Mr. Pincus (Photo: Wikipedia)

In response to questions about layoffs, Zynga emailed Betabeat an internal memo that CEO Marc Pincus sent out to staffers this afternoon. In the note, Mr. Pincus confirmed that the company cut approximately five percent of its full-time workforce today, including the shuttering of its Boston studio and mass layoffs at its Austin location.

Mr. Pincus also said that Zynga is proposing closures of its Japan and U.K. offices. In addition, the company will be sunsetting 13 of its games and reducing investment in TheVille, a Facebook game that's facing a lawsuit from EA for looking a whole lot like a Sims game.

In the memo, Mr. Pincus wrote that he believes the cost-cutting measures will "improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile."

The memo comes after a day of intense rumors about the flailing social gaming company filled the tech universe. Despite the fact that the news emerged during the attention-sapping Apple keynote, TechCrunch reported that the timing of the news had more to do with Zynga's impending earnings call, scheduled for tomorrow, than with the Apple presentation.

Earlier reports indicated that the Boston and Austin offices would be closing altogether; Austin, however, will remain open, though its staff was dramatically reduced.

Zynga has been on a downward spiral for the last few months, reporting an estimated net loss of $95 million to $105 million for its third quarter, which will be discussed on tomorrow's earnings call. Following that announcement earlier this month, its stock price immediately plummeted 19 percent. Currently, it's hovering around $2.20, after experiencing a 5.17 percent drop today.

SuperData Research analyzed some of Zynga's recent game statistics and concluded that player engagement reached an all-time low of 14 percent in September and that it has fewer monthly active users in simulation games now than it did two years ago. The hope for Zynga's salvation, SuperData's Sam Barberie (and others) have argued, is a pivot to social gambling, but current U.S. laws have tight control over the function of gambling games.

You can read the full text of Mr. Pincus' internal memo below.

Team,

Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we’ve had to make some tough decisions around products, teams and people.  I want to fill you in on what's happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios.  Additionally, we are reducing staffing levels in our Austin studio.  All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce.  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.

These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.

Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader.  Our success has come from our dedication to a simple and powerful proposition – that play is not just something people do to pass time, it’s a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company.  Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting.  I’m confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

With reporting contributed by Nitasha Tiku.

(Photo: Insider Monkey)

Social gaming company Zynga has endured a rough couple of months. After its acquisition of the NYC-based company OMGPOP--producers of the fad-friendly game Draw Something--Zynga has experienced a downward spiral. Earlier this month, it reported an estimated net loss of $90 million to $105 million for its third quarter, sending its already-low stock price into a tailspin. Now, The Next Web reports that the company has laid off 100 staffers from its Austin headquarters, and may even be shuttering its Boston office altogether.

Writes The Next Web:

We’ve heard from a former employee at Zynga who tells us that the layoffs did happen in the company’s Austin office. Additionally, TheVille will be discontinued. More than 100 employees were let go and ordered to turn in their computers, phones, and badges — many of whom have been working at the company for more than two years.

Employees affected by this change were given two hours to vacate the office. It appears that those affected were from two different game divisions: theville and bingo.

Gamasutra reports that it has received first-hand confirmation that Zynga is shuttering the Austin office altogether. [Update: Gamasutra says they may have incorrectly reported the full closure of the Austin office. "We can confirm that over 100 people are out of work in Austin, but we can not confirm whether the studio is remaining open in some capacity, nor if Zynga's QA office in Austin has been affected."]

Gamasutra also reports it has heard unconfirmed rumors that Zynga also intends to shut down its Boston and Chicago offices. A Twitter user reported to Gamasutra that one of his friends was laid off from the Boston office, and posted the following to his Facebook: "Zynga Boston is no more. Shocking and not awesome."

A source confirmed to The Verge that there have been layoffs in Austin, Boston and Chicago today.

[Update 4:05 PM: Techcrunch reports that it has confirmed Zynga has shuttered its Boston office and laid off 2/3rds of its Austin employees. "One former employee said the Boston office was almost ready to release a product that Zynga management was enthusiastic about. But the need to trim the company through severe layoffs meant that product couldn’t be seen through to launch."]

Zynga also has a New York office and Betabeat is investigating whether or not employees there will also face layoffs. OMGPOP cofounder Dan Porter was announced as the VP and general manager of Zynga New York back in March. ”Maybe we can turn New York City into a hotbed of gaming activity as well,” Mr. Porter told us then.

