Niantic, a San Francisco-based mobile games developer, has announced that it will be laying off 230 employees as part of a reorganization effort. The company, known for its hit game Pokémon Go, will also be cancelling the development of NBA All-World and a yet-to-be-released Marvel-based title. In addition, Niantic will be closing down a studio in Los Angeles, which is where most of the affected employees are located.
The decision to downsize reflects the changing landscape of the mobile games industry since the success of Pokémon Go in 2016. App store changes implemented by Apple and Google, which prevent advertising tracking among apps, have made it more difficult and costly to acquire new users through advertising. CEO John Hanke cited both internal and external factors, including a global macroeconomic slowdown, as reasons for the reorganization.
Despite the changes, Niantic emphasized that supporting Pokémon Go remains their top priority. However, the decline in game spending on the App Store is evident, with a 5% decrease in 2020 to $110 billion, according to estimates from Data.ai.
This development also highlights the evolving landscape of augmented reality (AR) applications. Pokémon Go utilizes AR technology to integrate digital creatures into the real world through a smartphone’s screen. However, the industry is moving towards more powerful devices such as headsets and goggles that merge real and virtual worlds using advanced cameras. Meta and Apple are among the major players venturing into this space with their respective headsets.
In a letter, Hanke acknowledged that these new hardware products validate Niantic’s strategy but viewed them as an “intermediate stepping stone” towards true outdoor AR devices, potentially resembling lightweight glasses with transparent displays. Niantic aims to create content and platform services that will leverage this technological shift.
However, Hanke also noted that the AR market is developing slower than expected due to technological challenges and reduced investments from larger players in light of the macro environment.
As of 2022, Niantic had a workforce of 1,050 employees. The company’s last funding round took place in November 2021, raising $300 million at a post-money valuation of $9 billion during a period of high tech valuations.