Over the last few years, the augmented reality (AR) mobile games market has seen quite the rise in popularity. For some studios such as pokemon go developer Niantic, this translated to an unwavering amount of success. However, the trajectory of mass user adoption and success may be slowing down.
Niantic has launched a number of popular AR titles over the years. This includes ingress and pokemon go. The latter has seen a ton of success both in revenue and player acquisition. Over the course of seven years, Niantic and pokemon go have set the bar for AR mobile titles.
However, Niantic recently faced internal layoffs. Despite acquiring new studios and developing new games like peridot, the studio let go of eight percent of its staff (85-90 employees). The company is also canceling the development of Transformers: Heavy Metal.
Now, analysts believe that the AR gaming market may be facing a significant dip. Omidia Analyst Guillermo Escofet states that pokemon go‘s revenue has dipped an estimated 45 percent in 2022. Outside of Niantic, the market itself faces a decrease of 20 percent in revenue. The last time the AR gaming market saw a significant decline in 2019.
Based on these drops, Escofet now believes that the AR game market’s projections require a major recalculation. Previously, it was predicted that the market would bring in roughly $6.7 billion USD (about $8.6 billion CAD) in projected revenue. Now, Escofet states that the AR games market is on track to earn only $2.5 billion USD (about $3.2 billion CAD).
While the AR games market faces another decline, Escofet believes that it can sustain itself once again. However, there are two major barriers. The first is that Niantic and pokemon go dominate the market space. As of now, it appears as though players adopt one title and stick with it. Breaking that cycle will be crucial.
The other barrier is the Chinese market. As of now, AR titles don’t have the mass popularity of other mobile games. pokemon go, for instance, isn’t available in China. Tencent’s Let’s Hunt Monstersan equivalent title, has failed to generate a lot of revenue.
pokemon go‘s launch in 2015 set a course for AR games. For many players, this was their first exposure to AR gaming. However, its success has placed the game and Niantic in a bubble. For now, there hasn’t been a competitor that has come close to being that next sensation in the market.
However, AR technology is still quite young and as it advances, so can its popularity. Plus, with new innovations come new ways to generate revenue.
Image credit: Niantic