In an effort to make up for slowing sales growth, the social-game maker Zynga Inc. has announced plans to eliminate games, studios and cut 5 percent of its full-time workforce.
Apart from reducing its investment in the game “The Ville”, Zynga will also have to part with13 older games.
It’s the first-ever round of layoffs for the San Francisco-based online game company which has about 3,200 employees and runs 18 studios across the world. The maker of social-media games including “FarmVille” and “Texas HoldEm Poker”, Zynga Inc will shut down its office in Boston, and is assessing the potential impact of closing studios in Japan and the U.K.
CEO Mark Pincus is quoted as saying that the job cuts were the most painful part of the cost-reduction plan.
Significant cuts in spending on data hosting, advertising and use of contractors are part of the cost cutting.
A day ahead of Zynga’s third-quarter earnings report, the company’s slumping stock climbed over 3 percent in aftermarket trading, following the announcement.
The stock probably got a boost from a better-than-expected earnings report by Facebook Inc. Zynga is by far the No. 1 gaming company on Facebook.
According to researcher AppData, the company makes five of the 10 most popular games on Facebook. In the latest quarter, it accounted for 7 percent of Facebook’s total revenue, down from 10 percent in the second quarter and 12 percent in the third quarter of 2011.