Niantic, the company behind the popular Pokémon GO game, has announced layoffs affecting 230 employees. As a result, the company has decided to cancel the development of NBA All-World and a Marvel-themed game.
Niantic’s CEO, John Hanke, explained in an email to employees that the company had expanded its workforce during the pandemic to pursue growth opportunities.
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However, with revenue returning to pre-pandemic levels, Niantic found that some new projects did not generate the expected revenue. One such project, Peridot, a mobile game similar to Tamagotchi, failed to meet financial expectations.
Despite its technological sophistication and unique breeding system, Peridot only earned $1.4 million in gross in-app purchase revenue since its launch in May.
Players were disappointed by certain paywall restrictions, such as having to pay for in-game items to hatch new Peridot pets and obtain specific fur patterns or styles.
While Pokémon GO remains Niantic’s most lucrative game, with over $1 billion in annual in-app purchases since 2020, players have voiced concerns about the company’s in-app purchase system.
Niantic faced backlash when it nearly doubled the price of remote raid passes, a popular in-app item. The company justified the increase by stating that remote play options contradicted their vision of encouraging outdoor, in-person gameplay.
However, some players boycotted Pokémon GO to protest the price hike, which likely affected Niantic’s in-app purchase sales. Sensor Tower data reveals that Niantic generated an average of $70 million in gross in-app purchase revenue per month between July 2022 and March 2023.
However, in the three months following the remote raid pass price increase, the company’s monthly revenue decreased to an average of $53 million.
CEO John Hanke emphasized that the primary focus is to ensure the long-term growth and success of Pokémon GO. Unfortunately, some Pokémon GO staff members were also impacted by the recent layoffs.
Despite the financial challenges faced by games like Peridot, Niantic has a separate business division dedicated to its developer tools.
The Lightship AR developer kit enables Unity users to create their own augmented reality (AR) games, with access to Niantic’s visual positioning system (VPS) for interacting with real-world landmarks.
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Furthermore, Hanke expressed the company’s intention to enhance its efforts in building for mixed-reality devices and AR glasses.
Niantic believes that if they are unable to replicate the success of Pokémon GO with new games, their developer tools and focus on AR technology can help sustain the company’s growth.
