Niantic is shuttering its Los Angeles studio and is moving away from in-house game development. As such, the Pokémon Go studio is laying off 230 employees, shuttering NBA All-World and cancelling its upcoming Marvel: World of Heroes.
In an internal email sent to employees today and acquired by Kotaku, company founder John Hanke explained that this decision came because the studio’s “expenses [grew] faster than revenue.” Hanke’s email says while the studio saw revenue surges during the covid-19 pandemic, as years have gone on, it’s seen a decline in revenue. Alongside this, he also says the AR game market has become much more crowded since Pokémon Go’s launch in 2016. Alongside the growing market, Hanke cites a broader lack of long-term engagement for its multiple projects, meaning it hasn’t been meeting internal goals.
“We also bear responsibility for our own performance,” Hanke’s emails said. “Today’s highly competitive mobile gaming market requires dazzling quality and innovation. It also requires strong monetisation and a social core which can drive viral growth and long term engagement. Teams need platform tools that are force multipliers, enabling them to build at the highest quality with powerful engagement features quickly and efficiently. Our AR map and platform must deliver the features that developers want in a robust and reliable way. We have not met our goals in all of these areas.”
In the meantime, Pokémon Go will remain a top priority for the company, with the long-term goal to keep it “healthy and growing as a forever game.”
Other recently-launched games like Pikmin Bloom, Peridot, and Monster Hunter Now will continue development, but Hanke claims the team has “a lot of work to do” to maintain retention, revenue, and profitability. The company also plans to continue investing in AR maps and platforms for developers to build and monetise their own AR experiences while minimising its own internal projects.
Kotaku has reached out to Niantic for comment on the situation and will update this story if we hear back.