Bloomberg is reporting that Niantic CEO John Hanke announced that the company will lay off 8% of its staff which amounts to about 85 to 90 staff. An email sent by the CEO says the company is facing “a time of economic turmoil” where it has been “reducing costs in a variety of areas.”

The email says Niantic is working to streamline its operations to put the company in the best position where it can “weather any economic storms that may lie ahead.”

News of the layoffs in Niantic, Unity and Substack prompted an outpouring 0f support and job offers for employees affected by the layoffs from various players in the industry:

Alongside the layoffs, Niantic has also canceled four projects including its mobile AR partnership with TOMY and Hasbro that it announced last year which is dubbed Transformers: Heavy Metal. Another canceled project had been announced the previous year and is a collaboration between Niantic and the New York-based immersive theater company Punchdrunk which is also behind the promenade theater production Sleep No More. The other two projects that have been canceled are codenamed Snowball and Blue Sky.

Unity was hard hit by the tech crash of the past few months and its share price plunged 70% from its November 2021 peak.

Unity looks well-positioned to tap into the current 3D and XR growth trajectory but the company has been plagued with an unprofitable business model. It is now trimming down as it prepares for uncertain times. Many top tech companies are bracing themselves up for a coming recession. It remains to be seen whether these predictions will come to pass.

Unity has already confirmed that it will be laying off about 4% of its staff. Kotaku reports that Unity will be laying off 300 to 400 staff across the globe. The layoffs will impact all areas although the company’s AI and engineering segments have been hit hard. Protocol ’s Nick Statt estimates about 200 layoffs based on the company’s headcount in 2021.

Niantic has been around since 2010 and was originally better known for its location-based experience Ingress. However, the company gained considerable fame when it leveraged the location-based mechanics that it developed for Ingress and went into partnership with The Pokémon Company for the Pokémon Go experience. Since its 2016 launch, Pokémon Go has been a consistent revenue driver for Niantic. The mobile analytics group Sensor Tower estimates that Pokemon Go has generated $6 billion in lifetime revenue, an average of $1 billion in revenue every year. Over those years, Pokemon Go has remained as popular as ever.

Pokemon Go’s success catapulted Niantic into a major player in virtual reality and augmented reality games. The company subsequently launched a Harry Potter game which it later sunsetted. Niantic also went on to expand its partnership with Nintendo which spawned the game Pikmin Bloom. The company has also made recent announcements of new games such as Peridot and NBA AllWorld.

In recent years, Niantic also made some acquisitions, buying up companies such as SpotX Games and NZXR. The company also released tools that can be used by other developers to immerse themselves in real-world gaming applications. Niantic even launched a developer conference for game developers looking to fully leverage these tools.

The company has event expressed its intention to dive into blockchain-based games which saw it bring back its veteran employee Chikai Ohazama to be the director of web 3.

Niantic layoffs will, no doubt, render some really talented developers jobless. The move may also dim Niantic’s bid to ride its Pokemon Go success to create a “real-world metaverse.”

It sunsetted two of its games (Harry Potter: Wizards Unite and Catan: World Explorer) before they hit their third anniversary and Pikmin Bloom has been largely unsuccessful.

Its latest move to lay off employees, cancel new projects, and shut down games developed around popular brands show that the company’s bets over the past few years have not paid off.

However, Niantic’s pullback is not just to a business model that’s no longer translating into new experiences. CEO John Hanke has talked about “economic storms that may lie ahead”, alluding to a coming recession in the US following the pandemic and months of recession. Many Silicon Valley companies are projecting a coming recession and shedding off some of their staff or putting a freeze on new hiring.

Niantic’s Real World Metaverse

Niantic’s AR development environment Lightship along with its large-scale AR cloud project for a “real-world metaverse” has given the company a foot in tech for XR and the metaverse. Niantic is also building augmented reality headsets.

These are, however, long-term bets without a clear outlook and with stiff competition from other well-resourced players and it is difficult to predict when or whether they will become profitable. Niantic is also becoming less attractive to investors in the current uncertain economic climate, coupled with high-interest rates.

In November 2021, Niantic received an investment of $300 million whereby the company was valued at $9 billion. In recent times, this valuation should have dropped considerably.

Sources:

MIXED

IGN

Bloomberg

Kotaku

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