Zynga plans to shed 5% of its workforce, as the embattled games developer looks to save money following waning demand for some its its titles. In an email to staff, founder Mark Pincus said the company would close its Boston studio and consider closing studios in the UK and Japan. It is be the first […]
Zynga plans to shed 5% of its workforce, as the embattled games developer looks to save money following waning demand for some its its titles. In an email to staff, founder Mark Pincus said the company would close its Boston studio and consider closing studios in the UK and Japan. It is be the first ever round of job cuts at Zynga, which is based in San Francisco and has about 3,200 employees.
The decision was part of an “overall cost reduction plan”, Pincus wrote.
Zynga is the company behind Farmville, a social-media game that at its peak attracted 82 million players a month. It bought rival company OMGPOP earlier this year for a reported $200m (£121m).
OMGPOP developed the smartphone app Draw Something!, a game industry tracker Appdata said was at one point attracting more than 13.3 million players a day.
Zynga also said it will dispose of 13 older games and reduce its investment in the game The Ville.
The Ville was a spin-off from an earlier success for Zynga, called YoVille.
It will close its studio in Boston and may close studios in Japan and the UK. It runs 18 studios worldwide.
Pincus thanked staff for their “amazing contribution” to the company. “We don’t take these decisions lightly,” he said in the email. “We recognise the impact to our colleagues and friends who have been on this journey with us.”
The firm’s slumping stock rose more than 3% in aftermarket trading following the announcement, which came a day ahead of Zynga’s third-quarter earnings report.
The stock may also have received a boost from a better-than-expected earnings report on Tuesday by Facebook. Zynga is by far the leading gaming company on Facebook.
Zynga said earlier this month that it expected to post a third-quarter loss due to weak demand for some of its titles. It said its revenues would likely be nearly flat compared to the same period last year.
The company also announced that it would adopt some broad cost-cutting measures to help improve its performance.
Zynga makes five of the 10 most popular games on Facebook, according to researcher AppData. It also accounts for about 12% of Facebook’s total revenue, so the two companies’ fortunes are somewhat tied together.
Zynga’s shares rose seven cents to $2.27 (£1.42) in after-hours trading.
The company went public in December last year at $10 per share and its stock price peaked in March at $15.91. The stock has lost about 85% of its value since then.
