According to sources, Zynga is laying off 18% of its workforce which represents 520 people in a bid to reduce costs and restructure its troubled business towards mobile.
The cuts are likely to be implemented by August, the company has confirmed. Zynga currently has around 2900 workers and this move will help the company reduce costs by $80 million. [pullquote align=”right”]Zynga currently has around 2900 workers and this move will help the company reduce costs by $80 million.[/pullquote]
Zynga will also be shutting down its offices in New York, Los Angeles and Dallas while incorporating other infrastructural changes to reduce costs. Zynga continues to have big offices in San Francisco; Beijing, China; and Bangalore, India, as well as several small units across the U.S.
All this is being done to shift the focus from web games to mobile, a business Zynga must conquer, despite its currently smaller prospects for monetization compared to its Web business.
This is what Zynga CEO Mark Pincus wrote to his employees,
To our Zynga Community,
Today is a hard day for Zynga and an emotional one for every employee of our company. We are saying painful goodbyes to about 18% of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company.
None of us ever expected to face a day like today, especially when so much of our culture has been about growth. But I think we all know this is necessary to move forward. The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played.
These moves, while hard to face today, represent a proactive commitment to our mission of connecting the world through games. Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect. By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences.
Because we’re making these moves proactively and from a position of financial strength, we can take care of laid off employees. We’re offering generous severance packages that reflect our appreciation for all of their work and we hope this will provide a foundation as they pursue their next professional steps.
Although these are hard decisions, I’m confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term. I’m encouraged by our recent progress. Running With Friends is a great example of the quality player experience we can deliver, already receiving an average 4.5 app star rating from 22,700 players in less than one month after launching. Our FarmVille franchise teams continue to innovate and deliver ground breaking new social experiences like County Fair which, despite only being available on the web, is engaging 39 million monthly players.
I want to thank every one of you for the spirit, creativity and energy that you’ve invested in Zynga. You’ve reintroduced a generation of people to gaming and through these games offered them new ways to connect with their families, make new friends and even sometimes find love.
Everyone will be affected by these changes and I’m sure there will be many follow up questions to this email. If you have specific questions relating to your project or team, please talk to your manager. For any other feedback or thoughts feel free to email me directly.
Zynga has already been on the cost-cutting path, closing less successful games and other more ambitious products that had enjoyed less than expected traction. The company closed down 18 games in recent months, as it has deployed more resources and development to mobile efforts.
It is high time that they get their mobile efforts on track if they want to be back up on top.