Pokémon Go developer Niantic has undergone a major restructuring, which includes the closure of its Los Angeles office, layoffs of over 200 employees, and a reduction in development for certain titles. The company’s new focus will be on supporting existing games and increasing its commitment to mixed and augmented reality development.
Email from CEO John Hanke
In an email sent to staff by CEO John Hanke (which you can read here), he explains that the surge in recruitment and the expansion of projects during the pandemic led to expenses surpassing revenue once the pandemic ended.
“In the wake of the revenue surge we saw during Covid, we grew our headcount and related expenses in order to pursue growth more aggressively, expanding existing game teams, our AR platform work, new game projects and roles that support our products and our employees,” Hanke writes. “Post Covid, our revenue returned to pre-Covid levels and new projects in games and platform have not delivered revenues commensurate with those investments. This change will bring expenses and revenue back into line while preserving our core assets and long term upside.”
Hanke also mentions challenges in the increasingly crowded mobile market and changes to mobile advertising, making it difficult to launch new titles on a large scale. He also points out that technology challenges have caused the augmented reality market to develop slower than expected due to a global macroeconomic slowdown and a lack of investment.
Scaling Back
As a result, Niantic is scaling back its operations. The most significant cut is the closure of its LA office, which will result in 230 employees being laid off. The company is also discontinuing support for NBA All-World, a mobile AR game based on the NBA that was launched in January. Additionally, Marvel: World of Heroes, an upcoming mobile AR game based on the popular comic universe, has been canceled.
“We also bear responsibility for our own performance,” Hanke writes in the email. “Today’s highly competitive mobile gaming market requires dazzling quality and innovation. It also requires strong monetization and a social core which can drive viral growth and long term engagement. Teams need platform tools that are force multipliers, enabling them to build at the highest quality with powerful engagement features quickly and efficiently. Our AR map and platform must deliver the features that developers want in a robust and reliable way. We have not met our goals in all of these areas.”
Focus on Current Titles and Future Development
Niantic will continue to prioritize the support and development of Pokémon Go, Pikmin Bloom, Peridot, Ingress, and the recently announced Monster Hunter Now. The company also plans to increase the development of tools and experiences for emerging mixed reality devices like the Meta Quest Pro and Apple Vision Pro, as well as AR platforms. Niantic aims to streamline its workflow to reduce redundancies in leadership and improve decision-making.
“While you will see changes in the culture as we evolve into our newest form, our mission remains unchanged,” Hanke writes. “We remain committed to building products and technology with a purpose, that leave the world better off than it was before, that serve both our needs as a company and the needs of our community of developers and Niantic Explorers in a way that is healthy and positive.”