Niantic, developer of popular AR game Pokemon Go, lays off quarter of workforce, cancels two games amidst post-pandemic revenue slowdown
Niantic, developer of the immensely popular augmented reality (AR) game Pokemon Go, said it was making “difficult changes” including laying off one-quarter of its workforce as it adjusts to the end of surging revenues during the Covid-19 pandemic.
John Hanke, founder and chief executive of the San Francisco-based Google spin-off, said that like many tech companies Niantic had expanded its headcount and related expenses during the pandemic amidst a “revenue surge”.
“We have allowed our expenses to grow faster than revenue,” he wrote in an email to staff that was published on Niantic’s website.
Following the pandemic “our revenue returned to pre-Covid levels” while new projects have not delivered revenues commensurate with investments, Hanke wrote.
The company in May denied reports that core revenues from Pokemon Go had declined, saying at the time that its revenue so far for the year was “up on last year”.
Hanke said that the cuts are designed primarily to focus on the continued development of Pokemon Go, which remains Niantic’s cash cow.
“The top priority is to keep Pokemon Go healthy and growing as a forever game,” he wrote, adding that investment in the game “continues to grow”.
Niantic is also continuing to invest in recently launched games including Pikmin Bloom, Peridot and Monster Hunter Now, he said.
But the company is to shutter its Los Angeles studio, while reducing its game platform team, shutting down its NBA All-World game that was released in January, and stopping the development of an upcoming game called Marvel: World of Heroes, Hanke said.
The resulting layoffs are to affect about 230 people, which Hanke acknowledged was a “painful step”.
Hanke said the company is continuing to track the development of mixed-reality (MR) headsets such as the Meta Quest Pro and Apple’s recently announced Vision Pro, which he called “an intermediate stepping stone to true outdoor AR devices”.
Niantic was spun out of Google in 2010 and in 2016 made its name with the release of Pokemon Go, which allows users to hunt creatures across real-life spaces.
The game remains widely played, with Sensor Tower data from June 2022 estimating it was bringing in annual revenues of $1 billion (£790m).