The company behind the popular game Pokémon GO, Niantic, is facing problems as it creates “the metaverse of the real world.” Like many other tech companies facing turbulent economic times, the company has decided to lay off 8% of its staff, affecting an estimated 85 to 90 people. Just seven months ago, the company raised $300 million at a valuation of $9 billion, more than doubling its valuation since 2018.
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In an email to staff, CEO John Hanke said the company needs to cut costs to better prepare for “economic storms that may lie ahead.” Niantic also canceled four upcoming projects: Heavy Metal, a Transformers game that had already entered beta testing; Amlet, a collaboration with the theater company behind “Sleep No More,” and two other projects called Blue Sky and Snowball. games like NBA All-World and Peridot do not appear to be affected.
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While Pokémon GO brings in more than $1 billion in revenue each year, other games like the now-defunct Harry Potter: Wizards Unite haven’t been as successful. Pikmin Bloom, which launched in October, has been downloaded about 5.6 million times and generated about $6.8 million in in-game spending, according to Sensor Tower estimates. By comparison, the blockbuster Pokémon GO earned $500 million in its first two months alone, making it one of the fastest-growing mobile ever.
Not all games will be as monumental as Pokémon GO, but the new games should likely earn more than mere fractions of the revenue share of Niantic's most popular app .
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In addition to mobile augmented reality games, Niantic is building the Lightship AR Developer Kit, which makes tools for developing AR games publicly available for free to anyone with 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 provide Niantic with another source of revenue.
