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Zynga CEO confirms 5% staff reductions, studio closures

Zynga CEO confirms 5% staff reductions, studio closures

Tue 23 Oct 2012 10:11pm GMT / 6:11pm EDT / 3:11pm PDT
BusinessSocial

Zynga "sunsetting" 13 games and closing Zynga Boston; UK and Japan studios may close

Update: Zynga CEO Mark Pincus has just issued a note to employees, outlining studio closures, games being canceled, and a sizable round of layoffs resulting in a staff reduction of roughly five percent. You can read his full letter below.

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

Original story:

As Apple was announcing its iPad Mini today, a report of mass layoffs at Zynga Austin was making the rounds.

The news first came from the Twitter account of Justin Maxwell, a friend of some of the affected developers, who said that more than 100 people were let go and given two hours to vacate the building. Shortly afterward, Austin-based Mockingbird Games co-founder and former Zynga senior software engineer Troy Gilbert confirmed that Zynga Austin laid off teams that had been working on its The Ville and Bingo games, leaving only the Zynga Slots developers remaining.

However, that conflicts with a Gamasutra report citing first-hand confirmation that the social gaming publisher was shutting down the studio entirely. The site also says Zynga Boston was affected, and notes rumors have Zynga Chicago caught up in the layoffs as well. Further, one of the laid off workers told Gamasutra that The Ville and an unannounced IP are both "done" as a result of the cuts.

Zynga has undergone a series of struggles in recent months. The social gaming giant's stock price collapsed after a bad quarterly report, prompting an exodus of executive-level talent. There has even been speculation that founder Mark Pincus might want to take the company private again after a disastrous first year as a publicly traded company. Zynga's stock is trading at $2.21 as of this writing, down about 5 percent from its opening price.

GamesIndustry International reached out to Zynga for comment, but had not received a response as of press time.

46 Comments

Christopher Bowen Editor in Chief, Gaming Bus

459 738 1.6
They intentionally fucking scheduled it to interfere with the Apple announcement. Those pricks.

Posted:2 years ago

#1

Fran Mulhern , Recruit3D

863 707 0.8
Popular Comment
Where's Bruce?

Yeah, exactly.

And good luck to those affected.

Edited 1 times. Last edit by Fran Mulhern on 23rd October 2012 10:23pm

Posted:2 years ago

#2
O Brucie...hehe

Posted:2 years ago

#3

Christopher Bowen Editor in Chief, Gaming Bus

459 738 1.6
Fuck Bruce. This is a potentially massive blow to the industry. Bruce is irrelevant.

Posted:2 years ago

#4
Looking for a silver lining....maybe it will help make a leaner, meaner Zynga?

Edit - Hmm, leaner, hungrier to make good games Zynga is what I meant

Edited 1 times. Last edit by Dr. Chee Ming Wong on 23rd October 2012 11:13pm

Posted:2 years ago

#5

Daniel Hughes Studying PhD Literary Modernism, Bangor University

436 496 1.1
Best of luck to those affected by this.

Posted:2 years ago

#6

Christopher Bowen Editor in Chief, Gaming Bus

459 738 1.6
@Dr. Wong - "Hungrier to make good games" - Why would anyone want to play them? If today proved anything, it's that with the sunsetting of 17 games - games that have had significant investments put into them by players - consumers would be flat-out stupid to put their money into these games and expect any ROI. They're not even buying a game; they're renting space for a time, and once that game gets killed for any reason, they cannot get anything out of it. Not only is the money gone, but so is literally everything they put into the game. The money is now pixiedust.

Posted:2 years ago

#7

Bruce Everiss Marketing Consultant

1,692 594 0.4
Acting as a business and facing commercial reality. Excellent, more people should do it.

Posted:2 years ago

#8

David Phan Co-Founder & President, Little Hero Games Inc.

10 3 0.3
I hope those affected by the layoffs and studio closures bounce back as soon as possible with new opportunities.

At the risk of sound melodramatic I think our industry is at a precipitous point whether you're in social, mobile or console game development. It's such a cut-throat and hits driven market that many studios large and small will be grappling with these types of job actions for the foreseeable future. Combined with cheaper development costs "abroad", the games industry is generally not for the faint of heart.

