The reason for the job cuts was to cut costs, the cuts are expected to save $70 million to $80 million in annualized cost.
In a move that the social-gaming site’s founder Mark Pincus described as “necessary to move forward.”
In a memo released to staff, Pincus said the reductions were part of Zynga’s strategy to become more competitive in the gaming market, particularly in the mobile arena.
“Mobile and touch screens are revolutionizing gaming” he said. “Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect. By reducing our cost structure today, we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences.”
Shares for ZNGA dropped down to $2.99 and are currently on offer for around the same price from $3.41 a share prior to the announcement.
Zynga Poker Too Little Too Late.
Zynga are best known for their Facebook games FarmVille, Mafia Wars and CityVille.
Zynga also owns ZYNGA Poker and the newly launched Zynga Poker Plus whose partnership with bwin.party offers real money gaming in the UK.
They had been banking on offering poker for real money to their millions of Facebook players as being their saviour, yet seem to have taken far too long to incorporate real money poker games into Zynga Poker, with the UK launch into real money poker taking place as late as last month and they have yet to move into any other markets to date.
In their prime, the poker world was eagerly awaiting the real money launch of poker games from Zynga but it seems they have played their trump card a bit too late.
At one stage Zynga was in talks with several US land based casino groups but it appears they have lost somewhat of their appeal as users stray from Facebook into the newly preferred mobile games market.
If 520 employees account for only 18% of their workforce one can only imagine just how tough Zynga’s financial outlook must be given that most of their current revenue comes from Farmville.
Zynga as of late have been focused on providing iPhone apps and Android Apps, with a few of their games reaching the top ten, yet they have failed to capture the mobile market to the extent that they managed to do so on Facebook.
Perhaps it’s a little too late for the Zynga to return to profitability but maybe they get lucky and get bought out by a big Las Vegas casino conglomerate or an online poker company like Bwin.Party both of which would benefit from the large player pool Zynga Poker currently owns but could do little else with the other games Zynga offers.