$3.5B Move for Pokémon GO? Scopely Looks to Take Over Niantic’s Gaming Division
According to Bloomberg, US-based AR gaming company Niantic plans to sell its gaming business, including its flagship title, Pokemon GO. The game development division could be acquired by US-based mobile gaming company Scopely for $3.5B. This deal would significantly shift the AR and location-based gaming market if true.
ABOUT NIANTIC
Niantic was established as an internal startup at Google in 2010 by John Hanke (previously CEO of Keyhole, which was acquired by Google and became the foundation of Google Earth). In 2015, it spun out as an independent company with backing from Google (NASDAQ: GOOG), Nintendo (TYO: 7974), and The Pokémon Company. Today, the company employs almost 1,000 people, with main offices in the US, Japan, and the UK.
Since 2015, Niantic has raised over $765m across four funding rounds:
- in Oct’15, the company has secured $20m in a Series A funding round from The Pokémon Company, Google and Nintendo;
- in Nov’17, Niantic secured $200m in a Series B round led by Spark Capital, with participation from other investors, for the development of an AR title based on the Harry Potter universe;
- in Jan’19, Niantic raised $245m in a Series C investment round led by IVP, with additional strategic investors participation, at nearly $4B valuation;
- in Nov’21, Niantic secured $300m from Coatue, doubling its valuation to $9B.
Niantic, best known for the AR mobile game Pokémon GO (2016), pioneered AR gaming by blending real-world exploration with digital gameplay. The game is based on IP co-owned by Nintendo (Japan-based gaming giant), Game Freak (Japan-based game developers of the main installments of the franchise), and Creatures Inc. (Japan-based video game company affiliated with Game Freak and Nintendo). While the company has since released other AR titles, including Harry Potter: Wizards Unite (closed in 2022 after 2.5 years since launch), none have replicated the same level of success.
Source: AppMagic
The success of Pokémon GO made Niantic’s name in the gaming industry; however, the company’s focus has been more tech-driven, as observed in its M&A activity. Since 2017, Niantic has acquired over 10 technological and platform start-ups (e.g., Scaniverse, Hoss, Lowkey, and others).
Source: AppMagic 2024 gross revenue estimates for Dream Games and Niantic
Given the stagnating performance of Pokémon GO (which saw almost flat YoY IAP annual revenue since 2022) and elevated valuation multiples relative to industry benchmarks, a $3.5B transaction for Niantic’s games unit would likely incorporate a contingent earn-out structure to align pricing with long-term performance. The rumored sale follows Niantic’s cancellation of its NBA and Marvel titles and layoffs in Jun’23. But what about the potential buyer?
Acquired by Saudi Arabia-based Savvy Games Group in 2023 for $4.9B, Scopely reported by the end of 2024 $10B lifetime revenue for its mobile games driven by live-service hits like Marvel Strike Force and Monopoly Go!, leveraging expertise in cross-IP partnerships and effective monetization strategies. Scopely’s potential $3.5B acquisition of Niantic’s games unit would mark a significant shift in its strategy, expanding its portfolio beyond traditional mobile gaming into AR-driven live-service experiences. The deal presents multiple strategic advantages for both companies.
STRATEGIC RATIONALE FOR SCOPELY:
- IP portfolio expansion: Pokémon GO generated ~$800m gross IAP revenue in 2024, according to AppMagic, providing immediate revenue scale and strengthening Scopely’s licensing portfolio, which already includes Monopoly Go!. The deal also offers potential access to Nintendo and Capcom IPs;
- Potential synergies: Scopely’s live-service know-how and monetization expertise combined with the loyal fanbase of Pokémon GO may potentially boost revenue growth and drive monetization upward. With Niantic’s recent pivot towards tech innovation over content development, there’s a clear low-hanging fruit scenario to enhance title performance and capture untapped value.
STRATEGIC RATIONALE FOR NIANTIC:
A $3.5B sale provides liquidity to accelerate R&D in AI-powered AR tools (e.g., 3D mapping, object recognition) and mitigates reliance on content revenue, clearly repositioning the company as a technology-first startup. With the games unit divested, Niantic could concentrate its workforce and resources on expanding its Spatial AR platform and enterprise solutions;
The deal seems a win-win for both sides. Niantic’s divestiture is a bold bet on AR’s future capabilities, prioritizing technology scalability over gaming content.
