Zynga Lays Off 314 Employees; Buys NaturalMotion Games

Zynga Lays Off 314 Employees; Buys NaturalMotion Games

Zynga made two major announcements today, laying off about 15% of its workforce and acquiring Clumsy Ninja publisher NaturalMotion Games in a $527 million dollar deal.

Zynga is letting go of 15% of its staff, cutting about 314 jobs. The cuts are part of the publisher's plans to reduce costs and generate up to $35 million in savings this year. No individual studios will be shut down, and CEO Don Mattrick says most of the cuts will come from "infrastructure" areas. Zynga reshuffled its executives and laid off about 520 people last summer.

Zynga also announced today the acquisition of NaturalMotion Games, a U.K.-based mobile games publisher. The $527 million dollar deal brings 260 employees and NaturalMotion's catalogue of games, including freemium iOS titles CSR Racing and Clumsy Ninja, to Zynga. The move seems like a new direction for Zynga, and may be part of Mattrick's plan for stabilizing the company. Mitch Lasky, former EA executive and colleague of Mattrick, commented on the acquisition in a blog post. "NaturalMotion will provide Don with a fantastic slate of mobile products (both new, innovative ones, as well as sequels of their current hits). Combined with Zynga's reach, social networking expertise, and advanced audience measurement tools, NaturalMotion and Zynga should be a very potent combination."

Zynga was expected to perform dismally in the fourth quarter of 2013, with analysts predicting a loss of 4 cents per share. The FarmVille publisher actually lost 3 cents per share, and that slightly less dismal result prompted a jump in its share price. The social games giant reported $176 million in revenue in the fourth quarter, putting it down 43% from 2012. Zynga also reported a drop in average users, down to 112 million from 298 million at the same time in 2012.

Source: TechCrunch

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Job losses are always bad news, i feel sorry for all those aspiring game designers that got conned into joining Zynga's horrible, impersonal and wholly bizarre corporate structure.

For Zynga in the past it's dealings, business structure and even announced profits (which by law need to be right for a PLC) are all smoke and mirrors. These numbers don't look like a company who is about to collapse i give them that but they are still effectively in free-fall.

There are still the legal issues of the IPO that hang over them too. If Zynga was to collapse i bet a lot of interesting details might emerge and make things uncomfortable for their founders who, by the way, are essentially white collar criminals.

Base salary for new CEO: $1 million per annum.

Signing bonus to poach him from the Xbone (like shooting fish in a barrel, admittedly): $5 million.

Stock options to make up for what he loses from leaving the old company: $25 million.

The look on the faces of 314 employees when they realise they're being let go to make savings roughly equivalent to the cost of hiring a new CEO: Priceless.

There are some things money can't buy. For everything else, there's MasterCard capitalism.

Wait... Natural Motion, as in the owners of the Euphoria physics engine? The thing that handles physics for games like GTA 5?

If this buyout includes all rights to the Euphoria engine and the licensing agreements that were made to other companies, than this could be a huge play by Zynga.

I ain't so good at the math while I'm going on about two hours of sleep, but a quick estimate would say that for 300~ employees laid off to be a 15% drop, that would mean there was about 2000 and it dropped down to about 1700. And then, with this purchase, it's pretty much back up there anyways. Again, very quick and crude math. Super sleepy right now.

But why does a social games creator need so many employees? I'm genuinely curious. That seems to be a hefty amount of employees, more than a lot of AAA studios. I'm not mocking or anything. I'm admitting my own ignorance of this and I would like to know if there's a reason behind it.

Also, good luck to the guys who lost their jobs. Hope you can find someone better than Zynga next time.

As much as I try to be rational, the fact of the matter is, I just want everything Zynga does to not work out for them and for them to die horribly. I honestly can't believe they employ that many people to reskin other games and make cheap social spiderwebbing shit.

So they fired a bunch of people so they could buy another company? Wow I would hate to work for them.

I'm honestly surprised Zynga had 314 employees left to lay off.

So if I'm reading this right then 314 people lost their jobs so around 2,000 people could make $35 million this year. Spread the wealth people.

Zynga had over $500 million available? Colour me suprised. It will only take them 15 years for these job cuts to recoup that investment.

So they hire a new CEO that was already recently an ass in public, costing them tens of millions in singing bonuses and stock options. Then they buy another publisher at $527 mil when they are already a publishing company. Finally, they lay off 314 of their own people citing they're are from "infrastructure" positions. Any order they did those in is beyond dick moves and in the realm of super-villainy.