Posted:2 years ago

#9
Its a tricky field to navigate, and mid to alrged sized studios, take a bit of lag to turn from one genre to another, whereas maybe smaller outfits can be agile enough to dodge various pitfalls and change/swap as required as the tide changes.

Posted:2 years ago

#10

John Bye Senior Game Designer, Future Games of London

484 456 0.9
Popular Comment
Bruce - "Acting as a business and facing commercial reality. Excellent, more people should do it."
Show a little respect and class, Bruce. Hundreds of people around the world (possibly including some friends of mine here in the UK) just lost their jobs.

Edited 2 times. Last edit by John Bye on 24th October 2012 9:36am

Posted:2 years ago

#11

Bruce Everiss Marketing Consultant

1,692 594 0.4
I really don't think losing your job in social gaming is such a disaster these days. Lots of people are hiring.

Posted:2 years ago

#12

Kingman Cheng Illustrator and Animator

956 184 0.2
Show a little respect and class, Bruce. Hundreds of people around the world (possibly including some friends of mine here in the UK) just lost their jobs.
+1 :)

Posted:2 years ago

#13

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
I've never played any of their games, but even if you disagree on what makes a good game, or even an original game you've got to appreciate that Zynga managed to do what many others who make games can't, and that's get massive investment from outside the normal funding channels. Games that you might consider better than those made by Zynga are probably more investable as a result of Zynga over the last couple of years. Hopefully the guys who worked there will take their experience and create some new and interesting games from it. No need to hate really.

Posted:2 years ago

#14

Nick Parker Consultant

302 179 0.6
Unfortunately, this is the tempting mistake companies make chasing a dream and running a business with their hearts. The wave comes, an opportunity to go for number one presents itself and before long you have higher overheads than catalogue of games can support. It happened to Infogrames in 2000; they had EA in their sights, bought Hasbro and ramped up staff and luxurious offices and the next year, they started the long downhill ride into debt, then oblivion. People starting out should employ checks and balances to their dreams; try to employ staff carefully, sometimes making them do the job of two people to protect jobs when the wave hits the rocks.

Posted:2 years ago

#15

Sam Brown Programmer, Cool Games Ltd.

235 164 0.7
I really don't think losing your job in social gaming is such a disaster these days. Lots of people are hiring.
Yes, but try telling that to your bank manager, your mortgage provider, etc. I'm amazed I don't get raised eyebrows, a sharp intake of breath and an extra 5% added on to the interest rate every time I tell one of them what I do for a living.

We already know the whole employment cycle of the industry is broken, (like Tim Schafer said recently) but it's been like this for twenty years in my personal experience, so why doesn't anything ever get done about it? If we're going to transition to a contract-based system instead of employment-based, so be it. But let's be honest about it.

Posted:2 years ago

#16

Dan Howdle Head of Content, Existent

281 814 2.9
Popular Comment
Acting as a business and facing commercial reality. Excellent, more people should do it.
"I tell you, she's unsinkable!" – Cpt. Edward Smith.

Posted:2 years ago

#17

Preet Basson Studying Mathematics with Statistics, University of Portsmouth

92 13 0.1
Is it me, but is all news from Zynga since its IPO been bad, but the picture they put up of the CEO always smiling, thats weird right.

Posted:2 years ago

#18

Nick Scurr Senior QA Technician, FreeStyleGames

7 34 4.9
Really? If this was a console related story you'd be wheeling out the 'consoles are doomed' message you seem to constantly spam your fake Twitter followers with.

Posted:2 years ago

#19

John Donnelly Quality Assurance

313 38 0.1
@Dan Howdle if your going to quote someone please get it right.

This is a sad day for the 5% and I hope they end up in new roles quickly.

Posted:2 years ago

#20

Fran Mulhern , Recruit3D

863 707 0.8
Popular Comment
If this is the attitude exhibited by senior staff from Kwalee, then let's hope people give them a wide berth.

"Senior Kwalee executive welcomes social gaming lay offs and suggests others should follow suit."

Edited 1 times. Last edit by Fran Mulhern on 24th October 2012 12:01pm

Posted:2 years ago

#21

robert troughton UK General Manager, Epic Games

223 98 0.4
@Fran: totally agree.
@Bruce: I have to agree with others here... with an attitude like that, I hope other employees at Kwalee don't read this - because if they do, they're very quickly going to realise that you don't value them.

