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Zynga Narrows Focus, Will Cut 18 Percent of Staff

Most of the 364 jobs cut will not come from game development, CEO Mark Pincus says.

Asa Mathat

With Don Mattrick out and founder Mark Pincus reinstalled as CEO, what will Zynga’s future look like?

For one, think a bit smaller: The company said today that as part of a $100 million cost reduction program, it would lay off 364 people, 18 percent of its total headcount, and focus on five categories of mobile games rather than continuing to branch out into more and more genres as it did under Mattrick.

Those categories are Action-Strategy (such as Empires and Allies, a new game launched yesterday), Social Casino (Hit It Rich), Invest & Express (FarmVille), Casual (Words With Friends) and Racing (CSR Racing).

The layoffs will finish within the next three quarters, according to a company press release, and are expected to save $45 million every year. Zynga expects to cut $55 million in other costs by the third quarter of 2016, but will take on restructuring charges of between $18 million and $22 million in the current quarter.

Zynga also came in ahead of Wall Street’s earnings expectations in the fiscal quarter that ended in March, reporting a net loss of $6.7 million, or one cent per share, on $167 million in sales. The Street was expecting a loss of two cents per share on sales of $148 million.

In an interview with Re/code, Pincus said the layoffs are aimed at “de-layering and de-cluttering the organization” and have come from corporate and central services, rather than game development. However, the company will exit the sports genre it entered last year and close the Orlando studio that developed the fantasy football-esque game NFL Showdown.

“We identified a couple places where we want to be world-class, like data analytics,” Pincus said. “But in other places — we will let Amazon manage our data centers, for instance.”

Mobile now accounts for 63 percent of Zynga’s revenue, continuing a trend that started last quarter; the company previously said it hoped to get that number to 75 percent in the current fiscal year.

Pincus said some games such as Zynga Poker and FarmVille still have “significant” daily active users on the Web, but that moving forward, the strategy for all games is “mobile first or mobile-also.” He pointed to the success of the Hit It Rich slots games amid several other casino game options as a model for attracting players to new releases.

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