In response to a slowdown in demand within the gaming industry, Niantic, the maker of the popular Pokemon Go video game, has announced plans to cut a quarter of its workforce. The company will also close its studio in Los Angeles and cancel the development of two games. This move comes as a result of Niantic’s expenses surpassing its revenue growth. Despite the challenges, Niantic remains committed to ensuring the continued success of Pokemon Go as a long-term game.
Niantic’s CEO, John Hanke, acknowledged that the company’s expenses had outpaced revenue, resulting in the need to downsize. A total of 230 employees across various departments, including the game platform team, will be affected by the job cuts. Niantic will be closing its Los Angeles studio, which played a significant role in the development of its games. This strategic decision aims to streamline operations and align the company’s resources with its current goals.
Since its release in 2016, Pokemon Go has become a global phenomenon. The augmented-reality game broke records on Apple’s app store, generating the highest number of downloads within a week. However, the mobile gaming landscape has evolved significantly since then, becoming increasingly crowded with new games. Furthermore, changes in the app store and mobile advertising landscape have made it more challenging for Niantic to launch new games at scale. As a result, the company has made the strategic decision to prioritise the sustained growth and success of Pokemon Go.
Niantic’s decision to downsize reflects the broader slowdown in demand within the gaming industry. The COVID-19 pandemic initially led to a surge in downloads as people sought entertainment while staying at home. However, as restrictions eased and people resumed their normal activities, the demand for mobile games declined. This shift in consumer behaviour has affected not only Niantic but other gaming companies as well. The challenges faced by Niantic highlight the need for adaptability and innovation in an ever-changing industry.
During the height of Pokemon Go’s popularity, players would gather in public spaces to hunt down virtual creatures. However, this led to safety concerns, with users disregarding warnings and engaging in risky behaviour. Incidents such as car crashes, muggings, injuries, and even deaths were reported. Niantic faced criticism for not implementing sufficient safety measures in the game. These controversies prompted the company to make adjustments to ensure players’ well-being and address potential risks.
This recent downsizing is not the first time Niantic has taken steps to restructure its operations. In June of last year, the company announced the cancellation of four projects and a reduction in its workforce by approximately 8%. These measures were implemented to optimise resources and refocus on core initiatives.
Although Niantic’s decision to cut its workforce and cancel game development may seem like a setback, the company remains optimistic about the future. Niantic’s spokesperson emphasised that their revenue in 2023 is higher than the previous year, indicating positive growth. As a private company, Niantic is not required to disclose its financial reports publicly, making it challenging to assess its financial performance accurately.