Zynga has halted trading and has reportedly decided to fire 520 members of the company’s staff, or 18%. Here’s what you need to know.
1. Zynga has been Struggling Since It’s IPO
As you can see from this chart, Zynga has been falling since the company went public. In December 2011, after riding the coattails of Farmville and other popular social network games that Zynga used to specialize in, the company went public, starting out at $9.50 a share. Now, the value of the company has dropped a lot, falling to around $3 currently. Due to the impending announcement about Zynga’s downsizing, the company has halted trading to prevent even more of a drop.
2. 520 Members Are Being Cut; They’ll Be Shutting Down Offices in NY and LA
Polygon reported that Zynga is cutting 18-percent of its workforce, which included 55 employees from Zynga LA. A now deleted tweet from an employee of Zynga LA confirmed the news and his release from the company. Three of the company’s studios(Los Angeles, Dallas, and New York are also being closed. The company-wide e-mail below was sent by Mark Pincus to 2,900 members of the company:
To our Zynga Community,
Today is a hard day for Zynga and an emotional one for every employee of our company. We are saying painful goodbyes to about 18% of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company.
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.
These moves, while hard to face today, represent a proactive commitment to our mission of connecting the world through games. Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect. By reducing our cost structure today we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences.
Because we’re making these moves proactively and from a position of financial strength, we can take care of laid off employees. We’re offering generous severance packages that reflect our appreciation for all of their work and we hope this will provide a foundation as they pursue their next professional steps.
Although these are hard decisions, I’m confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term. I’m encouraged by our recent progress. Running With Friends is a great example of the quality player experience we can deliver, already receiving an average 4.5 app star rating from 22,000 players in less than one month after launching. Our FarmVille franchise teams continue to innovate and deliver ground breaking new social experiences like County Fair which, despite only being available on the web, is engaging 39 million monthly players.
I want to thank every one of you for the spirit, creativity and energy that you’ve invested in Zynga. You’ve reintroduced a generation of people to gaming and through these games offered them new ways to connect with their families, make new friends and even sometimes find love.
Everyone will be affected by these changes and I’m sure there will be many follow up questions to this email. If you have specific questions relating to your project or team, please talk to your manager. For any other feedback or thoughts feel free to email me directly.
Mark
3. They’ll Start Focusing on Mobile Gaming
Zynga has opted to enter he mobile space of gaming, due to the substantial growth seen in this gaming space.
4. Zynga Will Save $80 Million
Business Insider reported that this recent move by Zynga will result in the company saving $70-$80 million after everything is said and done.
5. Is This The End of Zynga?
Our very own tech expert, Ian Kar, offered his thoughts on how this could spell the end of Zynga:
This could spell the end of Zynga, if the company is unable to successfully create mobile games. Clearly, mobile is the future of technology, but, somehow, Zynga managed to miss the boat entire (they were probably busy creating Farmville 900). Zynga (and ex-partner Facebook) are horror stories for tech startups thinking about an IPO; Zynga showed that you can’t convince Wall Street your company is valuable by simply having a lot of users. Companies like Facebook, Google, and Apple are leading the charge in mobile development — which is what makes them the biggest companies in Silicon Valley. If Zynga can’t catch up, they’ll be forgotten about pretty quickly. The tech industry is very lucrative, but only if you can predict trends and the needs of customers. Zynga shows that if you can’t do that, it’s hard to compete.
