Zynga CEO confirms 5% staff reductions, studio closures

Update: Zynga CEO Mark Pincus has just issued a note to employees, outlining studio closures, games being canceled, and a sizable round of layoffs resulting in a staff reduction of roughly five percent. You can read his full letter below.

Team,

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. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we've had to make some tough decisions around products, teams and people. I want to fill you in on what's happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we're also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios. Additionally, we are reducing staffing levels in our Austin studio. All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce. We don't take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us. We appreciate their amazing contributions and will miss them.

This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.

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.

Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader. Our success has come from our dedication to a simple and powerful proposition - that play is not just something people do to pass time, it's a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company. Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting. I'm confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

Original story:

As Apple was announcing its iPad Mini today, a report of mass layoffs at Zynga Austin was making the rounds.

The news first came from the Twitter account of Justin Maxwell, a friend of some of the affected developers, who said that more than 100 people were let go and given two hours to vacate the building. Shortly afterward, Austin-based Mockingbird Games co-founder and former Zynga senior software engineer Troy Gilbert confirmed that Zynga Austin laid off teams that had been working on its The Ville and Bingo games, leaving only the Zynga Slots developers remaining.

However, that conflicts with a Gamasutra report citing first-hand confirmation that the social gaming publisher was shutting down the studio entirely. The site also says Zynga Boston was affected, and notes rumors have Zynga Chicago caught up in the layoffs as well. Further, one of the laid off workers told Gamasutra that The Ville and an unannounced IP are both "done" as a result of the cuts.

Zynga has undergone a series of struggles in recent months. The social gaming giant's stock price collapsed after a bad quarterly report, prompting an exodus of executive-level talent. There has even been speculation that founder Mark Pincus might want to take the company private again after a disastrous first year as a publicly traded company. Zynga's stock is trading at $2.21 as of this writing, down about 5 percent from its opening price.

GamesIndustry International reached out to Zynga for comment, but had not received a response as of press time.