Zynga shutters Boston office, slashes staff, sunsets games
Zynga (NASDAQ:ZNGA) is slashing staff and pulling the plug on more than a dozen games in advance of what is expected to be a grim third-quarter earnings report.
An internal email from co-founder and CEO Mark Pincus obtained by TechCrunch confirms Zynga will shutter its Boston studio and has proposed closing its Japan and UK offices. "Additionally, we are reducing staffing levels in our Austin [Texas] studio," Pincus states, noting Zynga also will make "a small number of partner team reductions." In all, the social gaming firm will let go about 5 percent of its fulltime workforce.
Zynga also will sunset 13 games--titles are currently unknown, although Pincus notes the company is "significantly reducing [its] investment in The Ville," a Sims-like title introduced this June. "These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile," Pincus said.
Zynga will report final results for the third quarter on Wednesday. Earlier this month, the firm lowered its estimated annual bookings to $1.09 billion to $1.1 billion, down from the previous forecast of $1.15 billion to $1.225 billion. In addition, Zynga anticipates third quarter revenues between $250 million and $255 million, down from its previous expectations of $300 million to $305 million. Zynga's results also will include a write-down of $85 million to $95 million of mobile gaming firm OMGPOP, creator of Draw Something. Zynga purchased OMGPOP for about $180 million in March 2012.
Zynga stock has been in freefall since the company went public in late 2011. The firm reported second quarter 2012 losses of $22.8 million, which executives blamed on recent algorithmic changes made by social network Facebook (NASDAQ:FB), as well as diminishing mobile traffic for Draw Something.
Zynga has also suffered a series of high-profile executive exits. Chief Operating Officer John Schappert departed in August, just days after he was stripped of his responsibilities as head of social gaming development, and Chief Creative Officer Mike Verdu soon followed to launch his own startup. Bill Leinwand, the CTO of infrastructure cited as a catalyst behind Zynga's shift away from Amazon's (NASDAQ:AMZN) cloud services to its internal Z Cloud platform, has taken a similar role at enterprise IT firm ServiceNow. Last month, Jeff Karp resigned as chief marketing and revenue officer.
Earlier this week, All Things D reported Zynga is developing its own advertising platform in an effort to boost revenues but also to enhance the social gaming network's appeal to third-party developer partners. The platform, which will span its mobile properties and its Facebook titles, will offer promotional capabilities like banner ads, interstitials, video pre-rolls and incentivized downloads. Zynga generated $41 million in advertising revenue during the second quarter.
- read this TechCrunch article
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