Zynga shuts down three studios 24 hours before earnings call
100 staff working in Austin studio on the Ville and Zynga Bingo made redundant with both games described as "done" by former employee.
Zynga will close its Boston, UK and Japan studios and significantly reduce its Austin office making around 100 staff that work on its Ville and bingo games redundant, CEO Mark Pincus has confirmed in an internal memo seen by eGaming Review’s sister title Social Casino Intelligence.
Mark Pincus last night released an internal statement to Zynga employees confirming that its Boston studio would close, alongside its UK and Japan studios. Austin, where 100 employees have been laid-off, will remain open, but with significantly reduced staff. Overall 5% of the company’s workforce will be made redundant.
The chief executive went on to confirm that the company is “significantly reducing” investment in The Ville, rather than fully shutting the game down. Thirteen others are to be ‘sunset’, suggesting these “ unnamed games “ will cease to exist.
During Facebook’s third quarter earnings call chief executive Mark Zuckerberg described gaming on the social network as “not doing as well as I’d like” adding that payments from Zynga are down 20% from last year, but that the rest of gaming is up 40% compared to the same period in 2011.
The teams working on The Ville and Zynga Bingo were based in the company’s Austin offices, with the redundancies reportedly announced during Apple’s press conference announcing the release of the iPad Mini. Rumours that employees were given just two hours to clear their desks and vacate the premises remain unsubstantiated.
The news was originally reported by Justin Maxwell, a former Apple and Sony employee, with gaming news portal Gamasutra quoting an employee saying that The Ville and another new title were “done. The Ville currently attracts 17.5m MAU on Facebook according to AppData. The app has already been the subject of a legal challenge by Electronic Arts, which alleged that the game is in “clear violation of the US copyright laws.”
Zynga Bingo, which only beta-launched in January this year, has seen much slower uptake than the similar Zynga Slingo, developed in partnership with social casino operator Slingo. Currently the app attracts around 5.4m MAU, compared to Zynga Slingo’s MAU of 23.8m.
The news comes just weeks after the operator announced that it had lowered expectations for FY2012 following what it described as a “challenging” third quarter of the year, and ahead of its official results announcement, due to take place later today after the markets close in the US.
Speaking at the time Pincus hinted at layoffs, saying in a statement: “We’re addressing these near-term challenges by implementing targeted cost reductions in the fourth quarter and rationalizing our product R&D pipeline to reflect our strategic priorities.”
Pincus also spoke of the desire to evolve the business from a web-focused business into a cross-platform games network, highlighting the importance of mobile and pledging to continue to invest in the channel:
“At the same time, we are continuing to invest in our mobile business where we have one of the strongest positions in the industry. These actions support our strategy to transition from being a first party web game developer to a multiplatform game network,” Pincus explained.
The staff layoffs follow a number of high-profile management redundancies, beginning with COO John Schappert, who left in August. He has been followed out the door by chief marketing and revenue officer Jeff Karp, who has since joined GSN; chief creative officer Mike Verdu;infrastructure CTO Alan Leinwand; chief security officer Nils Puhlmann;former OMGPOP chief revenue officer Wilson Kriegel and former Zynga Casino GM Lo Toney. The company also seen CityVille general manager Alan Patmore; Erik Bethke, GM for Mafia Wars 2; vice president of mobile Ya-Bing Chu; Bill Mooney, who headed up the FarmVille franchise, and Jeremy Strauser, who was studio general manager for Zynga Slots and Bingo all leave in the intervening period.
In this period, the sole high-profile hire has been former 888 executive Maytal Ginzburg Olsha, who will head up the company’s online gambling project, due to launch in Q1 2013.
Following its IPO in December last year, the company has also seen its share price plummet, falling from a high of 15.91 to as low as low as 2.21, and stands at a current rate of 2.22 “ a decrease of 86%.