Massive restructure forces Zynga to lay off more than 500 employees

By on June 4, 2013, 9:00 AM
mobile, zynga, layoffs, social gaming, restructure

In what is probably a surprise to very few people at this point, fledgling social games provider Zynga is laying off nearly 20 percent of their workforce as part of a massive restructuring effort. Do the math and that comes out to around 520 employees that are out of a job.

In a note posted on Zynga’s blog, founder and CEO Mark Pincus said the model that served them so well in building and delivering the leading social gaming service on the web is now making it difficult to be successful over mobile and multiplatform.

The plan then, it seems, is to move the business towards mobile – a common theme among some of today’s largest tech companies. The reduction is said to affect every aspect of Zynga and save $80 million in staff costs, according to at least one source.

Pincus said the decision represents a proactive commitment to their mission of connecting the world through games. As he correctly states, mobile and touch screens are revolutionizing gaming. The aforementioned reduction in cost structure will give the remaining team leeway to take risks and develop new social experiences.

Because the decision came at a time of financial strength, Zynga said they were able to take care of laid off employees through generous severance packages that reflect their appreciation for all of their hard work. Hopefully the funds will provide a foundation as they pursue their next professional step, the CEO said.




User Comments: 11

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Darkshadoe Darkshadoe said:

They also killed off the OMGPOP brand as well. That was 200 million well spent,

[link]

2 people like this | Burty117 Burty117, TechSpot Chancellor, said:

So 520 people laid off will save them $80 000 000?

My Math head isn't on today and my Calculator app is broken (don't go there) how much was each employee earning?!

Matt12345170 Matt12345170 said:

Well, if you were to do the math on that figure, about 150k each =P... I assume they are including overhead costs in that figure, so probably about half of that.

1 person liked this | MilwaukeeMike said:

So 520 people laid off will save them $80 000 000?

My Math head isn't on today and my Calculator app is broken (don't go there) how much was each employee earning?!

Earning is different than what Zynga was spending on them. Zynga was spending $153,846, which is actually pretty reasonable. Where I work they give us a 'Total Rewards' statement that shows what our company pays toward my 401(k), healthcare, salary, retirement, and Social Security costs, and my salary is about 70% of the total. So based on that ratio, these Zynga employees were making around $107,000 on average. Zynga HQ is in San Francisco, which is a very expensive place to live, so it's a good salary, but probably not out of the ordinary for a talented San Fran computer developer/designer with some experience.

howzz1854 said:

Human resource is a major part of the overhead, but it's not the whole overhead. if you take other accounts into factor, ie supplies, additional space, electricity, rent you'll have the whole picture. part of Amazon's move to purchased their entire office space as oppose to renting it annually is to save on future overhead and convert it to fixed asset. moves such as this that amazon and Zynga did were prime example of corporate accounting at work. basically somebody is doing their job. and yes, that means someone else is loosing it. in this day and age is all about maximize efficiency. any fat in the operation you seize to exist in the market place. today's per work force capita typically performs at three times level of 30 years ago, that's just my personal opinion, which is not too far off.

JC713 JC713 said:

They also killed off the OMGPOP brand as well. That was 200 million well spent,

[link]

Yup... Zynga sees a great business, buys it, and kills it. That is corporate garbage that occurs unfortunately, since it is really the only way of expanding... taking risks.

treetops treetops said:

I'm afraid to try any zynga game, their poker game always runs on my phone even if I kill the task.

JC713 JC713 said:

I'm afraid to try any zynga game, their poker game always runs on my phone even if I kill the task.

I used to play Words with Friends, but then it went downhill.

avoidz avoidz said:

If the gaming revolution is trivial novelties, gaming itself is in very big trouble.

Thankfully the PlayStation 4 is almost here to see off that possibility.

Guest said:

Look at that...a small gaming company we used to love but gone corporate and now cannot sustain itself. Sad for people who bought stocks on high.

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