Pokémon GO developer Niantic is running into trouble as it builds “the real-world metaverse.” Like so many other tech companies facing turbulent economic times, the company decided to let go of 8% of its staff, affecting about 85 to 90 people. Just seven months ago, the company raised $300 million at a $9 billion valuation, more than doubling its valuation from 2018.
In an email to staff, reported by Bloomberg, CEO John Hanke said that the company needs to reduce costs to best prepare for “economic storms that may lie ahead.” Niantic also cancelled four upcoming projects: Heavy Metal, a Transformers game that had already entered beta testing; Hamlet, a collaboration with the theater company behind “Sleep No More;” and two other projects called Blue Sky and Snowball. Recently announced games like NBA All-World and Peridot don’t appear to be affected.
While Pokémon GO brings in more than $1 billion in revenue each year, other games like now-defunct Harry Potter: Wizards Unite have not been as successful. Pikmin Bloom, which came out in October, has been downloaded about 5.6 million times and generated about $6.8 million from in-game spending, according to estimates from Sensor Tower. By comparison, the smash-hit Pokémon GO earned $500 million in just its first two months, making it one of the fastest-growing mobile games ever. Not every game will be as monumental as Pokémon GO, but new games probably should earn more than mere fractions of a percent of the revenue from Niantic’s most popular app.
Aside from its augmented reality mobile games, Niantic is building the Lightship AR Developer Kit, which makes tools to develop AR games publicly available for free to anyone who has a basic knowledge of the Unity game engine. However, starting in January 2023, users will have to pay for access to these AR development tools, which could offer Niantic another source of income.
Niantic did not respond to request for comment before publication.