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.
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