GamesBeat

Zynga’s layoff of 314 employees — 15% of its workforce — shows the tough times aren’t over

Zynga’s burst of news today includes an all-too familiar round of layoffs. The social-mobile casual games company is laying off about 314 employees, or 15 percent of its workforce.

Zynga’s been cutting workers for a while, and this layoff will be another shock. More than a year ago, it had more than 3,000 employees. Many of them were refugees from rivals such as Electronic Arts and were veterans of the console game business.

But as Zynga’s fortunes began to sink in 2012, the company started shutting unprofitable games and laying off employees. When Don Mattrick joined over the summer, he accelerated the job cuts, taking the company down from around 3,000 to about 2,300. By the end of the fourth quarter that ended Dec.31, the company had 2,034 employees.

Now the latest cuts will take out an estimated 314 more.

But the $527 million acquisition of Natural Motion will add 260 employees, most of them focused on making mobile games, the part of the market that is growing the fastest — and an area in which Zynga has been weak.

So it’s not clear exactly where the payroll will wind up, but Zynga may have around 1,980 employees when all is said and done.

Zynga said the moves would save about $33 million to $35 million in 2014 in pretax savings in 2014.

The 315 employee number sounds like it could mean that the company is cutting multiple teams, and it may also be shutting down unprofitable games. It recently said it would shut down the YoVille team.

The tough thing about doing layoffs is that it affects teams that may be key to turning around the company. And it may also spur some people to quit and join other startups or companies. During the past couple of years, Zynga has had a lot of turnover in its key talent and this isn’t going to help with morale.

On the other hand, Zynga is gaining an important set of teams with the acquisition of Natural Motion, which is known for great mobile games such as CSR Racing, Clumsy Ninja, and My Horse.


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