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Midway through 2023, mass layoffs in the tech industry haven’t stopped. The latest to join the long list of companies laying off employees is Niantic. The San Francisco-based software firm, which is best known for the popular augmented reality game Pokémon Go, has announced that it would let go of 230 employees to reduce operational costs amid an economic downturn. The company laid off around 90 employees in June 2022.
Like last year, Niantic’s latest mass layoff will be accompanied by the cancelation of some projects. The company is pulling the plug on the basketball game NBA All-World just about five months after its release on app stores. It has also stopped the production of the Marvel-based game Marvel: World of Heroes. Niantic canceled four projects last year, including a Transformers game called Heavy Metal.
These aren’t the only cost-cutting measures from Niantic, though. With fewer employees and fewer projects to work on, the company will also shut down its Los Angeles studio. Going forward, it plans to focus on mobile game investments and prioritize first-party games. “We also want to increase our focus on building for the emerging class of MR devices and future AR glasses,” CEO John Hanke said in an email to employees on Thursday. The company later posted the email publicly on its website.
Niantic says its expenses grew faster than revenue post-COVID
An economic slowdown may be forcing these mass layoffs in the tech sector, but the companies led themselves to such situations because of an unprecedented surge during the pandemic era. Amazon, Meta, and many others went on a hiring spree a few years back as the e-commerce and gaming industries grew exponentially. Niantic did the same.
“We grew our headcount and related expenses in order to pursue growth more aggressively,” said Hanke. “Post Covid, our revenue returned to pre-Covid levels, and new projects in games and platforms have not delivered revenues commensurate with those investments.” As a result, “we have allowed our expenses to grow faster than revenue.” The latest layoffs and project cancelations will bring things back to level.
Hanke added that Pokémon Go remains the company’s top priority. Niantic wants to make it “a forever game.” The Niantic CEO is also confident about the prospects for Pikmin Bloom, Peridot, and Monster Hunter Now but admits that there’s a lot of work to do. The firm is committed to building new AR experiences for the gaming industry.
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