Niantic Axes 230 Staff Members, Scraps NBA and Marvel Projects

Niantic, the company behind the popular game Pokémon GO, has recently carried out a round of layoffs, resulting in the termination of 230 employees. This move comes merely a year after a previous layoff that affected around 90 staff members.

The previous round of layoffs also involved the cancellation of four projects, including a Transformers game. This time, Niantic has made the decision to scrap NBA All-World, a game that had been available on the App Store for only four months, as well as a Marvel-based game that was in production.

According to an email sent by CEO John Hanke to the employees and shared on the company blog, the layoffs were attributed to the company's ambitious growth strategy implemented during the COVID-19 pandemic. Niantic experienced a significant revenue surge during that time and expanded its workforce and related expenses to pursue aggressive growth. However, the anticipated revenue from new projects did not materialize as expected, leading to the need for downsizing. Hanke stated that the revenue has now returned to pre-pandemic levels.

One of the projects that fell short of financial sustainability is Peridot, a mobile game with similarities to the Tamagotchi. Despite its sophisticated features, such as a robust breeding system that creates genetically unique pets for each player, Peridot has only generated $1.4 million in gross in-app purchase revenue since its launch in May. The game received criticism from players who were disappointed with paywalled features, such as having to pay for in-game items and specific fur patterns or styles for their pets.

While Pokémon GO remains Niantic's primary revenue generator, consistently surpassing $1 billion in annual in-app purchases since 2020, players have expressed dissatisfaction with the game's in-app purchase system. In March, Niantic faced backlash for nearly doubling the price of remote raid passes, a popular in-app item. The company justified the price increase by stating that remote play options contradicted their vision of encouraging outdoor, in-person gameplay. Some players even boycotted Pokémon GO in protest, leading to a noticeable decline in in-app purchase revenue for Niantic. In the three months following the price increase, the company averaged $53 million per month, compared to an average of $70 million per month between July 2022 and March 2023.

CEO Hanke emphasized that the main focus for Niantic remains maintaining the health and growth of Pokémon GO as a long-term game. Unfortunately, the recent layoffs have also affected some staff members involved in Pokémon GO.

Despite the challenges faced in the gaming sector, Niantic possesses a separate business arm dedicated to providing developer tools. Their Lightship AR developer kit enables developers proficient in Unity to create their own augmented reality (AR) games. Additionally, Niantic's visual positioning system (VPS) allows users to interact with real-world landmarks in their surroundings. Hanke expressed the company's intention to intensify their efforts in building for mixed-reality devices and AR glasses, suggesting a potential shift in focus if their game projects continue to face difficulties.

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