UPDATE: Zynga CEO Mark Pincus has confirmed this news.
Possibly trying to hide the grim news by announcing it during Apple’s event, we’ve just independently confirmed that Zynga has shut down its Boston office and laid off 2/3s of the employees in its Austin office, including cuts to The Ville and Bingo teams. We’ve now confirmed the initial report from Justin Maxwell. We’ve also just heard Zynga may have an all-hands meeting this afternoon.
We’ve tried to get in touch with our contacts at Zynga, but haven’t heard back yet. We hope to have some official response soon. We have more stories from former employees here.
Maxwell, who first leaked the layoff news, is a former Apple, Sony, Mint, and Smule employee. He said Zynga workers were apparently given just two hours to clean out their desks. He apparently learned the news straight from friends at Zynga who were included in the layoffs, and that’s where he learned the news from. Zynga employees themselves may be forbidden from talking about their exit.
Our sources have a few more news nuggets. One Zynga employee says there are still about 1/3 of the workers still around the Austin office, so it doesn’t appear to be a total office shutdown. We hear mobile teams may be safe, as Zynga sees the small screen as the future of its business. The San Francisco headquarter may also be safe from layoffs.
The Boston office has been shut down, though. One former employee said the Boston office was almost ready to release a product that Zynga management was enthusiastic about. But the need to trim the company through severe layoffs meant that product couldn’t be seen through to launch.
All the bad news is taking its toll on Zynga’s share price, which is down 4.96% or $o.12 today to $2.21.
Earlier this month Zynga’s share price plummeted after it reduced earnings and revenue projections for the coming year. At the time CEO Mark Pincus said there would be “targeted cost reductions” in many areas aka layoffs. So while the pink slips may have been expected, their announcement during the Apple iPad Mini event most of the tech world was watching makes it seem like Zynga was trying to minimize the fallout of the cuts. That clearly didn’t work.
Neither of the games whose teams apparently experienced layoffs have been performing especially well this month, according to AppData. TheVille has been bleeding users, down from 26.2 million monthly active users to just 17.5 million in the last month. Meanwhile Zynga Bingo drifted down from 5.8 million to 5.4 million monthly users in the last 30 days.
The layoffs follow a tough couple months for Zynga, as it has struggled to keep its share price afloat as executives leave (or are fired for not performing) and revenue trouble continues. It’s also had to deal with harsh criticism of its company culture by former employees.
There’s still hope for the company if it can find a way to inspire remaining employees to stay and fulfill the company’s mission of connecting the world through games. But Zynga is running out of extra lives and could end up bought out and dismantled or have to further slash its roster.
For more on the gaming giant’s problems, check out our article: Why Zynga Failed
And for the inside scoop on how the new layoffs went down, read Kim-Mai Cutler’s Zynga’s Boston, Austin Layoffs Today: “Almost Everyone Was In The Dark”
Additional reporting for this story came from Kim-Mai Cutler, Colleen Taylor, and Drew Olanoff.