updated 04:44 pm EDT, Mon June 3, 2013
Move to save troubled developer up to $80 million annually
Game developer Zynga today announced that it has commenced laying off 520 employees, and closing offices in Dallas, Los Angeles, and New York, with an estimated completion date of the moves by the end of August. The moves are described as "substantial cost reductions" and "a hard day for Zynga" but "necessary to move forward" according to Zynga CEO Mark Pincus.
The shift to all-mobile development was forced by "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," Pincus said, "which is where social games are going to be played."
Layoffs and reorganizations are expected to save the company between $70 million and $80 million. Pincus believes that "our strategy of building leading franchises and supporting them with the largest network is the right one for the long term" and noted success in apps like Running with Friends, and FarmVille.
After losing a large number of gamers on Facebook, Zynga laid off more than 100 employees in three locations in October. Two insider trading suits are still pending against the company, and follow investigations of Zynga staffers and CEO Mark Pincus. Pincus and other high-ranking Zynga employees are accused of selling 43 million shares of stock in April at $12 per share, when employees and other early investors were banned from selling until May. By then, the stockholders claim, the business had already begun to slump.