The maker of the augmented reality “Pokemon Go” game, Niantic Inc., will lay off about a quarter of its workforce, or 230 employees, the company said in an email shared Thursday with employees by Chief Executive John Hanke.

Niantic will also be closing its Los Angeles-based game studio, as well as sunsetting its AR basketball game “NBA All-World,” and ceasing production on its upcoming superhero-based game “Marvel: World of Heroes.” These games will follow “Harry Potter: Wizards Unite,” which was shuttered in 2022.

“We have allowed our expenses to grow faster than revenue,” Hanke said in the email, adding that there was a surge in popularity for its games and platforms during the pandemic but that tide has been turning. “New projects in games and platform have not delivered revenues commensurate with those investments. This change will bring expenses and revenue back into line while preserving our core assets and long-term upside.”

He added that the mobile market is oversaturated and there is an “overall macroeconomic slowdown,” as well as “unique challenges” for the AR gaming segment. According to Hanke, in the years since Niantic’s release of “Pokemon Go” the mobile market has become crowded and the advertising landscape has made it difficult to launch new games at large scale.

“We also face an AR market that is developing more slowly than anticipated, because of technology challenges and because larger players are slowing down their investments,” Hanke said.

According to Hanke, “Pokemon Go” will remain a top priority for the company, since it remains the most successful game. The game has pulled in about $1 billion in revenue on average each year since its launch in 2016, according to Sensor Tower. “The top priority is to keep ‘Pokemon Go’ healthy and growing as a forever game,” Hanke said.

The company will also continue to focus on recently launched AR games such as “Peridot,” “Pikmin Bloom” and “Monster Hunter Now” and maintain their continued development.

Niantic doesn’t just develop games. It also focuses on AR software platforms for gaming and enterprise developers, including the Niantic Lightship developer tools that are part of building AR experiences and creating what the company calls the “real-world metaverse.” Using these tools, developers can build cross-platform AR software with access to real-world mapping, scene understanding and social capabilities.

Currently, most users experience augmented reality through mobile devices, but Hanke said the long-term vision of Niantic is a future where lightweight headsets will be available to bring AR to the masses. As a result, the company intends to continue to invest in and support its AR platform tools for enterprise developers to continue to build these experiences.

With the release of mixed-reality devices such as the Meta Quest Pro and Apple Inc.’s Vision Pro that use video pass-through, Hanke said he believes “validates the long-term importance of AR.” These devices are seen as only an intermediate step toward true outdoor AR wearables, which must be more lightweight and unobtrusive and last longer on battery.

Image: Niantic