Zynga lays off 5 percent of workforce, shutters games

Social games company cuts 150 employees and ends 13 unspecified older game titles as part of its cost-cutting measures to regain profitability.
Written by Ellyne Phneah, Contributor

Zynga has laid off 5 percent of its full-time workforce and called time on 13 of its games in a cost-cutting campaign.

According to a company blog post Tuesday, the job cuts amount to some 150 workers out of Zynga's total staff strength of 2,900. CEO Mark Pincus, who issued a staff memo to announce the decisions, said the management team is also proposing to close its Japan and U.K. offices while reducing staff numbers in its Austin, U.S., studio. It had already closed its Boston office in the United States, he said.

"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," Pincus added.

Besides the cuts, the social games company also plans to "sunset" 13 unspecified game titles and significantly reduce investment in its latest game "The Ville". It will also go ahead with a "more stringent budget and resource allocation around new games and partner projects", to improve its profitability.

These cost-cutting measures will allow the company to reinvest in games and their Zynga network on Web and mobile, he added.

News of the job cuts was dropped on Oct. 4, 2012, when the company reduced the year's outlook and warned investors it would register a steep drop in sequential quarterly revenue for the first time since its December initial public offering (IPO). Pincus said then the company would be looking into how to proceed with the streamlining process.

The past six months has been rough on Zynga, filled with underperforming games, stock prices falling by more than 75 percent since it went public at US$10 a share and facing multiple lawsuits accusing it and its executives of copyright infringement and insider trading.

In early October, the company also revealed plans to write off nearly half of the US$210 million it paid for "Draw Something" game developer OMGPOP, which it acquired in March this year.


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