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Wednesday, 24 October 2012 09:08

Zynga lays off more staff

Written by Nick Farrell



Cost cutting like crazy


Zynga has fired five percent of its full-time workforce and shut its Boston office as part of a cost-cutting campaign that may eventually see the "FarmVille" game creator close its Japanese and British studios. Zynga is fighting for its life as it deals with a steep decline in earnings as users gradually migrate onto mobile devices or rival games.

The company said that it plans to "sunset" 13 older titles as part of its streamlining. Chief Executive Mark Pincus wrote on the company bog that this will be the most painful part of an overall cost reduction plan. There will be significant cuts in spending on data hosting, advertising and outside services, primarily contractors, he added.

Pincus said the cuts would accompany a regime of "more stringent budget and resource allocation around new games and partner projects." This will be a change for a company famous for acquisitions and headhunting. In March, Pincus tried to buy game studio OMGPOP for $180 million before acknowledging this month that the deal didn't pan out, leading to a $90 million writedown.

Zynga recently slashed its 2012 outlook and warned investors that it would record a steep drop in sequential quarterly revenues for the first time since its December initial public offering. Pincus said that Zynga would significantly pull back its investment in "The Ville" game and scale back on its Austin, Texas studio as it sought to cut costs. He also said the company was "proposing" to close its Japanese and British offices.

Tuesday's layoffs amounted to roughly 150 out of Zynga's 2,900 workers.

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