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Zynga lays off almost entire Austin studio

GamesBeat can confirm that social game maker Zynga has laid off nearly everyone at its Austin offices.

We have independently verified this claim. Two games, The Ville and another unannounced title, are affected by this downsizing. Employees were given a little over an hour to exit the premises and turn in their Zynga-provided phones, computers, and badges.

Zynga is one of the biggest names in social games. Titles like FarmVille and CityVille have dominated the Facebook game market. But the company has run into a bit of a rough patch. A year ago, Zynga was preparing to launch its initial public offering in which it raised nearly $1 billion in funding. Since then, it’s struggled to live up to its potential. Several games have launched but failed to find substantial audiences. The $180 million acquisition of Draw Something developer OMGPOP looks like a bust and the game looks like it was just a fad.

In its earning report on October 23, Facebook noted that revenue payments from Zynga were down 20 percent compared to the previous year. That is a preview of what we can expect from Zynga’s earning report.

And now, this news which comes a day before Zynga declares its earnings for the year. In what appears to be an effort to bury these layoffs, Zynga timed informing the affected staff with the Apple event that saw a new iPad, iMac, and MacBook Pro announced.

But the San Francisco-based developer couldn’t keep a lid on it. A friend of one of the developers posted the following to Twitter as it was happening:

Zynga has yet to comment on the issue, but we have reached out to several employees and executives for an official word.

The company’s stock is down nearly 4 percent to $2.23 with an hour left before the closing bell.

According to Superdata, a data research firm, things aren’t looking great for the gaming giant. Its monthly active users are down to 147.8 million from 162.4 million two years ago. Overall player engagement was at a low of 14 percent in September. Its market share on Facebook isn’t growing as other developers have started to outpace Zynga.

Most of these negatives come due to Zynga’s overreliance on Facebook. It is attempting to diversify with Zynga.com and mobile games, but those ventures are more challenging and competitive. Zynga hasn’t re-created its mammoth success in those fields.

More on the news as it develops.


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