Zynga Cuts 18 Percent of Workforce to Fund 'Midcore' Gaming

Zynga, one of the biggest social game provider based in San Francisco, announced that the company is letting go 18 percent of their workforce starting today.

This is considered the biggest layoff in the company’s history which made people thinking if it is closing down in the near future. Last fall, it also dismissed 150 employees. Add another 520 people losing their job today because of this severe financial prudence decision.

The sites affected are those in Los Angeles, Texas, New York, and other sites across the globe. The layoff will be completed by end of the second quarter and the company is expecting to save about $80 million. This will reduce the impact of financial loss to the game maker as it already projected up to $39 million loss by the end of the second quarter.

Meanwhile, as of 5:59pm ET today, Zynga Inc. stock value closed at $2.99 down by 40 percent. Previous close was at $3.40. The value is way below its IPO of $10 per share and has been unstable for the past few months.

Zynga CEO Mark Pincus sent an email to its employees yesterday explaining this business decision.

“None of us ever expected to face a day like today, especially when so much of our culture has been about growth. But I think we all know this is necessary to move forward. The scale that served us so well in building and delivering the leading social gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played.”

Over the last six months, Zynga lost 18 titles including Petville, Mafia Wars 2, Treasure Isle, Cityville 2, and more due to underperformance. It still has 29 games available so far.

Zynga is now planning to use the money that they can save from the employees they decided to let go to fund its exploration to develop more mobile or ‘midcore’ games. The midcore games are games that can be played on a PC or console. This is another move to save the company since its relationship with Facebook has ended March 31.