Zynga Lays Off Five Percent, Kills 'The Ville'

 

It may not be game over yet for Zynga Inc., but the company may be on its last life.

Lay offs, development stoppage and office closures are now plaguing the once popular social game publisher following a less than stellar financial showing earlier this month.

STORY: Zynga Shares Plunge After Hours on Lowered Expectations

A letter sent out by CEO Mark Pincus confirmed the layoffs and closures. 

According to the letter, the company plans on "sunsetting" (i.e. stop new development of) 13 games and will "reduce investment" in The Ville, which isn't surprising considering the legal issues the company had with Electronic Arts over the game.

The letter also states that the company will close its Boston studio, propose closures of studios in Japan and the UK, and reduce the staff at its Austin studio.

According to Pincus, the closures and layoffs amount to a reduction of five percent of Zynga's total workforce.

News of the Austin layoffs broke on Twitter by game designer Justin Maxwell, tweeting, " Zynga just laid off 100+ employees (incl. my friends) in its Austin office during the Apple Event. Gave them 2 hours to vacate. RT please."

Read the full text of CEO Mark Pincus's letter below: [quote] 

Team,

Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we’ve had to make some tough decisions around products, teams and people. I want to fill you in on what’s happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios. Additionally, we are reducing staffing levels in our Austin studio. All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce. We don’t take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us. We appreciate their amazing contributions and will miss them.

This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.

Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader. Our success has come from our dedication to a simple and powerful proposition – that play is not just something people do to pass time, it’s a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company. Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting. I’m confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

Email: Joshua.Stecker@thr.com; Twitter: @joshuastecker

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