Zynga’s Belt-tightening Includes 5 Percent Layoffs

After game maker Zynga awarded stock options in July in an effort to retain its talent, those same folks could be getting pink slips.

The company announced Tuesday plans to cut its 3,200-employee work force by 5 percent – about 160 people. It plans to close studios in Boston, the UK and Japan, and reduce investment at its studio in Austin, Texas, according to reports.

It also said it will ditch 13 older games – it hasn’t said which ones – and sunset “The Ville,” the game that Electronic Arts sued over, claiming copyright infringement. “The Ville” debuted in June, but has not won that many fans, according to Business Insider.  “Sunsetting” means it will keep the game live, but discontinue development on it.

In Facebook’s earnings call Tuesday, CEO Mark Zuckerberg noted the decline in revenue from Zynga, just 7 percent this quarter, down from 10 percent the prior quarter.

At The Telegraph, writer Willard Foxton dishes more on the reportedly toxic work environment at the game startup. And just to keep things sounding ominous, he speculates on whether this could be a sign of the second dot-com crash.

He writes about why laying off creative types is a really bad idea:

Zynga is not a New Age social tech company – it’s to all intents and purposes on the same business model as a Hollywood studio, the sort of business that survives on big hits. If a business like this stops delivering hits, it dies. … Unless that big hit comes soon, Zynga is finished – and when one big dotcom goes over, others will inevitably follow, as investors rush for the exits.