San Francisco-based mobile games developer, Niantic, unveiled plans on Thursday for a reorganisation that involves laying off 230 employees.

As per a note from CEO John Hanke, the privately held company has made the decision to cancel NBA All-World and halt the production of an unreleased Marvel-based title. A report by CNBC revealed that the company will be closing down a Los Angeles-based studio, which is where the majority of the impacted employees are located.

This development showcases the evolving landscape of the mobile games industry since Niantic's initial success with Pokemon Go in 2016. In the intervening years, both Apple and Google have implemented alterations to their app stores that restrict advertising tracking within apps. As a result, acquiring new users through advertising has become more costly and unpredictable.

According to Hanke, the reorganisation is attributed to a combination of "internal and external factors," which includes a broader global macroeconomic deceleration.

“In the years since Pokémon GO’s launch, the mobile market has become crowded and changes to the app store and the mobile advertising landscape have made it increasingly hard to launch new mobile games at scale,” Hanke wrote.

Emphasizing their commitment, Niantic declared that their foremost focus is on supporting Pokemon Go. Additionally, Data.ai, a research firm, estimated a 5% decline in App Store spending on games in 2020, amounting to $110 billion. 

Furthermore, this development indicates a notable transformation in the augmented reality applications landscape, wherein computer graphics and data can be seamlessly integrated into the real world.

Through a phone's screen, Pokemon Go has the ability to present digital creatures interacting with the real world. However, there is a growing trend of incorporating this technology into headsets or goggles equipped with powerful cameras, enabling the integration of real and virtual worlds. 

Many in Silicon Valley perceive this fusion as the next significant computing platform. Meta recently unveiled its Quest Pro headset, while Apple is anticipated to launch its highly anticipated Vision Pro headset early next year.

According to Hanke's letter, these new hardware products serve as validation for Niantic's strategy. However, he views them as an "intermediate stepping stone" towards the ultimate goal of developing true outdoor augmented reality (AR) devices. These future devices are expected to resemble lightweight glasses with transparent displays.

“We believe that we can build key content and platform services that will help realize the promise of this technological shift,” Hanke wrote.

In Hanke's writing, he noted that the augmented reality (AR) market is progressing at a slower pace than anticipated due to technology obstacles and the reduced investments from major players in light of the macroeconomic conditions.

As of 2022, Niantic had a workforce of 1,050 employees. In November 2021, during a period of high-tech valuations, the company raised $300 million at a post-money valuation of $9 billion, according to Pitchbook data.