zynga11Zynga, 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).

Mark Pincus
Mark Pincus

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.

Mark

Comments

  • Oracle

    And some of us have been predicting this for a long time, long before they went public. Zynga’s business is fundamentally flawed, based on tricking people into paying for nothing.

    • http://www.adamlieb.me/ Adam Lieb

      Zynga creates vast amounts of value for tens of millions of gamers. There is no trick to their business. Zynga mints money, their growth has just plateau faster than they anticipated, their workforce needs to match the business and it currently doesn’t. There is no problem with their business model.

      • Paul Uhlir

        Adam, you had me 100% until the last sentence.

    • cfo

      Bingo! Oracle is 100% correct. I think most of us have been tricked into buying something we didn’t intend to buy; invited a friend to play who we did not intend to invite; etc., etc. by these folks. I for one dumped ALL my Zynga games because of this deceitfulness and trickery.

  • Barbara Lunghi

    Zynga games are good and funny, BUT… you could not expect people to sit in front of their own PC’s waiting to harvest plants or animals or whatever. Missions were increasing and very hard to match or finish, then we had almost 3 different farms to manage, each of them with separate missions… one day I’ve decided I’ve had enough and I’ve abandoned the game. I miss it, but I know it’s too hard to manage.

    • GrowingJadePlant

      I rather take care of my own garden with real food and soil than wasting time playing games.
      Time to pluck some fresh strawberries….

    • Kelly

      Same here! It all takes so much time that I had to cut back to only one game. It’s still Zynga but it’s not my farm. Playing their mobile game is aweful. I’m hoping they’ll do as planned and invest in mobile while keeping the others at a high quality but steady place. I don’t need 3 farms I just need 1 without a bunch of bugs and special pop-ups.

  • Guest

    Congrats to the Zynga Seattle office. They’re doing the work we need.

  • guest

    Isn’t it kind of Mark Pincus’s job to expect a day like today?

  • shocked
  • Kelly

    Plus they need to find something new and cool. None of my real friends play fb games. It’s just a general rule of thumb that I delete everyone I know in person when sending game requests on fb. So what can Zynga make or do that is favorable and shareable? They need to figure it out otherwise I don’t see them being a leader again ever.

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