Zynga chops staff, closes offices

Beleaguered online social gaming giant Zynga’s misfortunes continued this week with a further fall in share price and the news, confirmed by CEO Mark Pincus, that the company has cut 5 percent of its workforce of around 2,850 people and closed offices in the UK and Japan.

The Reuters news agency published a copy of a letter to employees from Pincus, in which the cuts were described as “the most painful part of the cost-reduction plan” and in which Pincus revealed that spending on data hosting, advertising and outside services from contractors was also being chopped.

The moves were designed to “streamline our operations, focus our resources on our most strategic opportunities, and invest in our future,” Pincus wrote in the brief.

100 layoffs were anticipated in the Austin, Texas office alone, Reuters reported.

13 unspecified game titles will also be shelved, although it appears that Zynga’s intention to enter the real money online poker sector in the UK next year remains firm.

Zynga shares took a further hit on the news, declining to the $2.15 mark at one point before managing a weak rally to $2.20. With its Q3 financial reportage due today (Wednesday) speculation is lively on the likely reaction of the stock market to the latest developments.

In related news Mark Zuckerberg, chief of Zynga’s main online venue partner, Facebook added to the pain during his Q3 analysts’ call by revealing that Zynga contributed just 7 percent of Facebook’s latest quarterly revenues, down from 10 percent in Q2-2012.

Zuckerberg also revealed that average user spend on Zynga games via Facebook had slipped 20 percent despite a significant upward trend of around 40 percent in user spending on games from other developers.

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