Zynga, the one-time high-flying maker of social games such as FarmVille and Words With Friends, is cutting 18 percent of its workforce and shutting down offices in New York, LA and Dallas as it continues to struggle with the shift toward mobile gaming.
“None of us ever expected to face a day like today, especially when so much of our culture has been about growth,” wrote CEO Mark Pincus in a blog post. “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.”
Zynga also operates an engineering office in Seattle, and it’s unclear whether there will be any impact at that Pioneer Square location. Seattle avoided the company’s last round of layoffs, which occurred in February. (Update: We are hearing that the Seattle office will remain open).
About 520 people are losing their jobs, reports Kara Swisher at All Things D. The layoffs, which are expected to be completed by this August, are expected to save the company $70 million to $80 million on an annual basis.
Zynga’s stock is down more than 43 percent in the past year. And they are falling on the announcement of the layoffs, down more than 10 percent in trading today. Earlier this year, Zynga said that it expected a net loss of $26 million to $36 million during the second quarter. The company’s revenue fell by 18 percent year-over-year during the first quarter, coming in at $264 million.
Here’s the full letter that Zynga CEO Mark Pincus posted on their blog:
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 22,700 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.