Zynga Confirms It Will Close Its Japan Operation At The End Of January As Consolidation Continues To Bite The Social Gaming Company

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Social gaming giant Zynga has now confirmed that it will be closing down its Japan operation, as it continues to consolidate its operations and cut less profitable parts of its business. The spectre of pulling out of that market was first raised in October when the company laid off 5% of its employees. Today, the CEO of the Japan operation, Kenji Matsubara, posted the news confirming the closure, (ironically) on Facebook, the social network that has been so closely tied to Zynga’s rise and fall.

No direct reason for the closure is given but it is likely linked to poor sales for its games in Japan.

The news was first spotted by Serkan Toto, who posted a screenshot of the status update from the CEO:

zynga-japan

He notes that the Japanese text reads as follows: “Zynga Japan will be shut down at the end of January, that Matsubara thanks users for playing his company’s games, and that service for popular card battle game Ayakashi will be continued.”

The site also bears a similar message, with an indirect hint that while a few games have proven popular and will continue to be supported, others have not:

zynga japan

In translation (very, very roughly, using Google Translate), that reads:

Notice of dissolution of a Japanese corporation
Thank you for patronizing always Zynga Japan. that we will continue to work but I get the kindness of everybody over two and a half years since its establishment as the Japanese subsidiary of U.S. company Zynga, to dissolve the corporation Womochimashite Japan January 31, 2013 due to various reasons became.
I would like to thank deeply from my heart to everyone, including the customer who enjoys the title of our past, we received your support.
Because we will continue to service beyond January 31, 2013 “Yin Ayakashi record” has gotten (and Android version of iOS) well received, thank you for your continued patronage and support.”

Zynga has a strong history with Japan. Before it went public, one of its biggest backers was Softbank, which pumped $150 million into the operation in 2010. Zynga itself expanded inorganically into that market, buying Unoh in the same year, reportedly for several billion yen.

But the writing has been on the wall for a while: not only is Zynga seeing declines in revenues and players for its games against competition from GREE, DNA and others, but it had already noted that it was considering a closure in October. Last month, it started the ball rolling by closing down three games in the market.

One question now is what might happen in the UK — another market that was mentioned during the October layoffs. The company has already shut down its games studio in the country, and the UK general manager departed last month. But on the other hand the UK has played a big role in the company’s latest strategic push to revive profits: a move into real-money gambling, which it is doing in partnership with bwin.