Zynga has reportedly closed two offices in the U.S. today, laying off more than 500 staff in the process – almost a fifth of the company’s employees. The move, combined with extra infrastructure spending cutbacks, is expected to save the publisher some $80 million in costs. (Zynga promises “generous severance packages” for the laid off employees, to “reflect our appreciation for all of their work”.)
None of us ever expected to face a day like today, especially when so much of our culture has been about growth. 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.
After these (significant) changes, Zynga is refocussing its efforts on mobile, rather than on web-based social games as it has in the past. Sources report that the company’s Facebook games have been dropping faster than the mobile space is keeping up, prompting a major reshuffle.
Following the updates, Zynga is projecting a net loss of between $28.5 and $39 million, and anticipates the company will perform “in the lower half” of the outlook range provided to investors last month.