Zynga shuts down three US studios to stay afloat in the social gaming market.
Dark days ahead for the social gaming giant, as the company announced via their Twitter and PR pages, that 520 employees would be laid off around the country. This included big studios in Los Angeles, Dallas and New York, where developers and artists were already working on new and stabilising current Zynga titles. Major cuts from the developer included 55 employees being let go from Zynga LA, who developed the Facebook game Empires & Allies. This may have been due to the slated cancellation of the game for June 17th of this year.
To sadly monetize the cost of the layoffs, the redundant employees will result in a saving of “$70 million to $80 million.” It is apart of a continuing strategy to keep the company afloat past August of this year. Zynga are also expected to post a projected net loss of $29-39 million in the second quarter, which could damage their chances of purchasing or maintaining most of their titles past 2013.
Unfortunately, this is another casualty in Zynga’s restructure. It began in February, when Zynga closed their Baltimore-based offices and consolidated other locations to cut costs. This lead to the merger of Austin and McKinney-based studios to the (now-defunct) Dallas location while centralizing various New York area studios into one. Last year, Zynga also closed its Japan office, only two months after notifying employees of additional closures in Boston and London.
When Polygon contacted the publisher for comment, Zynga replied with a memo to employees from CEO and founder Mark Pincus.
To our Zynga Community,
Today is a hard day for Zynga and an emotional one for every employee of our company. We are saying painful goodbyes to about 18% of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company.
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. 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.
These moves, while hard to face today, represent a proactive commitment to our mission of connecting the world through games. Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect. By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences.
Because we’re making these moves proactively and from a position of financial strength, we can take care of laid off employees. We’re offering generous severance packages that reflect our appreciation for all of their work and we hope this will provide a foundation as they pursue their next professional steps.
Although these are hard decisions, 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. I’m encouraged by our recent progress. Running With Friends is a great example of the quality player experience we can deliver, already receiving an average 4.5 app star rating from 22,000 players in less than one month after launching. Our FarmVille franchise teams continue to innovate and deliver ground breaking new social experiences like County Fair which, despite only being available on the web, is engaging 39 million monthly players.
I want to thank every one of you for the spirit, creativity and energy that you’ve invested in Zynga. You’ve reintroduced a generation of people to gaming and through these games offered them new ways to connect with their families, make new friends and even sometimes find love.
Everyone will be affected by these changes and I’m sure there will be many follow up questions to this email. If you have specific questions relating to your project or team, please talk to your manager. For any other feedback or thoughts feel free to email me directly.
It’s always tragic to see so many people lose their jobs in the video game industry. Here at VR-Zone, we hope the employees are safe and find new jobs soon.