Plugged In

Zynga to lay off 520 employees, shuttering three offices

View photo


The king of social gaming is losing a lot of friends.

On Monday, Zynga laid off 520 employees -- about 18 percent of its workforce -- in an attempt to restructure its ailing business in the face of a changing gaming landscape.

"Today is a hard day for Zynga and an emotional one for every employee of our company," Zynga CEO Marc Pinkus wrote on the company’s blog. "We are saying painful goodbyes to about 18% of our Zynga brothers and sisters…The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played."

According to AllThingsD, the downsizing will cut $80 million in staff costs and will include the total shutdown of offices in New York, Los Angeles, and Dallas. The layoffs are expected to be completed by August.

Despite creating some of the biggest franchises in social gaming, Zynga’s been behind the curve when it’s come to mobile expansion. Gamers have been migrating towards playing games on smartphones and tablets for some time now, but the bulk of Zynga’s business is geared toward monetizing through the Web. Waning interest in key franchises hasn’t helped matters, either.

It’s certainly been a rough road for the social game giant since its much-hyped IPO back in 2011. Despite high hopes, the company got off on the wrong foot by acquiring Draw Something developer OMGPop for $200 million, only to watch the game’s userbase decline rapidly. Zynga’s top executives began exiting the company, sending a troubling message to shareholders. The company also shut down nearly a dozen games, including big-name titles like Petville and Mafia Wars 2, in an attempt to right the ship. They’ve since shut down an additional seven games.

Shares have plummeted from its $15 high in early 2012 to about $3 after the news broke Monday.

Still, Pincus attempted to sound optimistic about the company’s future.

“I’m confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term,” he said, pointing to the success of mainstays like Farmville and new properties like Running With Friends.

For game news, free codes and more, Like us on Facebook and follow @yahoogames on Twitter!

View Comments (17)