Farmville creator Zynga is to lay off 18pc of its workforce – approximately 520 people – as part of a dramatic restructure to transform the company from a web company into more of a social and multiplayer operation. While the company’s New York, LA and Dallas offices are to bear the brunt of the cuts, the company’s CEO Mark Pincus last night in a blog said the impact of the layoffs will be felt across every group in the company.
San Francisco-headquartered Zynga employs 2,900 people worldwide in offices across the world. The company employs around 100 people in Dublin and it is not yet clear at the time of writing what the impact of the cuts will be there.
The cuts will save Zynga US$80m in payroll costs and the company aims to complete the layoffs by August.
Farmville creator Zynga embodied much of the fast growth shutzpah of Silicon Valley start-ups of the past five year but had a rocky IPO that only served to highlight weaknesses in its business model.
Despite the success of major game brands from Zynga on social media sites like Facebook and a loyal gamer audience, it could not ignore the reality that gaming is now a multi-screen experience, driven by the increased sophistication of smartphones and tablet devices, even TVs.
In a blog last night Pincus said the company needs to restructure and focus on being the leading social gaming service on mobile and multiplatform and not just on the web.
“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,” Pincus said.
He said that because the company is making the restructure happen from a position of financial strength it will be able to compensate the laid-off employees properly, promising generous severance packages.
Pincus said one thing that won’t change will be the company’s strategy of building popular franchises with large networks to support them.
“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 22,700 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,” he said.
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