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Layoffs and closures at Zynga as company struggles to save money
Layoffs and closures at Zynga as company struggles to save money
October 23, 2012 | By Frank Cifaldi

October 23, 2012 | By Frank Cifaldi
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Over 100 people are out of work at Zynga, as the company scrambles to cut costs ahead of its financial results announcement tomorrow.

The bulk of the layoffs came out of its Austin studio, home of its The Sims Online-esque The Ville. The game has been something of an underachiever, and while Zynga isn't shutting it down completely, it is reducing its investment on it significantly. We understand that the Zynga Bingo team from that studio has been let go altogether.

Zynga also shut down its entire Boston studio, which was in charge of Indiana Jones Adventure World. Rumors are circulating that there is similar bad news in Chicago, but we're unable to confirm anything at press time. The company may also shut down its satellites in the UK and Japan soon.

The announcements came to employees during Apple's press conference this morning, leading many online to speculate that Zynga intentionally timed the bad news so that it would get buried under Apple's new announcements. Apparently, those affected were given just two hours to pack up and leave their offices.

"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," said CEO Marc Pincus in an internal memo received by Gamasutra.

The move comes as Zynga prepares to unveil a weak Q3 earnings report tomorrow afternoon. Share prices today dipped as low as $2.20, below their all-time low closing price of $2.21.

Update: When this story first went live, we reported that Zynga Austin had been shut down. That may not necessarily be the case: we can confirm that over 100 people are out of work in Austin, but we can not confirm whether the studio is remaining open in some capacity, nor if Zynga's QA office in Austin has been affected. This story will be updated as we learn more.

Update 2: We now have direct confirmation that Zynga Boston has been shut down. The story has been updated to reflect this.

Update 3: We've been given the internal memo sent by CEO Marc Pincus to Zynga's employees today. The note confirms our report (though specifies that The Ville will continue to run, albeit with significantly less development support), and adds that the company will shut down thirteen of its older titles. Zynga may also close its UK and Japan offices, Pincus said. The full note as we received it follows:

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


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Comments


Alyssa Gobelle
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So there are two Austin buildings, one is the development studio and one is the QA for a lot of the Zynga games in general. Do we know if both were axed?

Frank Cifaldi
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We're not sure right now. Our source is currently packing up to leave and, understandably, not on email.

Francisco Nogueira
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What a despicable move. Just die Zynga.

Charles Durham
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Well, if you get your wish, then there will be many more "despicable moves" in the future.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Aiden Eades
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As much as I want Zynga to die, I'd much rather see their developers move off and start companies or their own, or get hired elsewhere first.

With the way things are going at the moment, I honestly hope people have second thoughts about employment with zynga, while those already there leave. Basically hoping it gets killed from the inside rather than out.

Kelly Kleider
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If only corps were really like people...then Zynga could die and leave us all its money.

Too bad for the affected people (don't forget to check the Gamasutra jobs board)

Jonathan Jennings
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when companies announce something like this during other events as a sort of " press shield" it makes me dislike them more , and considering this is Zynga i didn't know i could dislike them more. pitiful move and to me disrespectful to the employees.

Simas Oliveira
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Well said, expressed my thoughts exactly.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Jonathan Jennings
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considering this is Zynga which is usually cast as the evil empire 90% of the time more recently, i can't imagine anyone working there is new to unflattering headlines , reports, projections ,etc.

Kim Pittman
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It prevents their closures from becoming trending topics.

As if we needed more reason to dislike them.

I really really hope the people who got laid off, at least some of them, form a new studio, make a GOOD Facebook game, and do so awesomely that Zynga tries to buy them... Revenge is sweet and best served at level cap.

Doug Poston
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If they do that, my guess is Zynga will just hire a team of people to clone the game then sue the original creators.

(Yes, I'm joking. But I do wonder what sort of non-compete agreements Zynga employees had to sign...)

In any case, good luck to all those affected by the layoffs. Hear's hoping you land on your feet soon.

Kim Pittman
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@Doug Yeah, but it worked out for Tiny Tower when they got a ton of press and a ton of sales just because people wanted to thumb their nose at Zynga.

Really it would be best to make the best scenario that Zynga tries to buy them and they jack up the price then quit when they sell.

Also I would assume that other than the super high ups, who usually aren't laid off but relocated, that no one had to sign non-competes that would extend after their employment. Plus aren't those usually broken if a person is laid off or fired, as opposed to being offered severance where it would stay in effect?

Steve Fulton
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Honestly, when *is* a good time to do this kind of thing? No company I have ever worked at has found the magic secret sauce that makes layoffs an easy task. I heard they gave people "2 hours" to vacate. At many major corporations you are lucky to get the chance to say goodbye, much less time to vacate.

Coray Seifert
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Thoughts go out to anyone affected by the Zynga layoffs. Please message me if I can help you find a next stop. We're hiring, and I know a bunch of other folks who are looking for great people.

Kenneth Wesley
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Any QA openings because I've been laid off from Zynga for over a month now.

Elisabeth Beinke-Schwartz
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@Kenneth Irrational games is looking for QA testers! http://irrationalgames.com/studio/careers-at-irrational/

Stephen Horn
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Glad to see Twitter filling with job opportunities for the folks affected. Here's some links from the twitterverse that I hope will help the people effected:
https://twitter.com/collisonDS/status/260812135033090048
http://www.popcap.com/job-opportunities
http://tbe.taleo.net/CH01/ats/careers/jobSearch.jsp?org=RED5STUDI
OS&cws=1
http://meteor-ent.com/jobs/
http://jobs.nike.com/portland,-or-jobs

Charles Speer
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@Kenneth: Multimedia Games is Austin based and has QA openings: http://jobvite.com/m?3fcHzfwr

Rick Kolesar
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use #ZyngaJobs on twitter

Keith Blake
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This was just bound to happen. Zynga is going about social games all wrong (despite their enormous previous "success"). But, THIS is really sh**ty. Have the guts to announce it on your own and not inside the shadow of an Apple product release.

