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Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

October 23, 2012 at 2:55 PM

Zynga doing layoffs, closing studios; Seattle intact

Struggling social games giant Zynga is announcing sweeping layoffs and studio closures but it appears the company’s engineering office in Seattle was largely spared.

Word of the layoffs surfaced earlier and was confirmed in an internal memo to employees from founder Mark Pincus.

The memo said the company is cutting 5 percent of its full-time workers and closing its studio in Boston. That would be around 160 of its roughly 3,200 positions.

Also proposed is the closure of studios in Japan and the United Kingdom.

The company is phasing out 13 older games and cutting back investment in The Ville, leading to layoffs at its Austin, Texas, studio.

Zynga’s Seattle office is relatively safe because it’s working on new game genres such as arcade titles, not the older franchises that are being trimmed back.

Zynga opened the Seattle office in Pioneer Square last year and now has about 60 employees here. It was planning to expand the office, at least before the company lost some of its momentum. Facebook’s earnings report confirmed the slide, disclosing that its revenue from Zynga were down 20 percent.

Here’s the Pincus memo:

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 lightlym 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

Comments | More in | Topics: facebook, Facebook, seattle

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