As TechCrunch points out, TheVille--which is kind of like The Sims but lame?--has been hemorrhaging users, losing 33 percent of them in just one month.  In fact, in its third quarter results, Zynga blamed downgraded revenue forecasts on "reduced expectations" for games like The Ville. The company is also facing a lawsuit from EA games for violating copyright laws.

In keeping with its questionable ethics, employees appeared to have been notified of layoffs during Apple’s keynote event, when most tech outlets would be focused on Apple’s announcements.

UPDATE: As news of the layoffs continues to leak, anticipation for Zynga's third quarter earnings call scheduled for tomorrow afternoon is building. Like, oh, pretty much everyone, Sam Barberie, who has been crunching Zynga's daily active user numbers for Super Data Research, anticipates "bad news, especially with regard to their simulations games." Earlier this month, shortly after Zynga released its downgraded forecasts, Fortune's Dan Primack tweeted:

Zynga needs legalized online poker yesterday.

— danprimack (@danprimack) October 4, 2012

Mr. Barberie, who recently released a report on the company's future concurred, predicting a "definite move into the social casino games."

"Basically, that's sort of where the industry is heading as one of the remaining places to make money," he said. "They got rid of a bunch of people in the sim games and bingo to refocus on the real money games."

Poker games were mentioned during Zynga's last earnings call, with an expected release date next year. "[Zynga is] gaining users, but not maintaining them. If they're not maintaining their users, they're not going to turn those players in payers," via in-app purchases or advertising revenue, he said. "The thing about social casino is that it's gambling, which has a hook regardless of the medium that it's in."

Update 2:

A former Zynga employee told TechCrunch, "[CEO Mark] Pincus wants to be able to say that the company’s profitable but that’s harder as revenue goes down. They’re doing short-term things that don’t make any sense at all if you’re thinking about this being a stable company with $1.6 billion in cash in the bank."

Update 3:

A Zynga representative emailed Betabeat a copy of the internal memo from CEO Marc Pincus:

Team,

Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future. We waited to share this news with all of you until we had first spoken with the groups impacted.

As part of these changes, we’ve had to make some tough decisions around products, teams and people.  I want to fill you in on what's happened and address any concerns you may have.

Here are the most important details.

We are sunsetting 13 older games and we’re also significantly reducing our investment in The Ville.

We are closing the Zynga Boston studio and proposing closures of the Zynga Japan and UK studios.  Additionally, we are reducing staffing levels in our Austin studio.  All of these represent terrific entrepreneurial teams, which make this decision so difficult.

In addition to these studios, we are also making a small number of partner team reductions.

In all, we will unfortunately be parting ways with approximately 5% of our full time workforce.  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.

These reductions, along with our ongoing efforts to implement more stringent budget and resource allocation around new games and partner projects, will improve our profitability and allow us to reinvest in great games and our Zynga network on web and mobile.
Zynga made social gaming and play a worldwide phenomenon, and we remain the industry leader.  Our success has come from our dedication to a simple and powerful proposition – that play is not just something people do to pass time, it’s a core need for every person and culture.

We will all be discussing these difficult changes more with our teams and as a company.  Tomorrow, Dave and I will be hosting a post-earnings webcast (details to follow) and next week we will be discussing our broader vision and strategy during our quarterly all-hands meeting.  I’m confident this puts us on the right path to deliver on the promise of social gaming and make Zynga into an internet treasure.

If you have any immediate questions, I hope you will talk directly with your manager, Colleen, or me.

I look forward to talking with you tomorrow.

Mark

If you have any information about the layoffs, please email tips@betabeat.com or drop us an anonymous tip from the top of our homepage.

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HILL COUNTRY. Made in NY: Austin will celebrate New York based tech startups at South by Southwest on March 11 from 6 p.m. to 12 a.m. at the Fast Company Grill at Cedar Door in the Texas Capital. The event will be hosted by Gust, and the New York Tech Meetup and will be attended by over 250 NYC based startups. RSVP here. You might even be able to get there in a real NYC yellow taxi.

GroupMe is also heading to Austin for SXSW to keep you connected to your fellow conference-goers. Start a group on the GroupMe SXSW landing page and get exclusive updates, news and a chance to win prizes.

Be sure to RSVP for the GroupMe Major Rager end-of-the-weekend celebration at Cedar Street Courtyard featuring DJ sets from the likes of COMA and Nancy Whang of LCD Soundsystem.

