Pokemon GO was a hit. Now its creators have problems. Mass layoffs and cost cuts

When the American company Niantic released Pokemon GO in July 2016, hardly anyone expected it to be so successful. The application has become an absolute phenomenon, captivating millions of players all over the world. After a few months, the sight of dozens of people walking the streets of cities in a strange way in search of Pokemon visible only on smartphone screens ceased to be surprising. Over time, however, the game completely lost its popularity.

The creators of Pokemon GO have huge problems. Cuts and layoffs

Now the creators of Pokemon GO are struggling with a lot of problems. that as part of cost-cutting, it is forced to close its Los Angeles studio and lay off all its employees – a total of 230 people. That’s almost 25 percent. the entire staff of the company (1050 people in 2022). In addition, the company wants to reduce the team responsible for developing new games and make “additional cuts”, as well as suspend NBA All-World and stop work on Marvel: World of Heroes.

John Hanke, the head of Niantic, explained in an email to employees that “we allowed our expenses to grow faster than revenues.” This is the effect of situation during the coronavirus pandemic, when there was a sharp increase in the company’s revenue. Buoyed by this success, Niantic increased the number of employees, and therefore also expenses, and tried to “pursue growth more aggressively.” In addition, existing teams were strengthened, investments were made in the AR platform and new game projects. The problem is that when the pandemic ended, the company’s revenues returned to pre-Covid-19 levels and investments stopped paying off, Hanke explains. He goes on to say that both internal and external factors contributed to this.

However, Niantic now wants to focus on games using its own technologies – primarily augmented reality, on which Pokemon GO is based. He also wants to focus more on the further development of this title and the promotion of the remaining (non-cancelled) games. The announced layoffs and cost cuts are intended, according to the head of the company, to “revise expenses and revenues”, but at the same time “preserving core assets and long-term growth”.