning. Welcome to The Deal Talk where each week we break down a recent M&A deal.

Today we’re going to dive into a potential deal between Niantic Inc., the creator of Pokémon Go, and Saudi Arabia-owned Scopely Inc., who is looking to acquire Niantic’s gaming division for $3.5 billion​.

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DEEP DIVE
Scopely to Acquire Niantic’s Gaming Division for $3.5 Billion

Niantic Inc., the creator of Pokémon Go, is in talks to sell its gaming division to Saudi Arabia-owned Scopely Inc. for $3.5 billion​. The deal includes Pokémon Go, Monster Hunter Now, and Pikmin Bloom.

Strategic Rationale

Niantic struggled to replicate Pokémon Go’s success, facing declining revenues and layoffs. In 2023, it cut 25% of its workforce, citing slowing AR adoption​. Revenue from Pokémon Go fell from $1.2 billion in 2020 to an estimated $600 million in 2024, its second-worst year​. Despite high engagement, monetization challenges have led to stagnation.

Niantic will pivot to augmented reality (AR) and geospatial mapping, returning to its original vision of creating the “real-world metaverse.” The company’s Lightship VPS (Visual Positioning System) builds a global 3D map to enable persistent AR experiences​. Niantic has already partnered with Qualcomm on AR headset technology and Snap for AR pet simulation​. Selling its gaming division allows Niantic to focus fully on its Niantic Spatial Platform, which powers AR applications beyond gaming, including navigation, retail, and enterprise solutions.

For Saudi Arabia (Scopely), the acquisition aligns with its Vision 2030 initiative to reduce oil dependency by investing in gaming and esports​. Savvy Games Group, a subsidiary of Saudi Arabia’s Public Investment Fund (PIF), previously acquired Scopely for $4.9 billion in 2023 to expand its mobile gaming footprint​. Adding Pokémon Go strengthens its position in high-engagement, live-service gaming.

Financial Impact & Market Multiples

• Predicted Transaction Value: $3.5 billion

• Buyer: Scopely (owned by Saudi Arabia’s Savvy Games Group)

• Niantic’s 2024 Revenue: Estimated $600 million (down from $1.2 billion in 2020)​

• Saudi PIF’s Gaming Investments: Over $38 billion across Nintendo, Activision, EA, Take-Two​

• Scopely’s Prior Acquisition by Savvy: $4.9 billion (2023)

Deal Structure & Regulatory Considerations

This is an all-cash transaction because Scopely has the funds to execute without debt financing, leveraging Saudi Arabia’s $700 billion sovereign wealth fund. The PIF’s strategy has been to deploy capital aggressively in gaming, avoiding financial constraints that limit traditional acquirers. 

Saudi ownership of Pokémon Go could raise scrutiny, particularly over data privacy and geopolitical concerns. With millions of players contributing location data, regulators may examine whether user data will be stored outside the U.S.. The deal also raises questions about intellectual property control, as Pokémon is co-owned by Nintendo, Game Freak, and The Pokémon Company, which may require approval for the transfer.

Opinion & Outlook

What Could Go Right?

• Capital Reallocation: Niantic can scale its AR platform without gaming distractions.

• Scopely Growth: Gains a top-grossing mobile title to strengthen its portfolio.

• Saudi Gaming Expansion: Strengthens PIF’s long-term gaming ambitions.

What Could Go Wrong?

• Regulatory Scrutiny: Potential backlash over data security concerns.

• Monetization Challenges: Can Pokémon Go sustain long-term profitability under new ownership?

• Reputational Risk: Saudi involvement may draw criticism, given past controversies

Conclusion

This deal marks a major shift in gaming. For Niantic, it’s a clean break to focus on AR mapping. For Scopely, it’s another step in gaming dominance. If finalized, expect more M&A moves from Savvy Games as it pushes to become a global gaming powerhouse.

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See you next week,

The Deal Talk Team