While Apple was busy introducing new devices and updating its existing ones this morning, Facebook game creator Zynga was apparently relieving itself of several studios worth of employees. Several reports on Twitter indicate that Zynga is cutting its Boston, Austin, and Chicago studios; our colleagues at Joystiq spoke with a Zynga Austin employee who confirmed at least two of his location's teams were let go (The Ville and Zynga Bingo teams). Further reports on The Verge indicate that "more than 100" employees were let go as a result of the Austin layoffs. TechCrunch is reporting the full shut down of Zynga's Boston studio, which was apparently working on an unannounced title before being closed. The company's San Francisco location -- its headquarters -- has yet to be affected, nor have employees heard anything from upper management.
Notoriously, Austin-developed The Ville is the root of an ongoing lawsuit between game publishing giant Electronic Arts, wherein EA alleges The Ville too closely resembles its own Facebook game, The Sims Social. Beyond the lawsuit, Zynga's faced declining stock value since its IPO, and the $200 million purchase of Draw Something developer OMGPOP remains a sticking point for investors. The company is slated to release its quarterly earnings tomorrow, which are expected to be down for another quarter. We reached out to the company for comment, but have yet to hear back as of publishing.
Update: Zynga confirmed layoffs at its Austin studio, as well as outlining closures at its Boston, Japan, and UK locations. A full letter from CEO Mark Pincus to employees was released by Zynga detailing the layoffs and closures, which we've added below. The company also says it's closing 13 of its games, and "significantly reducing" its investment in The Ville.
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.