Zynga to Lay Off 18 Percent of Staff by August
June 3, 2013 8:06 PM
comment(s) - last by
This equates to about 520 employees
Zynga announced today that it's making major cuts to its workforce and even closing down offices around the U.S.
Zynga said it is laying off 18 percent of its workforce (or about 520 employees) by August 2013. It currently has about 2,900 employees.
The latest layoffs will affect all parts of the
social gaming company
. San Francisco-based Zynga will even have to close its offices in Dallas, Los Angeles and New York.
The layoffs are expected to save Zynga about $70 million to $80 million.
Zynga also announced that it expects a loss of $28.5 million to $39 million in the second quarter.
The problem with Zynga is that it's having a hard time taking on the mobile space. Its Web business has been declining faster than expected, and its mobile efforts aren't enough to fill the gap.
Zynga has also experienced financial trouble since its initial public offering (IPO). It filed its Form S-1 registration statement with the U.S. Securities and Exchange Commission (SEC) on July 1, 2011 and began trading December 16, 2011 at $10 per share. However, stock fell throughout 2012, hitting as low as $2.27 per share by October.
Another issue for Zynga is that its
casual, social games
don't seem to have long-term viability. It has had to axe 18 games in recent months -- including PetVille, FishVille, Mafia Wars 2 and Vampire Wars -- due to reduced popularity (and to make room for new games).
While Zynga still has a few successful games, like FarmVille, they haven't moved to the mobile space quickly enough, and players have increasingly lost interest over the years.
"None of us ever expected to face a day like today, especially when so much of our culture has been about growth," Zynga CEO Mark Pincus said in an e-mail message to employees Monday. "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."
This isn't Zynga's first set of layoffs. The company laid off 150 employees last fall as well.
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RE: No surprise here
6/4/2013 3:11:08 PM
Thats the problem with Zanga. They make an game and throw it at the wall and wait to see it stick (2-3% conversion of users into paying users)
So most likely the games you are talking about are the ones that did not gain enough traction to make it worth while. That being said maybe traction would have been better if they were not so buggy but either way.
Now look at Kixeye, Sure their games still have bugs but they focus on a few games rather than a bunch of games. And it shows. they get around 7-8% conversion on users unlike zangas 2-3%.
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