Facing weak results from its Web games like The Ville and delayed launches of new titles, Zynga says it will institute a major restructuring of its operations.
It’s game plan calls for cutting 5 percent of its workforce, or roughly 150 positions, and folding 13 games including The Ville, according to a company memo from CEO Mark Pincus that was posted on TechCrunch and its quarterly announcement.
The restructuring also calls for closing its Boston studio, which some reports say has already happened, reducing staff levels in its Austin studio and potentially closing its Zynga Japan and UK studios, Pincus said. The company may also reduce a small number of its partner teams.
From the memo:
We don’t take these decisions lightly as we recognize the impact to our colleagues and friends who have been on this journey with us. We appreciate their amazing contributions and will miss them.
This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors.
With these cuts, Pincus says, the company will have greater flexibility to reinvest in some games and its Web and mobile game networks. Zynga says it expects to save between $15 million to $20 million in pre-tax savings in the fourth quarter.
“Zynga remains well positioned to capitalize on social gaming and the overall worldwide movement to free-to-play gaming,” says Pincus in a conference all with Wall Street analysts after announcing its quarterly results Wednesday. He added both social games and mobile games provide the greatest growth opportunity for the company.
Specifically, in its near-term pipeline, Zynga has two new Web and four new mobile games slated per quarter throughout next year, Pincus says. And with its recent acquisition of A Bit Lucky, the company is planning to introduce its first mid-core game early next year.
Additionally, Zynga on Wednesday announced plans to enter real money games in the United Kingdom via its exclusive partnership with bwin.party, an international gaming operator.
Zynga’s RMG service will offer online poker and 180 casino games where people can bet with real money. The new service is expected to launch in the first half of next year. Some of those new offerings will feature Zynga-branded games like FarmVille, which include real money slot games.