The San Francisco-based AR game-maker behind Pokémon GO is laying off more than 200 employees and scrapping third-party games to focus on developing AR tech.

Niantic saw its revenue surge during the pandemic when locked-down people left their houses in droves to play Pokémon GO. So it hired staff and invested significantly in creating new games and developing its AR tech, CEO John Hanke explained in an email to employees yesterday that was also posted on the company’s website. This spending became unsustainable in the aftermath of the pandemic, when Niantic’s new games failed to provide enough ROI and revenue dropped.

Now, the company is shifting away from developing third-party games in order to prioritize the continued success of its biggest hit, Pokémon GO—which last year had nearly 150,000 daily active users (via iPhones) in the US, according to Statista.

Niantic will also focus on making proprietary games and developing AR technology that developers can license to create and monetize their own AR experiences. As part of this restructuring, the company is closing its LA office, laying off around 230 employees and shutting down production on two games—Marvel: World of Heroes and NBA All-World.

It’s still committed to investing in Pokémon GO and expanding this dedicated team, as well as continuing efforts to generate an audience and maximize profits for recent launches such as Pikmin Bloom (made with Nintendo), Peridot (an original title) and Monster Hunter Now (made with Capcom).

Beyond games, Niantic is investing in building out its AR platform so developers can create better experiences for headsets and mobile games. The AR industry is developing slowly, but eventually it will become competitive and fragmented, and Niantic wants to make sure its tech is in place to help companies stand out in the market, said Hanke. To get ahead of this anticipated growth, Niantic is also going to put more focus on building AR glasses and mixed-reality devices.

In June 2022, the company announced that it would lay off roughly 90 employees and cancel multiple projects, including a Transformers game.