Niantic, the renowned studio behind the wildly popular augmented reality (AR) game Pokémon Go, is the latest company to announce layoffs. The news broke after an internal memo was leaked to Kotaku, revealing that Niantic would be parting ways with 230 employees. Alongside the layoffs, the company also disclosed the closure of its Los Angeles studio and the cancellation of two licensed games: NBA All-World and Marvel: World of Heroes. However, the silver lining for fans is that Pokémon Go will continue its operations as the flagship product.
In an “organizational update” published by Niantic, CEO John Hanke addressed the changes and the studio’s strategic shift. Hanke explained that the decision was driven by a desire to focus on first-party games that align closely with Niantic’s core values of location-based gameplay and fostering local social communities. The mobile gaming market’s maturity necessitates a concentration on the best and most unique titles to achieve success. Additionally, Niantic aims to increase its emphasis on developing for the emerging class of mixed reality (MR) devices and future augmented reality (AR) glasses.
Hanke’s letter acknowledged the mistakes made by the leadership team, attributing the downsizing to the studio’s expenses outpacing its revenue growth. He noted that after experiencing a surge in revenue during the COVID-19 pandemic, Niantic expanded its headcount and investments in pursuit of aggressive growth. However, post-pandemic, the company’s revenue returned to pre-COVID levels, and new projects in games and platform development did not generate the expected revenue. The CEO expects the layoffs to realign expenses with revenue while safeguarding the studio’s most valuable asset.
Regarding Pokémon Go, Hanke emphasized its status as a top priority, aiming to maintain its growth as a long-term “forever game.” While the Pokémon Go team underwent some adjustments, Niantic remains committed to investing in the product and its dedicated team. Pokémon Go became a global sensation upon its release in 2016, and its popularity resurged during pandemic lockdowns as players sought an opportunity for adventure beyond their homes. Last year, Niantic launched a social app for Pokémon Go, enabling players to organize and communicate with one another.
The letter also highlighted the slower-than-expected development of the AR market as another contributing factor. Niantic’s games, designed for on-the-go AR experiences, anticipate the eventual emergence of smart glasses that seamlessly integrate augmented reality into daily life. However, current wearable AR devices like Apple’s Vision Pro and the Meta Quest Pro primarily cater to home-based usage for work and entertainment. Niantic’s signature approach to AR, tailored for a future that has yet to fully materialize, necessitated adjustments to align with the current state of the industry.
As the company looks ahead, Niantic may have to wait five to ten years for consumer-friendly versions of the AR technology it envisions. In the meantime, the studio is committed to reconfiguring its strategy and navigating the evolving landscape to continue delivering captivating experiences to its dedicated fanbase.
