Layoffs and closures at Zynga as company struggles to save money
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.
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.
We now have direct confirmation that Zynga Boston has been shut down. The story has been updated to reflect this.
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:
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.