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Niantic, the creator of the popular game Pokémon GO, has recently announced a reduction in its workforce, letting go of 230 employees. This comes on the heels of a similar reduction last year when the company laid off about 90 staff members.
The layoffs have resulted in the cancellation of several game projects. Notably, the NBA All-World game, which had been available on the App Store for four months, will be discontinued. Additionally, a game project based on the Marvel franchise will not proceed.
Niantic’s CEO, John Hanke, explained the layoffs as a necessary adjustment following the company’s aggressive growth during the Covid-19 pandemic. The company expanded its team and expenses during the pandemic when it experienced a surge in revenue. However, as the revenue has now returned to pre-pandemic levels and new projects have not been as profitable as expected, the company has had to recalibrate its operations.
One such project is Peridot, a mobile game similar to Tamagotchi. Despite its technological sophistication, Peridot has only generated $1.4 million in gross in-app purchase revenue since its launch in May. Players have expressed disappointment with the game’s paywall system, which requires payment for many of the game’s features.
Despite these challenges, Pokémon GO continues to be Niantic’s main revenue generator, earning over $1 billion in in-app purchases annually since 2020. However, recent changes to the game’s in-app purchase system have been met with resistance from players.
Niantic also has a separate business arm that provides tools for developers to create AR games. The company plans to increase its focus on developing for mixed-reality devices and AR glasses. Despite the challenges with its own games, Niantic hopes its developer tools will keep the company on a positive trajectory.