Pressured Zynga to Cut 5% of Its Workforce

Zynga will cut 5 percent of its workforce as it begins a major restructuring as it contends with weak results from its Web games and delayed launches of new titles.

Facing weak results from its Web games like The Ville and delayed launches of new titles, Zynga says it will institute a major restructuring of its operations.

It’s game plan calls for cutting 5 percent of its workforce, or roughly 150 positions, and folding 13 games including The Ville, according to a company memo from CEO Mark Pincus that was posted on TechCrunch and its quarterly announcement.

The restructuring also calls for closing its Boston studio, which some reports say has already happened, reducing staff levels in its Austin studio and potentially closing its Zynga Japan and UK studios, Pincus said. The company may also reduce a small number of its partner teams.

From the memo:

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.

With these cuts, Pincus says, the company will have greater flexibility to reinvest in some games and its Web and mobile game networks. Zynga says it expects to save between $15 million to $20 million in pre-tax savings in the fourth quarter.

“Zynga remains well positioned to capitalize on social gaming and the overall worldwide movement to free-to-play gaming,” says Pincus in a conference all with Wall Street analysts after announcing its quarterly results Wednesday. He added both social games and mobile games provide the greatest growth opportunity for the company.

Specifically, in its near-term pipeline, Zynga has two new Web and four new mobile games slated per quarter throughout next year, Pincus says. And with its recent acquisition of A Bit Lucky, the company is planning to introduce its first mid-core game early next year.

Additionally, Zynga on Wednesday announced plans to enter real money games in the United Kingdom via its exclusive partnership with bwin.party, an international gaming operator.

Zynga’s RMG service will offer online poker and 180 casino games where people can bet with real money. The new service is expected to launch in the first half of next year. Some of those new offerings will feature Zynga-branded games like FarmVille, which include real money slot games.

 

 

 

 

 

 

Comments

  1. BY RobS says:

    When I first started playing Farmville, I had come from playing another company’s Farm Town, which was much better in many ways, but many of my friends migrated over.
    they had Farmville “quests” that were a bit of a pain but not horrible (like the nightmares I heard about Frontierville.)
    They eventually made enough improvements to make it fun to play, and then came the change: getting bombarded with message to pay money to get this and that or start a new quest that could best be played by sending them money for this and that. Every step was a bombardment of messages. I went on vacation for a week and come back to find there were 4 new quests to accomplish and I kept getting bombarded by messages to play these games (most of which needed help from friends who were not online so much any more, or paying money to continue.) there was no way to disable a quest so I kept getting more and more messages and their Flahs player kept locking up my system.
    Needless to say, I stopped playing.
    I moves on the Indiana Jones Adventure which was a fun game…until they did the same thing…over and over.

    No wonder they’re struggling….their model is to bombard people to get their friends to play and then bombard everyone with messages to send them money to keep playing. that’s just not a sustainable business model. Imaging the phone company calling you 3-5 times per day offering new services, or new variations to the services; or having them interrupt your phone calls to suggest that you look into their new service.

    • BY RobS says:

      So Zynga has lost me for over a year now, and I won’t go back unless things change, and I have no reason to go visit them to see if they’ve changed since I’ve moved on; I suspect a lot of their business is permanently gone.

      • BY Glen Smith says:

        Remember, if you are not paying, you aren’t the consumer but the product. Unfortunately for Zygna, unlike most cattle, we can leave the ranch.

        • BY RobS says:

          yup, and after using my points card (which was paid for, not free) I realized that it was not worth paying for another one.

  2. BY Proud Paulbot says:

    Not surprising. The online gaming industry is clearly a bubble, and Zynga’s woes are the first sign of it popping.

  3. BY Mike says:

    That is to say, they need to keep Wall Street happy because the stock value has tanked since the IPO.

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