To be fair, Niantic Labs is also doing a bunch of game promotions and specials for Pokémon Go’s seventh anniversary, but that’s probably little comfort to the 230 employees the company just laid off.
We cannot overstate the brief, inexplicable popularity of the 2016 fad game Pokémon Go, the augmented reality game released seven years ago today. Pokémon Go had people glued to their phone screens pretty much nonstop in the month of July 2016, while SFist and every news outlet in the U.S. was running like three different Pokémon Go articles a day. The game’s capacity to distract people made players sitting ducks for criminal attacks, while even politicians running against each other would compete in highly publicized matches, and then-candidate Hillary Clinton’s incredibly tone-deaf proclamation of “Pokémon Go to the polls!” will be remembered as a tagline of her atrociously uncharismatic political oratory.
Niantic Labs Slashes 25% of Workforce, Scraps NBA and Marvel Games as It Makes Pokémon Go 'Top Priority' https://t.co/BeRx8O7tzX— Variety (@Variety) June 30, 2023
But the poké party seems to be over for Pokémon Go’s creator, San Francisco-based Niantic Labs. Variety reports that Niantic laid off 25% of their staff just days before Pokémon Go’s seventh anniversary. The company is reportedly shutting down its Los Angeles studio entirely, and scrapping the games NBA All-World and Marvel: World of Heroes, news that will disappoint no one I can think of.
Niantic CEO John Hanke said in the layoff memo that “The top priority is to keep Pokémon Go healthy and growing as a forever game.”
No matter when you started your Pokémon GO journey, we couldn’t be more excited to celebrate our seventh anniversary with you!— Pokémon GO (@PokemonGoApp) July 6, 2023
We hope you’ll keep taking us along for the ride, wherever your journeys take you.
🎨 @kymg pic.twitter.com/eD7xPGEtRg
And yes, they are doing Pokémon Go promotions galore for the seventh anniversary. These promotions involve nerd lingo which is as unfamiliar as Portuguese to me, so I’ll let the Bay Area News Group explain. “The event mainly focuses on Kanto region Pokemon that were released at the game’s launch,” according to the News Group. “Players will have a chance of encountering the original starters — Squirtle, Bulbasaur and Charmander, all with party hats. Pikachu will have a cake hat from the previous year. Each day will feature a different set of starters and bonuses culminating with the Alola ones July 12.”
Pokémon Go actually enjoyed a revenue spike during the pandemic, but like many tech companies, Niantic assumed that boost was the “new normal” and then proceeded to grow too fast.
“We have allowed our expenses to grow faster than revenue,” Hanke admitted in the layoff email. “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. Post Covid, our revenue returned to pre-Covid levels and new projects in games and platform have not delivered revenues commensurate with those investments.”
These layoffs oddly came exactly one year after Niantic’s last batch of layoffs. And the company seems to be pivoting to nothing but Pokémon Go. But if you’ve only ever had one hit, is doubling down on the diminishing returns of that one hit the best business idea?
Like the larger AR and VR industries, Niantic has been showered with unthinkable sums of investment money, yet has not managed another crossover success among mainstream users. Whittling down the offerings seems a recipe for AR and VR to limit their popularity to only a small set of users, while the larger gaming public remains uninterested because they haven't been intrigued by another hit AR product in, now, seven years and counting.
Image: Niantic Labs