Posted:2 years ago

#22

Fran Mulhern , Recruit3D

863 707 0.8
Popular Comment
Bruce isn't here, he's playing on his Xbox.

Posted:2 years ago

#23
Or the app management store on the ipad mini :)

Posted:2 years ago

#24

Rick Lopez Illustrator, Graphic Designer

1,269 941 0.7
I feel sorry for the employee's. But Im really hoping zynga burns to the ground. I hate how they copied so many games and the ones that they didnt they bought out the developer keeping alot of potentially good games from flourishing. They didnt let smaller developers develope anything and lots a potential games didnt make cause of zynga.

Posted:2 years ago

#25

Kingman Cheng Illustrator and Animator

956 184 0.2
Another +1 Fran :)

Posted:2 years ago

#26

Nick Scurr Senior QA Technician, FreeStyleGames

7 34 4.9
Another +1 for you sir!

Posted:2 years ago

#27

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,284 2,493 1.1
Zynga is what happens when you expect exponential growth to continue forever.

Posted:2 years ago

#28

Bruce Everiss Marketing Consultant

1,692 594 0.4
Zynga still have a cash mountain that others can only dream of and a customer base that others can only dream of.
What they are doing is facing commercial reality and cutting their cloth to suit. This is the best option for their remaining employees, it gives them far more job security.

And how many massive staff culls have EA had?

Obviously I sympathise with those who have lost their jobs. Been there myself. But the social market is thriving and recruiting. I took on a marketing person last week and am interviewing for another this week. This week we also took on a programmer. All without using any recruitment companies.

Posted:2 years ago

#29

Carl Silvers Researcher, Electronic Arts

22 25 1.1
And how many massive staff culls have EA had?
Over the 25+ years we have existed? Quite a few. But then we've been around a long time.

This year, our total head count will be up on last year.

Posted:2 years ago

#30

Keldon Alleyne Handheld Developer, Avasopht Ltd

455 443 1.0
@Fran: +1
Zynga is what happens when you expect exponential growth to continue forever.
Too true.

Edited 1 times. Last edit by Keldon Alleyne on 24th October 2012 3:38pm

Posted:2 years ago

#31

Christopher McCraken CEO/Production Director, Double Cluepon Software

111 257 2.3
Support.com, (IPO’ed in 2000 for $32/share — stock price now $2 to $3) Tribe.net, (defunct, carcass sold to Cisco) Zynga. Why is anyone shocked by this? Pincus is the master of this new type of pump and dump. He's a three (some would say four) time loser, if you take an honest look at the track record of the companies he has been involved with. Build something up quick, make a pile of cash for himself, and then leave the festering ruin of what was and...on to the next thing.

Pincus may be successful in that he's got a lot of money. A lot of people can play the system and make money. Happens on Wall Street (and Warren Buffet's office) every day. But he does not build viable, and long term companies with overall sustainable business. I feel badly for the employees let go today, and I am hopeful we get a few new indies to spring up from this. There are some jobs, but layoffs have been happening a lot lately, and it's harder to get hired when there is a glut on the street.

That said: working for Mark Pincus is like jumping back and forth over a campfire. You really shouldn't be surprised when you get burned. The man has a track record of pumping up value, dumping value into his own pocket, and then buying back the shell only to eventually put down the dog.

This is a guy who has detestable loser written all over him. Why anyone is shocked by the layoffs, how they were announced, and how much money Zynga principles have been enriched on the backs of the suckers...I just don't know.

Posted:2 years ago

#32

Bruce Everiss Marketing Consultant

1,692 594 0.4
@ Carl Sivers: http://www.digitalspy.co.uk/gaming/news/a186169/ea-plans-redundancies-drops-12-games.html


"Electronic Arts has confirmed plans to make 1,500 employees redundant by April next year and also drop 12 development projects to save on costs.

The firm will cut 900 jobs from its studios operation, along with 500 from the publishing business and 100 from corporate positions to achieve an annual saving of around $100 million (£59m). "

Where is the difference between EA and Zynga now?

Posted:2 years ago

#33
@Bruce:

"Where is the difference between EA and Zynga now?"

