Beleaguered game maker Zynga has cut 520 jobs in a cost cutting measure that questions the future of the company as a whole.
Zynga, based in San Francisco, stated that they have laid off only 18% of its workforce world wide. The company declined to say where, but sources say the locations are Los Angeles, Dallas, and New York. The move is intended to save $70 to $80 million, in which the game company expects a $28.5 to $39 million lost in the second quarter.
The news has caused the shares of Zynga to decline from its IPO price of $10 to $2.99 a share. “None of us ever expected to face a day like today, especially when so much of our culture has been about growth,” said Zynga CEO Mark Pinus in an email to employees on Monday. “But I think we all know this is necessary to move forward.”
The job cuts is the largest in the 6-year history of the company that has endured player defections, increased competition, and the elimination of 18 titles in the past six months. Just last fall, Zynga announced 150 job cuts.
The company has moved its focus to the mobile and so called midcore games in hopes of changing its course. Midcore games are defined by Zynga as a “blend the depth of hard-core games, traditionally played on a PC or console, with the approachability and accessibility of casual games that are mobile, free-to-lay and social,” says Steve Parks, senior vice president of games.
While Zynga struggles to retain users, the amount of people in the United States who play games on their phone and online continues to grow. The amount is expected to reach 5.6% this year, according to eMarketer.