New York, Los Angeles and Dallas offices to close, sources claim

Zynga culls over 500 jobs

Zynga is set to lay off 520 staff across the entire company, the social gaming outfit has confirmed.

It is expected the move will cut around $70-to-$80 million in staff costs.

The 520 staff represent approximately 18 per cent of the firm’s global workforce.

Sources "close to the situation" have told AllThingsD that as well as the mass layoffs, Zynga will close its offices in New York, Los Angeles and Dallas.

A spokeperson has told Develop that it is not yet disclosing which studios, if any, have been closed, but confirmed the layoffs had affected employees worldwide.

Zynga said that staff redundancies will occur "across all functions", and will be substantially completed by August.

Sources also said that the substantial cuts have come amidst a steeper than expected decline in the company’s web business, while its mobile operations have not expanded as fast as it needed.

The layoffs and restructuring is expected to cost between $24 million to $26 million pre-tax in the second quarter, and up to a further $5 million in the third quarter.

A note to employees from CEO Mark Pincus said the impact of the layoffs would be felt "across every group in the company" and that "none of us ever expected to face a day like today".

He stated that the previous rapid expansion of the company had now made it difficult to "successfully lead across mobile and multiplatform", conceding players had moved away from the web.

You can read the full statement below.

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.


A turbulent year

In October last year, Pincus announced that Zynga would be enacting a major overhaul of its operations as it attempted to stem its losses in the social gaming market.

It was revealed that as well as closing down 13 of its games, it would close its Boston studio, cut down the number of staff in Austin and cut back on resources on The Ville. On top of this the company reduced the rest of its workforce by five per cent.

Games eventually cancelled included the likes of PetVille and Mafia Wars 2

In January, Zynga confirmed the closure of its Japan studio, and announced it would be halting support for titles such as Montopia, Mojitomo and Machitsuku.

In February earlier this year, the social gaming outfit shut down its Baltimore studio. The company also consolidated its Austin, New York and Dallas studios, with the restructuring costing around 30 jobs.

The restructuring came not long after a disastrous IPO in December 2011, which led to the company’s value continuing to plummet throughout 2012.

A large exodus of the firm’s top executives also jumped ship following the IPO, including the likes of marketing chief Jeff Karp, COO John Schappert, mobile CTO Laurent Desegur and CCO Mike Verdu.

It remains to be seen whether the overhaul of Zynga’s business can successfully return the company to profit, and back to some of the success it enjoyed in previous years during the social gaming boom.

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