Zynga Lays off 520 in Attempt at Turnaround

Susan Hall

Zynga announced Tuesday that it’s cutting 18 percent of its staff – 520 positions – as it tries to reboot in mobile, according to All Things Digital.

It plans to close offices in New York, Los Angeles and Dallas. It still will have large operations in San Francisco; Beijing, China; and Bangalore, India, and smaller offices in Seattle and San Diego.

Though it’s expected to save $70 million to $80 million, it advised investors it will lose between $39 million and $28.5 million in the second quarter. Its shares dropped 12 percent to $2.99 on the news, before recovering slightly. However, its stock price has plummeted more than 43 percent in the past year, GeekWire reports.

"None of us ever expected to face a day like today, especially when so much of our culture has been about growth," CEO and founder Mark Pincus wrote in a blog post. "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."

The company’s original success with games such as FarmVille was closely tied to Facebook, though it has been trying to move players to its own website. Facebook has its own difficulties in the move to mobile, though its first-quarter game revenue was its best ever, according to The Next Web.

A Huffington Post piece outlines the pressure on Zynga to continually produce the next big thing, though it attributes some of Zynga’s woes to going for the lowest common denominator and failing to deal with players’ concerns.

The pressure to create has produced an intense culture at the company in which it has struggled to keep workers happy.

Meanwhile, it has been looking to gambling as its potential next big thing. Though the Justice Department cracked down on Internet poker in 2011, Ultimate Gaming, a Las Vegas-based casino operation, is offering the first fully legal U.S. real-money poker website. Late last year, Zynga filed an application for a license with the Nevada Gaming Control Board, a process that could take up to 18 months, according to USA Today.

In April, Zynga launched online poker, slot machines, blackjack and other games in the UK.

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