Pokemon Go Made Niantic Billions. Now It’s Ditching Gaming For AI.

Forbes

Niantic was still raking in hundreds of millions a year from the beloved mobile game when CEO John Hanke decided to sell its games business and pivot to enterprise AI. Why blow it all up now?  Read the full story on Forbes: https://www.forbes.com/sites/richardnieva/2025/05/21/niantic-scopely-pokemon-go/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

00:00Today on Forbes, Pokemon Go made Niantic billions.

00:05Now it's ditching gaming for AI.

00:09Walking through Niantic's headquarters in San Francisco's historic Ferry Building,

00:13visitors are greeted by a scrum of giant Pokemon stuffed animals.

00:18On amphitheater-style steps, an enormous Snorlax naps in the corner, while a Bulbasaur sits

00:24ready to pounce.

00:25Elsewhere, a stunned Psyduck stares vacantly toward the distance, and perhaps the company's

00:31unexpected future.

00:33In March, Niantic made a bombshell announcement.

00:37The developer of Pokemon Go, once the biggest mobile game ever in the US, is abandoning games

00:43to go all-in on AI.

00:46It has sold off its game development business to Saudi-owned game maker Scopely in a $3.5

00:51billion deal and rebranded itself as Niantic Spatial.

00:56Instead of building augmented reality games for mobile phones, it will develop artificial

01:00intelligence models that analyze the real world for enterprise clients.

01:06Co-founder and CEO John Hankey told Forbes, quote,

01:09It's kind of unusual for a successful company to do this cellular division, form two companies.

01:15It became clear to us that the way to maximize the opportunity for both was to let each of

01:20them go and pursue its future.

01:23Now, Niantic is doubling down on its nascent Spatial Platform, announced in November, which

01:30provides AI mapping tools that companies can use to chart out routes for robots or power augmented

01:35reality glasses.

01:37Just as large language models allow AI to generate text, Niantic's large geospatial models, or

01:43LGMs, help AI understand, navigate, and interact with physical spaces as a human would.

01:50The models are able to recreate 3D real-world places thanks to Niantic's massive set of location

01:56data, drawn from the 30 billion miles people have collectively walked playing its games like

02:01Pokemon Go and Ingress.

02:03And when the models don't have precise data on all the dimensions, topography, or physical

02:08structures in a place, they use generative AI to fill in those blanks, estimating different

02:13angles of a statue or missing corners of rooms.

02:17Niantic's pivot underscores the seismic effect that the generative AI frenzy has had on Silicon

02:23Valley since ChatGPT rocked the industry nearly two and a half years ago, radically transforming

02:29even a firmly established decade-old company like Niantic.

02:34According to Gartner, the market for spatial computing is expected to hit $1.7 trillion

02:38by 2033, up from $110 billion in 2023, with growth driven by location-based services from

02:47the likes of mapping giant TomTom and traditional big tech like Google.

02:52Tuang Wen, director-analyst for Gartner's emerging technology team, said, quote,

02:57The opportunity is enormous.

03:00And so is the competition.

03:03In spatial AI, Niantic faces some formidable rivals.

03:07Since 2021, NVIDIA has offered Omniverse, an enterprise platform that creates 3D so-called

03:14digital twins for performing simulations in factories and other industrial settings.

03:19And last year, computer vision pioneer Fei-Fei Li, known as the godmother of AI, founded WorldLabs,

03:26a startup building AI that generates 3D fantasy worlds, which could be helpful for video game

03:32development or astronaut simulations.

03:34The company is already valued at $1 billion, without even launching a product.

03:38To fund its new company, Niantic went to its well of existing investors, including Co2, Battery

03:46Ventures, and CRV, for a $250 million investment.

03:50From the start, Pokemon Go was a runaway hit, generating around $8 billion in revenue since

03:58its debut in 2016, analysts estimate.

04:00Almost a decade later, the game, which tasks players to catch virtual Pokemon by trekking

04:06to real-world locations, racked up 100 million players in 2024, Niantic said.

04:13The company brought in $1 billion in revenue last year.

04:17The biggest reason for the split, Niantic executives say, is focus.

04:22Inside the company, there has always been competition for time and resources between the game development

04:27side and the technology side, which developed all of the augmented reality and mapping tools

04:32that underpin the games.

04:34The latter, for example, built Niantic's so-called visual positioning system, which could precisely

04:39pinpoint a person's exact location at a specific date and time, like if you caught a squirtle

04:45at Grand Central Terminal at noon.

04:48Its technology portfolio also includes Scanaverse, an app Niantic acquired in 2021 that lets a

04:54user create a 3D model of a room by scanning it with their phone, similar to how you'd

04:59take a panoramic photo.

05:01Now, the company can devote all of its energy to the enterprise business.

05:07For full coverage, check out Richard Nieva's piece on Forbes.com.

05:13This is Kieran Meadows from Forbes, thanks for tuning in.

Category

Transcript

Recommended