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Zynga Eliminates 5% of Workforce

The company was shutting its studio in Boston and could close studios in the UK and Japan

October 24, 2012 – Zynga Inc, social networking games maker has announced it will eliminate jobs for the first time in its brief history. The company announced it would be cutting up to 5% of its entire workforce. The announcement by the company, based in San Francisco came just one day before it is expected to post downbeat earnings for the recently ended quarter, which underlines the difficulties the company is having lately.

Mark Pincus the CEO of Zynga said to his employees in a note that had been published online, the company was shutting its studio in Boston and could close studios in the UK and Japan. The company’s studio in Austin, Texas would also be losing staff. Zynga also announced it would eliminate 13 games and cut down on its investment in “The Ville” a game it released last June.

Pincus said it was the most difficult and painful part of the cost reduction program the company decided to put into place that includes large cuts in data hosting spending, advertising, primary contractors and other outside services. The stock for Zynga was up by over 4% in afterhours trading on Tuesday to $2.29.

Zynga was founded in 2007 and had rapid growth through placing its games on Facebook’s huge social network. Money is earned by the company through its games when someone purchases virtual goods. It employs more than 3,000 people compared to only about 100 a couple of years ago. However, of late, the influence of Zynga on Facebook has dropped and Facebook restricted its ability to showcase its games.

In addition, other games’ makers for the social network site, like Kixeye have increased in popularity, which has pulled away users from the company’s games.

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