Niantic Sells Gaming Division to Focus on Geospatial AI and XR, Highlighting Opportunity in the Overlap Between AI, XR, and Spatial Data

Niantic, renowned for developing the hit mobile game Pokémon GO, has announced the sale of its gaming division to Scopely for US$3.85 billion. This transaction also includes the transition of its original development teams to Scopely. Following this divestiture, Niantic is launching a new entity named Niantic Spatial, focusing on advancing geospatial Artificial Intelligence (AI) and Augmented Reality (AR) technologies. Niantic is positioning Niantic Spatial to develop AI solutions across various industries, including logistics, construction, and entertainment; this is not a new area for Niantic, which began pushing into spatial compute more aggressively with the Niantic Spatial platform that included Scaniverse (user-generated object/environment scanning solution) and the Visual Positioning System (VPS). These solutions targeted both consumer and enterprise markets with spatial compute enablement for design, immersive content creation, and collaboration.

The spinoff is funded with US$250 million, consisting of US$200 million from Niantic and an additional US$50 million from Scopely. John Hanke, Niantic’s founder and Chief Executive Officer (CEO), will lead Niantic Spatial. This move underscores Niantic’s commitment to expanding its geospatial AI and AR capabilities, as well as the company’s belief in the potential value of a “pure-play” AI solution compared to a hugely successful, and established, gaming brand.

Niantic’s decision to sell its gaming division is surprising, but rooted in logic. On one hand, gaming was Niantic’s source of reliable income; while the sale will help funds, the value of a reliable and constant income stream cannot be understated. On the other hand, moving away from gaming creates a more streamlined and focused AI/Extended Reality (XR) company, which can be increasingly seen as a requirement as companies look to differentiate in AI and XR both separately and as a cohesive platform. The scale of Pokémon GO was still substantial, even nearly a decade after launch, so freeing up those resources alongside an influx of cash may help Niantic Spatial scale its XR and geospatial efforts quickly. The company is not new to those spaces, having invested increasingly over the past few years as a way to both grow its gaming capabilities and enable non-gaming solutions.

On the technology side, Niantic’s decision reflects a growing recognition of the broader potential of geospatial technology beyond gaming. The company’s AR platform, Lightship, has already been used to develop location-based experiences across various industries, including retail, tourism, and urban planning. By shifting focus to only focusing on geospatial technology, Niantic aims to leverage its expertise in AR mapping, computer vision, and real-world data integration to create applications with broader commercial and societal benefits.

This shift also positions Niantic to compete more directly with companies investing in XR and geospatial services, such as Google, Apple, and Meta. The increasing demand for location-based augmented experiences—ranging from interactive maps to AR navigation—shows significant market potential, especially as these companies themselves are scaling investment in XR and AI as a value add to their broader platforms.

There are a number of necessary considerations when operating in either the XR or AI space. The novelty of some required enabling technologies, especially around the AI side of spatial data, brings valid concerns around accuracy, privacy, scalability, and end-user value. At the same time, the following steps should be taken:

• Prioritize Real-World Data Accuracy and Context Awareness: Companies working in (or with) geospatial AI and XR solutions need to ensure their applications are built on highly accurate real-world data. There is a risk with varied content capture methods (such as user-generated content, simulated data, etc.) that accuracy and reliability of data will lessen. This means integrating real-time data sources, crowdsourced mapping, and AI-driven creation alongside automated or human-controlled corrections to improve precision. Using VPSs and semantic segmentation as Niantic Spatial offers can enhance interactions between virtual content and physical spaces.

• Optimize for Scalability and Cross-Platform Accessibility: Developments in geospatial AI and XR should be scalable across devices and platforms, including smartphones, AR glasses, VR headsets, and web browsers with WebXR. Companies should adopt open standards where possible to ensure their experiences work across different operating systems and hardware configurations, while maximizing the potential to scale and reducing friction for end users.

• Focus on User Experience (UX) and Engagement: For geospatial XR applications to succeed, they must offer intuitive, seamless, and interactive experiences. Companies need to conduct user testing to refine interactions and minimize friction in capturing content and interacting with it. Features such as persistent AR, shared multi-user spaces, and gamification elements can drive long-term engagement.

• Leverage Geospatial AI for Business and Industry-Specific Solutions: While gaming and entertainment were primary use cases for Niantic, the company had recognized the potential already outside of those segments, and that opportunity is growing as more companies focus in it. Retail and marketing, smart cities and urban planning, tourism and education, and real estate are prime targets for Niantic Spatial and its competitors/partners.
• Ensure Privacy, Security, and Ethical Use of Location Data: Since geospatial AI platforms rely on location-based data, companies must implement strong data privacy policies and comply with regulations like General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). Ensuring transparent user consent, secure data storage, and minimal tracking can help build trust while avoiding legal and ethical concerns.