Zynga, the once thriving social gaming company, is now in a tough situation, as they have announced that they’re laying off 18% of their workforce, as well as shutting down three of their studios, which include New York City, Los Angeles, and Dallas locations. The company called the decision “necessary to move forward.”
18% of Zynga’s workforce equals around 520 employees, all of which will be receiving “generous severance packages.” The company’s founder and CEO Mark Pincus confirmed the layoffs today, and although he doesn’t mention specific studio closures, it’s said that the three studios mentioned above received the ax.
Zynga says the layoffs and downsizing will save the company approximately $70 million to $80 million total, and the entire process will be completed by August later this year. Zynga also says that they expect a net loss of $39 million to $28.5 million for their second quarter earnings, and trading of Zynga shares was halted on Nasdaq since the announcement of the downsizing.
Zynga has been experiencing some difficulties for quite some time now, and this certainly isn’t the company’s first big layoff. The game developing company quietly laid off a handful of employees back in October during Apple’s iPad mini event, most likely to keep attention off of them while Apple was stealing the spotlight for the day, but that didn’t quite work out so well.
Later in January, Zynga shut down its Japan studio, and the very next month, they closed down their Baltimore studio in order to consolidate their offices. Zynga said this consolidation didn’t amount to any significant layoffs, but a closing of a studio is never a good sign. Today’s layoffs aren’t making the situation better either. Frankly, we’re curious as to how long Zynga can tread water before they drown, but if they’re able to crank out popular social games with a smaller team and less resources, then more power to them.