Zynga is cutting about 5% of its workforce, and is ‘sunsetting’ 13 of its older games, the company’s founder and CEO Mark Pincus said Tuesday in a note to employees.
The games developer is also shutting down its studio in Boston, and may also close its studios in Japan and the UK, Pincus said in the letter which was also posted online. It also plans to cut investment in The Ville, a game it launched recently, and is reducing staff in its Austin studio. The company is also planning small reductions in partner teams.
The note comes a day ahead of Zynga’s quarterly earnings conference call. The company said earlier this month that it expected to report losses for the third quarter ended 30 September, and lowered its outlook for the full year 2012.
"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," Pincus said in the note. The overall cost reduction plan also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.
The reductions, coupled with more stringent budget and resource allocation around new games and partner projects, are expected to improve the game developer’s profitability and allow it to reinvest in games and its Zynga network on Web and mobile, Pincus said.
On Tuesday, Facebook’s CEO Mark Zuckerberg said that gaming on Facebook is not doing as well as he would like. Payments revenue from Zynga however dropped 20% during the third quarter compared to last year, while revenue from other games grew.
Zynga said earlier this month it expects to report revenue in the range of $300 million to $305 million and bookings in the range of $250 million to $255 million for the third quarter. It also expects to report a net loss of between $90 million and $105 million.
In June, it announced the Zynga With Friends network, a unified experience that will connect all players on any platform, from Facebook to iOS and Android to its own gaming website Zynga.com, a move that was also seen as a bid to get away from its dependence on Facebook.
Earlier this month Zynga’s Irish operation posted a post-tax profit of $3.9 million off a gross revenue of $198.4 million.
IDG News Service
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