Zynga Confirms 5 Percent Staff Reduction, 13 Game Closures

Zynga’s founder and CEO Mark Pincus has just sent out a letter to the troops detailing the magnitude of the cutbacks today, which include a 5 percent reduction in staff.

“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,” he told employees in a letter.

More details will be provided on the earnings call tomorrow, but the high-level takeaway is that the troubled social games maker will be “sunsetting” 13 games, which seems like a lot, and closing the Boston office. It is also proposing closures of the Zynga Japan and U.K. studios.

As previously reported, it confirmed it was reducing staffing levels at its Austin studio, where The Ville was developed.

With as many as 3,400 on its payroll, a 5 percent layoff works out to about 170 employees being let go.

And on what was already a rough day, it didn’t help that Facebook CEO Mark Zuckerberg pointed to Zynga’s struggles as one of the drags on his payments business.

Here’s the note that was provided by a Zynga spokesperson:

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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