Niantic to cut staff and cancel Marvel and NBA games to focus on mobile game investments

Augmented reality (AR) software development company Niantic will be laying off 230 of its employees, according to an organisational update by Niantic. 

John Hanke, chief executive officer of Niantic, broke the news to employees in an email that was later published on its site. In it, Hanke noted that the layoffs were due to the company’s decision to “narrow [its] focus for mobile game investments, concentrating on first party games that most strongly embody [its] core values of location and local social communities.”

In the email, Hanke also revealed that Niantic’s studio in Los Angeles will be shut down to reduce additional costs incurred to the company. Moving forward, Niantic will also be sunsetting NBA All-World and ceasing its production of Marvel: World of Heroes.

“We have allowed our expenses to grow faster than revenue. In the wake of the revenue surge, we saw during Covid, we grew our headcount and related expenses in order to pursue growth more aggressively, expanding existing game teams, our AR platform work, new game projects and roles that support our products and our employees,” said Hanke, when addressing the rationale behind the layoffs.

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“Post Covid, our revenue returned to pre-Covid levels and new projects in games and platform have not delivered revenues commensurate with those investments. This change will bring expenses and revenue back into line while preserving our core assets and long-term upside,” Hanke added.

Hanke cited several possible reasons for the slow growth for the company, such as the harsh market environment caused by the overall global economic slowdown and obstacles faced in the mobile gaming and AR markets.

Moving forward, Niantic will prioritise its Pokémon GO game and user retention, revenues and profitability in its latest games such as Pikmin Bloom, Periodt and Monster Hunter Now. Additionally, it will resume its investments into its AR map and platform to allow developers to construct, expand and attain profits from their own AR experience. The company will also adopt a more straightforward and achievement-oriented approach.  

The news comes shortly after Niantic unveiled its rewarded AR ad format which aims to allow its mobile users to earn in-application rewards by interacting with AR advertisements.

With AR penetrating the digital sphere, brands and consumers are also demonstrating a growing appetite for immersive experiences, leading to the emerging category of AR advertising.

With Niantic’s new AR ad format, players can interact with short, augmented reality experiences in order to receive in-game rewards. This helps to better reach players near key physical locations, delivering branded AR experiences that lead to improved results across the funnel. For instance, in real-world games such as Pokémon Go.

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