Zynga Makes Drastic Staff Cuts, Shutters OMGPOP
By Paul Tassi for Forbes
What we witnessed yesterday, as the announcement was made and Zynga’s stock took a dive, was yet another disaster in a series of perfectly expected failings of a company built on attempting to copy creative, popular games if they couldn’t buy them outright.
First, let’s look at the aftermath: Zynga is closing its offices in Los Angeles, New York and Dallas, they’re laying off 18% of their workforce, or 520 employees, they’re effectively shuttering OMGPOP, the Draw Something studio for which they paid $180M last year, they’re projecting quarterly net losses of between $39 million and $28.5 million, though that has been revised slightly downward from larger previous projected losses and their stock plunged from $3.40 to $2.99 in the wake of the announcement.
Zynga had this to say about the layoffs:
“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.”
And this to say about the restructuring the layoffs reportedly will make way for:
“Mobile and touch screens are revolutionizing gaming. Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect,” CEO Mark Pincus wrote to his employees. “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.”
It should have been obvious to everyone that this isn’t a sustainable business model, and I’m amazed why anyone would actually invest in a company with these practices. Cloning games was bad enough, but buying the studios who made them was almost a worse idea from a business perspective. Zynga famously bought OMGPOP literally days before Draw Something reached its peak of popularity. All $180M bought them was an app that began crashing in users as soon as they picked it up.