How Savvy aims to grow its games empire after $3.5bn Niantic deal

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With the backing of Saudi Arabia’s Public Investment Fund (PIF) to the tune of $37.8 billion, Savvy Games Group swiftly became one of the world’s richest games companies.

But it’s had to start from scratch. First it built up its esports business with the purchases of ESL, FACEIT (now the ESL FACEIT Group), Vindex and an investment in VSPO. In 2023, it then splashed $4.9bn to acquire mobile games publisher Scopely - a deal that arguably looks like a bargain now thanks to the enormous, multi-billion dollar success of Monopoly Go.

Savvy’s mobile games operations are now run through Scopely leadership, which, backed by the Saudi company’s funds, recently spent $3.5bn on Pokémon Go developer Niantic's games business, bringing over its games teams, the flagship IP, as well as Monster Hunter Now and Pikmin Bloom.

Niantic and Savvy both have experience working top licences, and while Pokémon Go’s best days may be behind it, it remains a highly lucrative title. According to Scopely, revenue for the title has risen each year during the past three years.

Data estimates from market intelligence firms Sensor Tower and AppMagic show a decline, though Niantic may make significant revenue through its web shop, as well as other sources such as location sponsorships.

Some industry speculation has put the onus on this being a Savvy acquisition, with the aim of bringing the Pokémon prestige to Saudi Arabia. Speaking to PocketGamer.biz, Savvy Games Group CEO Brian Ward says it's a Scopely deal.

“We provided the funding right essentially,” he states, adding. “Nothing is going to Saudi Arabia.

"It’s an American company and it’s being bought by an American company. And as you know, we keep Scopely very independent and autonomous in all of their business operations and everything. We’re just a shareholder basically.”

How Savvy sees the partnership

Ward says Savvy’s M&A plans over the last year-and-a-half has been “through the lens of Scopely”. The group has been looking to help support the publisher in finding a category leading title, or team capable of making such a game.

Scopely looks at “hundreds and hundreds” of potential deals each year, he says. Those options are then discussed, along with the pros and cons, “and we go from there”.

But how does that fit in with Savvy Group’s own ambitions?

“Well our mandate is to build a leading games and esports company,” says Ward. “And on the games side our strategy and philosophy, the means to getting there, is largely inorganic M&A. And if we can find one, two, three or four genre-leading titles in big categories and amass those…

“If you think of Activision Blizzard. Activision is essentially Call of Duty, Blizzard is essentially World of Warcraft - of course there are a couple of other titles - and King is essentially Candy Crush. And if you can accomplish that sort of outcome with genre-leading titles, then you can build a very valuable games business. So that’s our strategy.”

He adds: “Any title that’s number three to number 10 might make money, but it’s not really going to move the needle in terms of company valuation.”

New platforms

Now that Savvy’s mobile division has grown sharply through $8.4bn in deals for Scopely and Niantic, the group is turning its eyes to PC and console.

“That could be through the lens of Scopely, but there could be something that's not in Scopely's wheelhouse also, but hopefully we'll figure that out shortly," says Ward.

When asked if web gaming, an emerging trend over the past year, was on its radar, Ward says there hadn’t been many discussions related to it.

Previously Ward has said that Savvy is taking a measured approach to M&A. Perhaps that strategy was most notable when it pulled the plug on a $2bn investment in Embracer Group.

But given Savvy Games Group has been around for a few years now and has had time to take a look at all the opportunities in the market, what is it waiting for when it comes to further making deals?

“We’re not in a rush to deploy capital,” states Ward. “It’s about making the best choices. Between Scopely and us, and other components of our ecosystem, we do talk to a lot of companies all the time and try to stay in touch with people.

“But executing on this strategy does take a long period of time and not everything is actionable. There might be great companies that aren’t available, there’s no possibility of entering into a partnership with them at this time, and it might be two years down the road, or never at all.

“...We’re not really waiting for anything. It’s just looking for the right and best opportunities.”

Local growth

One of Saudi Arabia’s ambitions with its games investments is to grow its local games and tech industries. Savvy has set up its own internal development team Steer Studios, while its M&A activity has helped feed into that strategy, with Scopely setting up a new studio in Riyadh named Mirai, headed up by industry veteran Charity Joy.

Prior to Scopely’s acquisition of Niantic, the Pokémon Go developer had also penned a Memorandum of Understanding with Savvy to support its expansion into the MENA-3 region, including establishing regional operations in Saudi Arabia, UAE and Egypt.

“We do look for those opportunities to see if there’s a good fit,” says Ward, explaining that Scopely’s Mirai studio is starting with a focus on QA.

The acquisitions of Niantic, Scopely, ESL FACEIT, Vindex and VSPO combined amount to more than $10bn in spending to date for Savvy Games Group.

Given it started life with $37.8bn in the bank, we can expect to hear about more deals from the Saudi Arabia-owned group in the coming years, likely for some of the world’s biggest names.