Quite - most on this board only ever saw Zynga as another EA. I do believe you're the fellah who keeps telling us how they're worlds apart.

Posted:2 years ago

#34
EA is a very establish developer with a wide berth of entertainment products across multiple platforms and genres.
As such, as a global entity it has to mange its assets well across the whole range.
Zynga still have a cash mountain that others can only dream of and a customer base that others can only dream of.
And it can easily evaporate overnight. very very easily

Posted:2 years ago

#35

Nicholas Lovell Founder, Gamesbrief

207 236 1.1
Hold on, you say that Zynga grew too fast and got bloated, but then you say you expect management to act irrationally by downsizing. Surely if your first statement is true, then downsizing is a very rational reaction.

Posted:2 years ago

#36

Keldon Alleyne Handheld Developer, Avasopht Ltd

455 443 1.0
@Nicholas, it all depends on the motives. Cost cutting should be carried out on loss makers, yes I'm sure it would make short term investors happy they will see more annual profits, but long term strategies are important too, so downsizing can be irrational depending on the reasoning behind the decision.

Posted:2 years ago

#37

Fran Mulhern , Recruit3D

863 707 0.8
The difference is EA make proper games:)

Posted:2 years ago

#38
+1 Fran ( true true!) you're getting lots of + 1 s today Fran (tastic).

Posted:2 years ago

#39

Christopher Bowen Editor in Chief, Gaming Bus

459 738 1.6
It's not our business to determine what a "proper" game is. I think that the past two or three years have destroyed what that ideal is, and I think that goes towards a large part of Bruce's historically poorly worded arguments.

I'm most angry at the timing, which I have to admit is good business sense even if the cold-bloodedness of it makes the gamer in me very, very angry. They timed the announcement right as the iPad announcement was happening, so naturally it got buried to anyone other than us. One day later, their numbers drop. So now, it looks like they've preemptively solved their problem. "Forget our lowered guidance! We just cut a lot of jobs! And stopped a lot of old games!" (EDIT: It 'aint working. ZNGA is down 3%)

I think what's most notable is that in their own earnings call, Mark Zuckerberg of Facebook just face-slapped Zynga. The article I'm linking, and its writer, are crap, but the point remains: http://money.msn.com/top-stocks/post.aspx?post=d1449ce2-9b93-420a-b86e-c400b4d5d69f

Edited 1 times. Last edit by Christopher Bowen on 24th October 2012 9:22pm

Posted:2 years ago

#40

Gary LaRochelle Digital Artist/Game Designer, Flea Ranch Games

74 72 1.0
(EDIT: It 'aint working. ZNGA is down 3%)
Zynga's stock is up over 14% in after hour trading (to $2.42 after reaching an all time low of $2.10). Mainly because Zynga announced a stock-buy-back plan and a partnership with the gambling site bwin.com.

If Zynga was smart, they would fire the metric people first. They seem to be the ones getting in the way of making good games.

Edited 3 times. Last edit by Gary LaRochelle on 24th October 2012 10:18pm

Posted:2 years ago

#41

Fran Mulhern , Recruit3D

863 707 0.8
I know, I feel loved:)

Posted:2 years ago

#42
@ Fran - don't u sleep?

Posted:2 years ago

#43

Nuttachai Tipprasert Programmer

79 60 0.8
Where is the difference between EA and Zynga now?
The difference is, if this news related to EA, some people will start spamming "traditional games business is doomed" again.

Back to the main topic. Despite my hatred toward Zynga, I feel very bad for people who lost their jobs. Marc Pincus and other higher up executives should be the one who got fire instead of these poor guys, because, it's their fault their money drying up.

Edited 1 times. Last edit by Nuttachai Tipprasert on 25th October 2012 8:55am

Posted:2 years ago

#44

Dan Howdle Head of Content, Existent

281 814 2.9
@John Donnelly
"@Dan Howdle if your going to quote someone please get it right."
The point was not to quote, the point was the communication of a metaphor in its clearest possible form. That's what writers do, you know. They make shit up to carry a point clearly to the reader. You learn something new every day, eh?

Posted:2 years ago

#45

Fran Mulhern , Recruit3D

863 707 0.8
@ Chee. Sometimes:)

Posted:2 years ago

#46

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