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Social game maker Zynga has laid off over 100 employees today across its Boston and Austin studios. You can find our original report here.
Zynga has just provided GamesBeat with the note that chief executive officer Mark Pincus sent to the company’s remaining staff. The biggest information in the letter is that Zynga has fully closed its Boston studio. The company has proposed a plan that will likely lead to the closure of the Zynga Japan and U.K. studios. Pincus wrote that they are “reducing staffing levels” at the Austin, Texas-based offices, although our reports suggest that the majority of those jobs have been lost.
In total, Zynga cut 5 percent of its staff.
This is one of the industry’s largest social-gaming developers. Its lineup of ‘Ville titles essentially built a category of gaming moms that no one knew existed and quickly became one of the biggest contributors to Facebook’s revenues. Critics claim the company’s business model is over reliant on that social network, and these layoffs are representative of the growing pains Zynga is experiencing in its attempts to diversify.
In announcing Facebook earnings today, chief executive officer Mark Zuckerberg noted that Zynga’s contribution to Facebook’s revenues dropped 20 percent.
In addition to the studio closures, 13 games are losing support and Zynga is “reducing” investment in its game The Ville.
“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,” Pincus wrote. “We appreciate their amazing contributions and will miss them.”
Pincus admitted to keeping his teams completely in the dark about this but cited wanting to inform the affected employees before warning the rest of the workforce. Zynga will announce their earnings tomorrow and will hold a webcast afterward to address employee concerns.
Here is the letter in its entirety:
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.
We will have continuing coverage of this and of the company’s earnings.