Niantic, the company that created the hugely popular video game Pokemon Go, is laying off a quarter of its staff since the demand for the title has slowed after the Covid-19 pandemic’s download spike. In addition to cutting 230 jobs, the company is closing its Los Angeles studio and axing two games. In an email to employees, its chief executive John Hanke said that the reorganization and layoffs were necessary because the company’s expenses had grown faster than its revenue. He also cited “internal and external factors,” including the global macroeconomic slowdown, in explaining the decision.
When Pokemon Go first hit the market in 2016, it quickly became a worldwide craze and got people out of their homes to explore their neighborhoods while hunting down virtual creatures like Pikachu and Snorlax. But the augmented reality game’s popularity waned after the initial surge, and its follow-up products haven’t been as successful in encouraging people to venture outside.
In a memo to employees posted publicly on the company’s website, Hanke acknowledged that the gaming industry is uncertain. He cited several challenges, including a changing mobile gaming market that’s become more competitive and crowded. He also pointed to changes in how Apple and Google app stores handle ads, making it harder for developers to find new players.
While Niantic’s core AR platform and maps remain viable, Hanke says the company has narrowed its focus to mobile game investments. He wrote that the company would continue investing in AR and augmented reality technology, but it will now concentrate on developing its first-party games. Hanke says the company will also take a more conservative approach to its investments in third-party titles.
This year has been particularly challenging for the company. In addition to the 230 job cuts, it has canceled two of its games, including NBA All-World and Marvel: World of Heroes. It has also slowed development on its new Heavy Metal, a Transformers game, and halted production on Hamlet, a collaboration with Punchdrunk. This theater company produces the interactive play Sleep No More.
Despite the reorganization, Hanke remains optimistic. He says the company is “committed to augmented reality as the future form factor for computing.” And while its current lineup of games hasn’t had the success of Pokemon Go, he believes that the company will ultimately succeed because it has developed a unique and compelling gameplay experience. He also says that the team has much experience creating high-quality game experiences and is working hard to create more great products. The company also has a strong backlist of potential hits, including a Harry Potter game and a multiplayer Pokemon Go spin-off.
