Niantic, the genius behind Pokémon GO, made a tough call today by laying off 230 employees. Surprisingly, this comes just a year after they bid farewell to about 90 employees.
Last year’s layoffs were accompanied by the cancellation of four projects, including a much-anticipated Transformers game. Unfortunately, history repeats itself this time around, as Niantic has decided to pull the plug on some of their games yet again. After a mere four months on the App Store, NBA All-World is getting shut down. Moreover, a game based on the beloved Marvel franchise is also getting axed.
CEO John Hanke shared in an email to the staff, which he later posted on the company blog, that the layoffs were a result of their previous hyperactive expansion during the Covid era. Riding the wave of increased revenue, Niantic beefed up its workforce and incurred significant expenses to fuel its ambitious growth plans. However, it seems that the windfall has subsided, and the new projects haven’t been as financially fruitful as anticipated.
Among the casualties of this financial reckoning is Peridot, a captivating mobile game reminiscent of Tamagotchi. This creative endeavor marked Niantic’s return to developing original intellectual property after Ingress. Peridot made its grand entrance in May, but the numbers don’t lie. According to market intelligence firm Sensor Tower, the game has only managed to rake in $1.4 million in gross in-app purchase revenue thus far.
On the surface, Peridot appears to be a technologically advanced game, boasting a sophisticated breeding system that ensures each player’s pets are genetically unique. However, players were sorely disappointed upon its release. Many of the game’s most thrilling features were locked behind paywalls, which left a bitter taste in the mouths of eager players. For instance, obtaining a new Peridot required shelling out $5 for an in-game item. And if you thought that was the end of it, think again! Once you hatched a Peridot, you soon discovered that you needed to cough up more cash to unlock specific fur patterns or styles for your adorable companion.
While Pokémon GO continues to be Niantic’s golden goose, amassing over $1 billion in in-app purchases annually since 2020, players have grown increasingly disillusioned with the game’s in-app purchase system.
In a surprising move, Niantic nearly doubled the price of remote raid passes at the end of March. These passes are highly sought-after in-app items, and the company justified the price hike by claiming that remote play options were crucial during pandemic-induced lockdowns. However, players vehemently disagreed with Niantic’s rationale. They felt that remote play was an essential part of the game, contrary to Niantic’s original vision, which aimed to bring people together physically. Some players even resorted to boycotting Pokémon GO as a form of protest. Although the boycott may not have caught Niantic’s attention, the impact on in-app purchase sales certainly did.
According to data from Sensor Tower, Niantic averaged a staggering $70 million in gross in-app purchase revenue each month between July 2022 and March 2023. However, in the three months since the price increase for remote raid passes, the monthly average plummeted to $53 million.
“Our utmost priority is to ensure the sustained growth and prosperity of Pokémon GO as an everlasting gaming experience,” reassured Hanke in his message to the staff. Unfortunately, some employees directly involved with Pokémon GO were affected by the recent layoffs.
Despite the financial struggles faced by games like Peridot, Niantic has a separate business division that focuses on creating developer tools. The Lightship AR developer kit empowers any Unity-savvy developer to craft their own augmented reality (AR) games. Additionally, developers gain access to Niantic’s groundbreaking visual positioning system (VPS), enabling users to interact with local landmarks in their real-world surroundings.
In his communication, Hanke emphasized the company’s intention to intensify efforts in developing mixed-reality devices and AR glasses. Therefore, if Niantic encounters challenges in producing a successful sequel to Pokémon GO, they hope their developer tools will steer them in the right direction.
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