Perhaps Zynga New York employees running into traffic was a harbinger of terrible things to come: AllThingsD reports that the social gaming company intends to lay off 520 people–about 18 percent of its total staff–and permanently shutter its New York, Los Angeles and Dallas offices.
The move will trim $80 million in staff costs from Zynga’s tight budge. Sources told AllThingsD that the cuts come at a time when the company is experiencing a faster decline in its web business than predicted, while failing to see a significant uptick in mobile adoption.
CEO Mark Pincus took to the staff blog to explain the “structural changes.”
Today is a hard day for Zynga and an emotional one for every employee of our company. We are saying painful goodbyes to about 18% of our Zynga brothers and sisters. The impact of these layoffs will be felt across every group in the company.
Mr. Pincus goes on to explain that the company’s breakneck growth has made it difficult to “lead across mobile and multiplatform,” areas in which Zynga’s games will primarily be played. But because the company is conducting the layoffs from a place of “financial strength,” Mr. Pincus and co. are generously offering severance packages to the 520 employees that will be cut today.
The move comes just weeks after Zynga New York had a big hit in the app store with What’s the Phrase, a game much akin to a digital Wheel of Fortune. After skyrocketing to the number one position, the game has dropped to #70 in top free apps. Words With Friends sits at #30 in top paid apps, while Draw Something 2 looms at #32.
Zynga has also halted trading following the news; its stock is currently hovering around $3.41 per share.