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Zynga lays off five percent of employees during Apple's event, shutters Boston studio [update: Mark Pincus's memo to staff]

Zynga lays off five percent of employees during Apple's event, shutters Boston studio [update: Mark Pincus's memo to staff]


The word comes a day before Zynga is expected to report lousy earnings

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the ville
the ville

There were mass layoffs at Zynga in Austin today, according to a former employee of the company, who said the announcement came during today's widely-publicized Apple iPad Mini announcement.

The company allegedly laid off more than 100 employees and shut down The Ville, a neighborhood-based reality simulation game that was released in June, a former employee told The Verge in an email. The company also laid off the entire team for a new unreleased game; both games "are now done," the ex-employee said.

The Ville had a strong debut, but its popularity dropped off drastically earlier this month. The game was also the target of a lawsuit filed in August by Electronic Arts, which alleged that Zynga had copied its game The Sims Social. Zynga counter-sued in September.

The news comes a day before Zynga is slated to announce its third quarter earnings results, which are projected to be another disappointment for the company's slumping stock.

We reached out to Zynga and were told the company will have a statement soon. We are still reporting this story and will update with a confirmation.

Update: A second source has confirmed there were layoffs in Austin, Chicago, and Boston today.

Update 2: Here's the memo from CEO Mark Pincus, provided by Zynga:



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.