Social gaming company Zynga announced yesterday that it would cut 18 percent of its employees, in part because targeting consumers on mobile devices requires fewer employees than running a Web-focused company, according to news reports.
In addition to cutting more than 500 jobs to right-size itself as a mobile-focused company, Zynga is shuttering its offices in New York, Los Angeles and Dallas, AllThingsD reports.
The company designs games including FarmVille for social media websites such as Facebook, but like other social media companies Zynga is searching for a way to make a significant profit off its games.
Online gaming is growing despite Zynga’s recent cost-cutting measures, which included ending use of18 games in the past six months, USA Today reports.
The number of people in the U.S. who play games on the Web, phones or social networks is expected to grow 5.6 percent to reach 80.3 million by the end of 2013 according to eMarketer.
Part of Zynga’s strategy may be to shrink and live off its cash reserves betting that state and federal restrictions will eventually permit online gambling. The San Jose Mercury News reports the San Francisco-based company would in the best position to take advantage of legalized online gambling.
Gambling lobbyists and have raised the stakes this year in a push to allow online gambling and are searching for allies in Congress, The Hill reports.
Rep. Peter King (R-NY) and Rep. Joe Barton (R-Texas), each plan to introduce bills to legalize online gambling, Reuters reports.
The layoffs announced on Monday are the latest blow to Zynga’s stock, which has failed to produce predictable earnings since going public in December 2011, Kotaku opines. The stock plummeted 41 percent in July 2012, and the company failed to profit from a $210 million acquisition of online game DrawSomething.
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