I just wish we were in a position to staff up so we could rescue some of these people.

Rich Marble
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Just chatted with an employee at Zynga QA. They seem to be safe, for now.

Scott Jennings
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Zynga Austin is not closed, but it is hurting. 2 out of 3 teams were laid off (Zynga Slots is safe for now) and the QA team in a separate building is also safe. The 100+ figure quoted for layoffs from Zynga Austin is accurate.

Not a good day, in a city that already has far too many looking for work in the game industry.

Marilyn Hommes
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Gazillion Entertainment in San Mateo is hiring. www.gazillion.com

Julio Constant
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*Removed

Peter Dassenko
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A lot of good people are affected by this... Never a good thing.

Shay Pierce
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Although I'm glad that I dodged this bullet, I'd like to express my dismay over all this. A lot of good, talented developers have been left jobless with little warning.

To make it clear what the situation looks like for devs on the ground here in Austin: Bioware did extensive layoffs a few months ago; Vigil did the same shortly thereafter; and Lightbox shed many employees just a few days ago. This feels like a repeat of 2008, when Midway Austin laid off a large team (including myself), just after NCSoft and Spacetime had done layoffs.

Trust me, looking for work in that kind of atmosphere really, really sucks. I feel nothing but condolences for all Austin devs caught in this situation.

Lars Doucet
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Man, Shay - talk about vindication...

My heart goes out to everybody else who stayed on board :(

Eric Boosman
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Hey Zynga Austin people, I was Lead Designer on Warstorm for Challenge Games before they became Zynga Austin. Condolences to all those who got screwed over.

I started an indie studio last year, and we just submitted our first Unity developed game for iOS. It's a subversive anti-establishment type game that's just a bunch of fun to play.

check it out:
http://www.facebook.com/darktonicgames

Wall Street Titan is destined for Facebook, so if any of you wants to help take a genuinely awesome old school kind of arcade experience to FB, contact me and let's talk!

Charles Speer
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Multimedia Games in Austin, TX is looking for QA, Programmers, and Artists of all sorts of experience levels. They make casino games, which isn't as cool as console, IOS, or PC games but it is a hell of a lot more secure. Check out this link for all available jobs. P.S. Be sure to use these links to apply so I get the referral. :)

http://jobvite.com/m?3reHzfwF

Hollyann Wood
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I'm sorry to hear this news.

However, there are jobs to be had. :)

Among others, local Austin Big Data startup, Infochimps, is also hiring: http://www.infochimps.com/careers beyond the data engineer and devops roles that are currently posted, we're always looking for motivated geniuses of various kinds. :)

=h=

Josh Looman
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Our new EA Sports Austin studio is looking for talented people, namely programmers and game designers. Contact me for more info.

rob legg
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I hate to hear layoff news...Good luck to everyone!

Cordero W
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Pop.

Ramin Shokrizade
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Well said Cordero :)

Ty Roberts
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Ouch. Having been laid off by PopCap a short time ago, I can definitely feel for these folks. It's a terrible thing and I feel awful for them.

Rodolfo Camarena
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Both full-time and contract QA personnel were not affected by the layoffs from the Austin studio. They will transition into the teams at the AQC in North Austin.

The Austin studio has not been shut down entirely as Zynga Elite Slots is still there as well as the the QA team for slots. They'll now have the entire floor all to themselves... for now.

Neal Nellans
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I'm chief technology officer for a mobile studio in Austin called Tiny Utopia. We're looking for a programmer that can work with Unity for a arcade puzzle game that's currently in development. Contact me for details.

Andreas Gschwari
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There have been a few comments to the fact that redundancies are never easy and that it seems to be industry standard to give 2 hours or less warning. From personal experience i can say that's not the case. When i was laid off by NCSoft a few years back we were given ample notice, fair compensation and we were allowed to use office space to try and get a start up off the ground - this included the use of office equipment.

Some companies know how to handle a redundancy procedure and respect their work force.

[User Banned]
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This user violated Gamasutra’s Comment Guidelines and has been banned.

Nooh Ha
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Amazed this did not happen sooner. Any company whose growth strategy is largely based on such a shotgun pattern of mass acquisitions over a relatively short period of time is bound to have to go through a consolidation period irrespective of their underlying trading strength (or in Zynga's case, weakness). Acquisitions followed by layoffs are as inevitable as IPOs followed by personnel selling their options and moving on... LOL

Michael Marks
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Aspyr Media in Austin has openings for programmers. We bring AAA titles to the MacOS and develop original IP for iOS. Contact me for more info.

I worked with Shay Pierce at Midway and his above comments echo a common sentiment in the Austin community. Best of luck to all who have been affected.

Ramin Shokrizade
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Given that last year 57% of interactive media investment went into Facebook game development, large swaths of the industry were recently gutted to make Facebook games, largely following the Zynga model. I clearly articulated that it was a bad idea more than a year ago, and why, but here we are. Even just a few months ago I had studio heads laugh at me for suggesting Zynga was going down.

The good news is that a good chunk of future investments, if they have not been totally scared off, will go back to more stable productions. This means a lot of firing and, followed by a hopefully short and dark period for us, a lot of rehiring in other places. Where those other places are is what fills much of my wonder time.


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