Social game developer Zynga is making major cuts to its internal teams, closing its Los Angeles, Dallas and New York-based studios and laying off more than 500 employees, the company announced today.
Approximately 18 percent of Zynga's workforce will be cut, which will result in "an estimated $70 million to $80 million" in savings, according to the company. Layoffs will occur "across all functions" and are expected to be completed by August 2013. The cutbacks and affected locations were first reported by All Things D.
In addition to layoffs affecting 520 employees, Zynga announced it expects a net loss projected to be in the range of $39 million to $28.5 million for its second quarter. Trading of Zynga shares was halted on Nasdaq prior to the announcement of cuts, according to a report from Barron's.
Cuts at the developer include 55 employees at Zynga LA, according to a tweet from an artist who says he was let go from the company. A source later confirmed the closure of Zynga LA, which developed Facebook game Empires & Allies, to Polygon. Empires & Allies is slated to shut down June 17.
In February, Zynga shuttered its Baltimore-based offices and consolidated other locations, merging its Austin and McKinney-based studios with its Dallas location and centralizing various New York area studios. In December, Zynga closed its Japan office, two months after notifying its employees of additional closures in Boston and the UK.
When contacted for comment, Zynga forwarded Polygon a memo to employees from CEO and founder Mark Pincus.
To our Zynga Community,
Today is a hard day for Zynga and an emotional one for every employee of our company. We are saying painful goodbyes to about 18% of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company.
None of us ever expected to face a day like today, especially when so much of our culture has been about growth. But I think we all know this is necessary to move forward. The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played.
These moves, while hard to face today, represent a proactive commitment to our mission of connecting the world through games. Mobile and touch screens are revolutionizing gaming. 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.
Because we're making these moves proactively and from a position of financial strength, we can take care of laid off employees. We're offering generous severance packages that reflect our appreciation for all of their work and we hope this will provide a foundation as they pursue their next professional steps.
Although these are hard decisions, I'm confident that our strategy of building leading franchises and supporting them with the largest network is the right one for the long term. I'm encouraged by our recent progress. 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 22,000 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.
I want to thank every one of you for the spirit, creativity and energy that you've invested in Zynga. You've reintroduced a generation of people to gaming and through these games offered them new ways to connect with their families, make new friends and even sometimes find love.
Everyone will be affected by these changes and I'm sure there will be many follow up questions to this email. If you have specific questions relating to your project or team, please talk to your manager. For any other feedback or thoughts feel free to email me directly.
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