UPDATE: An internal memo from Zynga CEO Mark Pincus has hit, wherein he describes the closure of the Boston studio and the layoffs in Austin. The memo also points to potential staff reductions via closure of the company's Japan and UK studios. A total of 5% of the company's workforce is expected to be laid off.
The memo in full can be found at the bottom of this story.
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The only thing worse than layoffs, in my opinion, are layoffs scheduled in time with a major event--like, say, an Apple press conference--so as to deflect bad press. If the reports we're hearing are true, Zynga just pulled that particular sleazy move in a major way.
Though the casual games publisher has yet to comment publicly, independent reports are coming out of Zynga's Chicago, Austin, and Boston studios. Austin has reportedly suffered a 100+ staff reduction, while Chicago and Boston are allegedly being shuttered outright. We're still trying to get official word on the validity of those closures, though multiple knowledgeable sources have all but confirmed them.
Zynga Boston was responsible for the Facebook game Adventure World, while Austin had been working on The Ville and Zynga Bingo.
These layoffs would mark yet another bleak spot in what's been a pretty bleak year all around for Zynga. After going public early in the year, the company saw its stock drop from $12 in early April, all the way to $2.21 as of this writing. Additionally, lawsuits have been filed, accusing the company's upper management of insider trading.
We'll update this story when and if we get an official response from Zynga.
INTERNAL NOTE FROM ZYNGA CEO AND FOUNDER, MARK PINCUS
Team,
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.
Mark
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