Social game powerhouse Zynga confirms that it has decided to lay off roughly 18% of its global workforce.
Based in San Francisco, Zynga’s staff reduction will be felt primarily in Los Angeles, New York, and Dallas, whose offices will be closed down, said a source who wished to remain anonymous.
The “18% of workforce” translates to 520 jobs. The cuts are not all immediate, but are hoped to be completed by August. CEO Mark Pincus has made the move in hopes of saving $70-$80 million. In an e-mail to employees acquired by USA Today, Pincus said: “None of us ever expected to face a day like today, especially when so much of our culture has been about growth, but I think we all know this is necessary to move forward.”
This is not the only round of layoffs for Zynga. In the fall of 2012 there were 150 jobs eliminated. There were also several much-publicized defections both to and from Zynga in the past two years. Lawsuits dealing with those defections and the motivations behind them were settled out of court this past February. To say the corporate stability at Zynga was more akin to medieval court intrigue may be somewhat accurate.
To “move forward” Pincus says Zynga needs to focus on what are now being called “midcore” games. Such games are thought to be full of the depth of the games traditionally played on a PC or console, but also with the accessibility of mobile games, free-to-play, and social in nature. There are many gamers that will read those requirements as “watered down gaming.” For now they may be right, but eMarketer research shows that social, mobile and/or online gaming will grow by 5.6% this year. Midcore may be just what those new gamers want.
Currently, Twitter is aflutter with tweets of the OMGPOP closure. OMGPOP was the company purchased by Zynga 14 months ago for $200 million. The purchase was to acquire the surprise hit mobile game Draw Something.
As of today, Zynga stock has fallen to $3.00 down about 12% after yesterday’s job reduction notice, but down 70% from it’s initial price less than two years ago.