It looks like Scopely Inc. is getting bigger.

The Culver City-based mobile games maker is in talks to buy Niantic Inc.’s video game division in a $3.5 billion deal pending regulatory approval, both companies announced on Wednesday.

Niantic would mark Scopely’s fifth acquisition since it was founded in 2011. Despite difficult releases, Niantic’s games division was responsible for more than $1 billion in revenue in 2024, according to Scopely. Together, both companies hosted 500 million players in 2024 and the entire Niantic games team will continue to work under Scopely.

Niantic, which is known for its flagship property Pokémon Go, has had a hard time developing titles that were able to replicate the worldwide success of its original augmented reality game, which was released in 2016.

The company was created on the basis of using AR in new applications, but after Pokémon Go finally lost some steam during the 2020 Covid-19 lockdowns, other titles fell flat.

Niantic then laid off 230 employees – about a fourth of its workforce – in 2023 and canceled several anticipated titles from the Transformers and Harry Potter franchises.

“I firmly believe this partnership is great for our players and is the best way to ensure that our games have the long-term support and investment needed to be ‘forever games’ that will endure for future generations,” John Hanke, founder and chief executive of Niantic, said in a statement.

Saudi Arabia’s gaming campaign

Meanwhile, Scopely was acquired by Saudi Arabia-based Savvy Games Group for $4.9 billion the same year Niantic announced sweeping layoffs. According to Savvy Chief Executive Brian Ward, Scopely was an appealing acquisition target for its ability to successfully scale as a mobile first gaming company.

“Scopely was the only one that was actionable, at scale, with multiple franchises that had done over $100 million in lifetime revenue – this was before the launch of Monopoly Go – and had a technology platform that was unique in the marketplace driving retention, monetization and community engagement,” Ward told the Los Angeles Business Journal in October. “Those were the main factors (to why we wanted to buy the company).”

The Niantic acquisition is another notch in the belt for Saudi Arabia, which has made a concerted effort to create inroads in the growing games industry. The Saudi Public Investment Fund created Savvy Games Group in 2021. The fund has also been used to acquire stakes in Santa Monica-based Activision Blizzard Inc., Electronic Arts (known for the Sims franchise) and Nintendo. Saudi Arabia also hosts the Esports World Cup.

Scopely cultivated a relationship with Niantic in 2024 when Niantic and Savvy announced a partnership in August to expand Niantic’s titles to the Middle East and North Africa region. The two companies share many parallels – both build mobile games and offer real life social experiences to supplement those franchises. Pokémon Go has two social media apps and hosts live events (which will continue under Scopely), and Monopoly Go’s entire premise requires a social environment in order to be played.

“After spending time with the Niantic team, it quickly became clear that this organization shares our inclination to create industry-leading outcomes and exceptional player experiences,” Tim O’Brien, chief revenue officer and board member at Scopely, said in a statement. “We look forward to a bright future ahead.”

Niantic splits up

If the acquisition is finalized, Niantic’s assets will further divide into different companies and entities. Under Scopely, Niantic will continue developing Pokémon Go, Pikmin Bloom, Monster Hunter Now and two companion apps for Pokémon Go – Campfire and Wayfarer.

Niantic’s technology platform will become a standalone company called Niantic Spatial Inc. that will be led by Hanke. Niantic Spatial Inc. will focus on geospatial artificial intelligence use cases, preserving Niantic’s success with augmented reality and building on other Niantic games titles like Ingress Prime and Peridot.

“Niantic games have always been a bridge to connect people and inspire exploration, and I am confident they will continue to do both as part of Scopely,” Hanke said.