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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.

50 Comments

Christopher Bowen
Editor in Chief

412 579 1.4
They intentionally fucking scheduled it to interfere with the Apple announcement. Those pricks.

Posted:A year ago

#1
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:A year ago

#2
O Brucie...hehe

Posted:A year ago

#3

Christopher Bowen
Editor in Chief

412 579 1.4
Fuck Bruce. This is a potentially massive blow to the industry. Bruce is irrelevant.

Posted:A year 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:A year ago

#5

Daniel Hughes
Studying PhD Literary Modernism

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

Posted:A year ago

#6

Christopher Bowen
Editor in Chief

412 579 1.4
@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:A year 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:A year ago

#8

Andreas Gschwari
Senior Games Designer

556 607 1.1
@Christopher: not really sure why you personally seem to be upset by this, but (at the risk of sounding old and boring) - language please? And disagreements with Bruce aside (we all have them) - be nice? maybe?

Regarding the story: it should really not come as a surprise that they used the Apple announcement to cover the press release and prevent massive trending. At the same time, as much as hate to admit it, i have to agree with Bruce. From a business point of view all of their actions make sense. Cost cutting, trying to avoid negative press etc.

It's a pain for the people. The only thing i can hope is that less small, independant studios can resist the lure of a quick pay off and avoid selling out to companies like Zynga. In the end many studios with a good idea and a successfull IP chose to sell out and become part of the Zynga machine - the risk comes with the cash.

Posted:A year ago

#9

David Phan
Co-Founder & President

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:A year ago

#10
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:A year ago

#11

John Bye
Senior Game Designer

480 451 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:A year ago

#12

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:A year ago

#13

Kingman Cheng
Illustrator and Animator

950 166 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:A year ago

#14

Sandy Lobban
Founder and Creative Director

314 206 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:A year ago

#15

Nick Parker
Consultant

280 144 0.5
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:A year ago

#16

Sam Brown
Programmer

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:A year ago

#17

Dan Howdle
Head of Content

280 810 2.9
Popular Comment
Acting as a business and facing commercial reality. Excellent, more people should do it.
"I tell you, she's unsinkable

Posted:A year ago

#18

Preet D Bass
student

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:A year ago

#19

Nick Scurr
Senior QA Technician

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:A year ago

#20

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:A year ago

#21
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:A year ago

#22

Andreas Gschwari
Senior Games Designer

556 607 1.1
+1 Fran :)

Posted:A year ago

#23

robert troughton
Managing Director

219 93 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:A year ago

#24
Popular Comment
Bruce isn't here, he's playing on his Xbox.

Posted:A year ago

#25
Or the app management store on the ipad mini :)

Posted:A year ago

#26

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:A year ago

#27

Kingman Cheng
Illustrator and Animator

950 166 0.2
Another +1 Fran :)

Posted:A year ago

#28

Andreas Gschwari
Senior Games Designer

556 607 1.1
@Rick: i am by far not a Zynga fan, but what makes you say that they did not let smaller developers create anything and how can you state that lots of potential games did not get made because of Zynga? Is that your opinion or do you have any examples?

Posted:A year ago

#29

Nick Scurr
Senior QA Technician

7 34 4.9
Another +1 for you sir!

Posted:A year ago

#30

Jim Webb
Executive Editor/Community Director

2,246 2,233 1.0
Zynga is what happens when you expect exponential growth to continue forever.

Posted:A year ago

#31

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:A year ago

#32

Carl Silvers
Researcher

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:A year ago

#33

Keldon Alleyne
Handheld Developer

434 406 0.9
@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:A year ago

#34

Christopher McCraken
CEO/Production Director

110 251 2.3
Support.comTribe.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:A year ago

#35

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.



Where is the difference between EA and Zynga now?

Posted:A year ago

#36
@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:A year ago

#37
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:A year ago

#38

Nicholas Lovell
Founder

185 170 0.9
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:A year ago

#39

Keldon Alleyne
Handheld Developer

434 406 0.9
@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:A year ago

#40
The difference is EA make proper games:)

Posted:A year ago

#41
+1 Fran ( true true!) you're getting lots of + 1 s today Fran (tastic).

Posted:A year ago

#42

Christopher Bowen
Editor in Chief

412 579 1.4
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:A year ago

#43

Gary LaRochelle
Digital Artist/Game Designer

59 52 0.9
(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:A year ago

#44
I know, I feel loved:)

Posted:A year ago

#45
@ Fran - don't u sleep?

Posted:A year ago

#46

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:A year ago

#47

Dan Howdle
Head of Content

280 810 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:A year ago

#48
@ Chee. Sometimes:)

Posted:A year ago

#49

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