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Niantic, the creator of the immensely popular Pokémon GO game, made headlines today as it announced the unfortunate layoff of 230 employees. This comes just one year after a previous round of layoffs that affected around 90 employees. During last year's downsizing, Niantic had to cancel four projects, including a Transformers game.
Some Niantic games will unfortunately suffer the same. A long-running App Store game, NBA All-World, will be shut down by the company, along with a Marvel franchise game. John Hanke explained the rationale behind these difficult decisions in an email to employees.
He explained that during the COVID-19 pandemic, the company experienced a significant surge in revenue, which prompted them to scale up their workforce and related expenses in order to pursue aggressive growth. However, as the situation evolved, revenue levels returned to pre-pandemic norms, and new projects failed to generate the expected financial results. This scenario is not unique to Niantic, as numerous tech companies have found themselves in a similar position, necessitating layoffs to align their team sizes with current business needs. Hanke highlighted that one such project affected by this shift is Peridot, a mobile game reminiscent of the iconic Tamagotchi. Launched in May, Peridot represents Niantic's first venture into original intellectual property since Ingress. However, market intelligence firm Sensor Tower reports that Peridot has only generated $1.4 million in gross in-app purchase revenue thus far.
Peridot boasts advanced technology, including a sophisticated breeding system that creates genetically unique pets for players. However, the game received mixed feedback upon launch, primarily due to certain exciting features being locked behind paywalls. For instance, players must pay $5 for an in-game item to hatch a new Peridot, and additional payments are required for unique fur patterns or styles. This monetization approach left some players disappointed. While Pokémon GO remains Niantic's cash cow, with over $1 billion in in-app purchases annually since 2020, players have also expressed dissatisfaction with the game's in-app purchase system. In a move that stirred controversy, Niantic nearly doubled the price of remote raid passes at the end of March.
The company defended this decision by stating that remote play options were introduced during the pandemic but contradict the game's core vision of encouraging people to play together in person. However, players disagreed and some even boycotted Pokémon GO in protest.
Although the boycott may not have caught Niantic's attention, the impact on in-app purchase sales likely did. According to data from Sensor Tower, Niantic averaged $70 million in gross in-app purchase revenue each month between July 2022 and March 2023. However, in the three months following the remote raid pass price increase, the average monthly revenue dropped to $53 million. In light of these developments, Hanke emphasized that the top priority for the company is to ensure the health and growth of Pokémon GO as a long-term game. Unfortunately, some Pokémon GO staff members were affected by the recent layoffs. Despite the challenges faced by games like Peridot, Niantic maintains a separate business arm dedicated to developer tools.
The Lightship AR developer kit empowers developers familiar with Unity to create augmented reality (AR) games. Furthermore, developers have access to Niantic's impressive visual positioning system (VPS), which enables users to interact with local landmarks in their real-world surroundings. In his note, Hanke expressed the company's intention to intensify its focus on developing mixed-reality devices and AR glasses.
Therefore, if Niantic struggles to replicate the success of Pokémon GO with its own games, its developer tools might chart a path forward for the company. While Niantic faces challenges and difficult decisions ahead, it remains a prominent player in the world of AR gaming.
