Social gaming company Zynga recently announced it would cut its work force by 18 per cent to an extensive cost-reduction plan that the company says should help it save around $100 million in the short-term.
It will leave the sports video-game category, which will narrow its business and help improve the quality of its video games going forward.
The lay-offs will affect a total of 364 people. Zynga estimates that the layoffs will be completed by the end of its fiscal year and should result in about $45 million in annualized savings.
The San Francisco based company declared the same as part of Zynga’s latest earnings report for the quarter ended March 31. It was another tough quarter, for FarmVille developer as it posted another net loss. On a GAAP basis, Zynga lost $46.5 million, while the non-GAAP loss was $7 million. However, total Zynga revenue rose 9 percent to $183 million during the quarter.
Apart from restructuring process, cost reduction measures will also include lowering costs and eliminating spend on outside and centralized services. This move, which should be completed by the third quarter of 2016, is expected to result in another $55 million in savings, the company said.
Last month Don Mattrick left the company as the Mark Pincus, stepped into the role of Zynga CEO to focus on mobile games which seems to be more profitable than the ever so fumbling social games.
“For our people, we need to create an empowered, entrepreneurial culture that fosters more creativity and innovation,” Mark said. “Over the years we’ve seen that tighter, more nimble teams can drive faster innovation and deliver more player value. As a result, today we announced a cost reduction program to focus, simplify and align us against our most promising opportunities.”
“This was a hard but necessary decision and I believe this plan puts us in the best long term position for success.”
