Zynga to Lay Off 364 People, Close Orlando Office as Part of Cost Reduction Plan

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Mobile and social game company Zynga today announced its Q1 2015 financial results, which saw the developer generating $ 167.4 million in bookings, outperforming the high end of its Q1 2015 outlook. With the company’s continued transition to mobile devices (and away from Facebook), mobile bookings accounted for 63 percent of Zynga’s total in the quarter, up 84 percent year over year.

Many numbers were up quarter over quarter, but down year over year. In Q1 2015, Zynga had 25 million daily active users (DAU), up from 24 million in Q4 2014, but down from 28 million in Q1 2014. In terms of monthly active users (MAU), Zynga had 100 million MAU in the first quarter of 2015, up from 98 million in Q4 2014, but down from 119 million in Q1 2014.

In addition to these earnings, Zynga announced its plan to reduce costs by $ 100 million, in part, by reducing its workforce by 364 people, or around 18 percent. The reduction is expected to be complete by the fourth quarter of 2015 and generate approximately $ 45 million in annualized savings.

Zynga CEO, Mark Pincus, commented on the layoffs in a recent earnings call:

We need to be more resourceful in how we manage our costs in order to fund our investments in great new games, people and data analytics. We’ve over-burdened our game teams with complexity and centralized expenditure.

Zynga Orlando will close as part of this move, and the developer will move away from developing sports titles. Specifically, this eliminates support for NFL Showdown, which launched in September 2014, and ceases development of the previously announced Tiger Woods golf title, which were both being led by Zynga Orlando. Zynga will also reduce its further investment in the runner genre, following the release of Looney Tunes Dash in December 2014.

As a result, Zynga’s previous estimation of releasing six to ten new games in 2015 has been decreased to six to eight new titles. Part of this lineup comes from Zynga’s NaturalMotion studio, which plans to release CSR Racing 2 later this year.

All told, Zynga will now focus on the development and support of titles in five main categories: action strategy, social casino, invest and express (FarmVille, as an example), casual and racing. Zynga’s vice president of games, Jonathan Knight, will take over the FarmVille franchise and drive the company’s future efforts as Zynga works to reinvest, as Pincus said, “in one of our most core categories.” FarmVille: Harvest Swap was announced in February 2015, and is expected to release later this year.

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Federal Wiretap Charges Vs. Facebook, Zynga Dismissed, But Facebook Still Faces Breach-Of-Contract Claims

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ScalesOfJusticeGavel650It was a mixed bag for Facebook at the Ninth U.S. Circuit Court of Appeals in San Francisco Thursday, as Reuters reported that federal wiretap claims against the social network and game developer Zynga were dismissed, but breach-of-contract claims under California state law were revived.

Separate class-action lawsuits were filed against Facebook and Zynga in 2010, according to Reuters, and they were consolidated during the appeal process. The suits involved disclosure of users’ personal information to advertisers.

According to court filings, as reported by Reuters, the plaintiffs claimed that advertisers and other third parties received their Facebook IDs and page addresses when they clicked on Zynga games or ads on the social network.

The three-judge panel ruled that civil wiretap claims were not applicable because the information that was allegedly disclosed did not qualify under law as “contents of a communications,” according to Reuters, but the panel also ruled that the plaintiffs could pursue allegations that Facebook’s privacy policies were violated.

Plaintiffs’ attorney Kassra Nassiri told Reuters:

Now we’re going to get our chance to show exactly why Facebook breached its privacy policy, and what the value was to Facebook.

Readers: How will this case turn out?

Image courtesy of Shutterstock.

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