The makers of Pokémon Go, known for their pioneering work in augmented reality (AR) gaming, are facing a challenging time. Niantic, the company behind the popular game, is making significant changes by laying off 230 employees and canceling the development of a high-profile AR-based Marvel app.
The decision was revealed in a leaked internal email from Niantic founder John Hanke, who explained that the company’s expenses were growing faster than its revenue. The cost of developing real-world games with large teams in expensive cities was becoming a burden for the company.
While it may seem surprising that Niantic would walk away from a Marvel license, the challenges and costs associated with producing AR titles must have outweighed the potential benefits. Niantic now has its hopes pinned on their recently released game Pikmin Bloom, the upcoming game Peridot, and Monster Hunter Now to overcome these hurdles and make a turnaround in the AR gaming market.
Declining interest in AR
Unfortunately, Niantic’s Los Angeles studio will be closing down as a result of these changes. This means that their NBA All-World game and the upcoming Marvel: World of Heroes will not see the light of day. While Pokémon Go introduced the world to AR gaming, it is worth noting that many players chose to turn off the AR features, opting for a simpler gameplay experience. As a result, the true extent of AR usage in Pokémon Go remains a subject of debate.
In his email, Hanke also acknowledged that after the surge in popularity during the COVID-19 pandemic, Niantic is now experiencing declining revenue. Projects like Peridot, which aimed to replicate the success of Pokémon Go, have failed to meet expectations.
Hanke emphasized the need for higher quality and innovation in today’s highly competitive mobile gaming market. He also emphasized the importance of strong monetization and a social core that can drive long-term engagement and viral growth. Niantic’s AR map and platform must deliver the features that developers want in a reliable way. Hanke admits that the company has not met its goals in these areas.
Despite the challenges, Hanke remains optimistic about Niantic’s future. He reassured that support and development for Pikmin Bloom, Peridot, and Monster Hunter will continue. He also highlighted Pokémon Go as a successful global phenomenon that will remain a priority for the company.
More updates are expected following an official statement from Niantic regarding these changes.