Pixable is going to SXSW with a special section dedicated to the interactive conference based on what's happening, where you should be and what's most popular "#SXSW Live Feed" is a real time stream of all #SXSW tagged photos on Instagram and Twitter and "#SXSW Popular" is a showcase of the most shared and liked pics.

PIIIIIING. Sonar, the mobile app that shows hidden connections to the people around you based on the information you publicly post online, is going to SXSW with an Android App in beta. And that's not all—new features are also live including a people tab, to show users whose around no matter what the venue may be, Facebook and Twitter location data integration to show more people with more context and the entire app has been reengineered under the hood for improved speed and power.

GIRLS. GirlDevelopIt now has over 2,300 members and will be on hand at SXSW celebrating women in tech with a totally unofficial All Girl* Dev Brunch. The nerdettes also announced that classes in San Francisco are open for enrollment.

*Boys allowed.

ISPs 4 U AND ME. KeyWifi, the disruptive little startup spearheading the effort to bring Internet access to all by sharing hotspots, came out on top at the Silicon Alley Battlefield event at the New York Entrepreneurs Business Network. Betabeat believes uninhibited access to information is a good thing, so it's nice to see KeyWifi win with a refined pitch after struggling to connect with judges at last month's Common Pitch.

TESTING 1-2-3. After over a year of beta testing, Broadcastr 2.0 is available in the iOS app store and in the Android Market. Broadcastr allows users to " find memories, insights, and enriching information about eclectic and everyday places on every continent on Earth." New features include imprived filtering options, a gallery view, curated story collections and more intuitive map browsing.

ADITUDE. Solve Media heard our prayers and has come up with a way around 30 second ads for online videos that are sometimes only half that length. With Solve Media's solution, viewers will be able to type a sponsor's message in a text box to bypass the commercial. Users will be less frustrated and sponsors will know that their message was heard instead of playing to nobody while the intended target is making a sandwich.

CHA-CHING. Covestor, an investment management company that basically lets users see the transactions of pro traders and copy their moves, is joining forces with SlashDeclare, a cooperative movement of financial services companies calling for fairness and transparency in financial markets.

Covestor’s Next Invest, a virtual conference, is set for March 20 and 21 where Charles Lewis Sizemore, of the Sizemore Investment Letter, will talk about "using content to build a money management practice."

LIFE COACH. "It is time for you to stop stalking your exes and start living your life!" proclaims LifeGunk, a startup that touts itself as "the world's first life-management network." LifeGunk allows you to maintain schedules, take notes, log goals on your calendar, and send yourself reminders. When you accomplish one of your goals you can even give yourself a checkmark. Sort of like Google Calendar—but more patronizing. LifeGunk is currently self funded. Investors—get in while you can.

45 RPM. Turntable.fm is rolling out new features including a private chat function, improved search and a guest list so you can see how else is is jimmying to your jams. Best of all, there's a new free iPhone app—gratuitous guitar solo goes here.

MAXIMIZE. Clickable just made some big expansions to their senior leadership team as they plan to continue their rapid growth as a platform that combines search and social across Facebook, Google, Twitter, Foursquare, Bing and LinkedIn. Dave Fall joins Clickable as COO, David O. Smith as CRO, Sanjay Gupta as senior director of engineering and Brian Tucker as the VP of agency sales.

WORK FOR CHANGE. Gawker is looking for a new creative director with coding proficiency. Apply Here. Hyperpublic needs a web developer who's comfy with MongoDB, Javascript and JQuery. Throw your hat into the ring. Betaworks wants a senior backend engineer and architect for contract or full-time. Expertise in Python, Mongo and AWS is preferred. Tell 'em why it should be you. GetGlue, the social network for entertainment, has an opening for a senior product manager with 3-5 years experience and a social media presence. Apply here. Signpost, the "Google AdSense of local commerce," is on the prowl for a new publisher development manager. Strong business acumen and three years of marketing/sales experience gives you a good shot. Shoot. Work Market, a labor and HR management platform, backed by Union Square Ventures, is looking for a back-end Java developer, operations engineer, community manager and many other positions. Check 'em out here. Foursquare has internships for young, budding techies on the software engineering and community fronts. They've also got more than a few job openings. Check it all out here. And last but not least, Boxee wants to pay an intern on their product team. If you're based in NYC apply here.