Don Mattrick was an asshole even as the head of xbox. Now, hey joined a company full of them to the entire board reach new lows in assholism. Maybe with all those greedy execs confined together they'll all go prompt critical and finally wipe out this company, and the in house developers and other employees can make new companies out of its corpse. Unlikely, but one can hope.

I bet they only bought Natural Motion so they could milk their IPs dry while avoiding claims of plagiarizing them. If Zynga had the moolah to buy another firm at $527, they could have spent it on their current team developing more smartphone games. Only they'd be too tempted to copy Angry Birds and Fruit Ninja instead of coming up with their own ideas.

Wow. Really, Zynga and Mattrick's next move might be to take over HSBC's job of laundering money for Drug Lords. . . really, it is not like they have any shame or scruples, they have proven that already.

Also, you lay off 300+ employees, then spend $500 million on a company that is perhaps worth about $150 million . . . Words cannot express the level of cynical idiocy on display here. Assuming those employees averaged $50,000 per year, if you have paid a reasonable price for the acquire company -say $200m- you would have enough money to pay those salaries for roughly 20 more years. Way to take charge, Mattrick.

And we were all right. Western devs CEOs would rather cut off an arm or a leg before letting go of any of their paycheck. Iwata took a paycut so that this wouldn't happen to Nintendo. Sure he's still making millions but its half of what he used to make. HALF OF HIS INCOME gone to save his employees jobs and moral. Zynga CEO "Later all 314 of you. Good luck feeding your families. Now then let's buy something." Disgraceful. Its like a honorable samurai going down in service of his country vs. a sleezy soldier who just wants to save himself. Pisses me off that Nintendo is struggling and doing whatever it can to keep its workers happy but others would just as soon let them go.

Scrumpmonkey:
Job losses are always bad news, i feel sorry for all those aspiring game designers that got conned into joining Zynga's horrible, impersonal and wholly bizarre corporate structure.

For Zynga in the past it's dealings, business structure and even announced profits (which by law need to be right for a PLC) are all smoke and mirrors. These numbers don't look like a company who is about to collapse i give them that but they are still effectively in free-fall.

There are still the legal issues of the IPO that hang over them too. If Zynga was to collapse i bet a lot of interesting details might emerge and make things uncomfortable for their founders who, by the way, are essentially white collar criminals.

Well, to be honest I have mixed opinions about people losing their jobs in cases like this. Zynga has been known to be corrupt for a very long time now, there have been leaks all over the internet from their meetings where they have talked about stealing rather than innovating, and other subjects. At this point anyone who decided to go to work for Zynga is arguably complicit in what they were doing.

The way I see it is the humble secretary answering phones, and the janitor sweeping the floors are just as responsible as the CEO when they know what the company stands for and what it's up to. Through their actions, as minor as it might be, they form parts of the machinery that allow the whole thing to function, even if they are not making any decisions. After all someone needs to do those jobs to make a company work... they might be small gears, but they are still gears, and they were taking money from a group of people that have quite obviously been doing wrong.

Basically the axe fell on a bunch of minor functionaries who were knowingly taking money from a corrupt enterprise.

On a lot of levels I actually feel less sympathy for these guys than say Nazi Concentration Camp guards, because at least the Camp guards were technically in the military, and arguably could have been killed or had bad things happen to their families if they wound up on the wrong side of the party (though honestly, I believe such technical defenses are usually irrelevant since most of them were quite probably sociopathic scumbags and party loyalists to begin with... but there is no way around the basic truth of this). The guys working for a company like Zynga knew they were getting a better paycheck because of all the dirty things their bosses were doing, and did it in order to enrich themselves and find the best employment possible regardless of whether it was right or wrong. There isn't any chance anyone was going to die, or find their family blacklisted and unable to function for choosing not to work for Zynga, they did not volunteer for military service and be told "this is your post" and wound up someplace morally disgusting with an option of doing the job, or facing military justice.

I don't expect a lot of people to agree with this, but at the end of the day I believe Zynga is just so infamously evil as a corporation that there is no way anyone could justify not knowing at this point. It's sort of like how when EA buys out a company I might mourn for what the company once was, but I can't really bring myself to be sympathetic to the guys who sold out to EA knowing what was going to happen given their long history. When a once well loved developer winds up getting it's staff cut or shuffled around for failing to make EA's quota (which happens eventually) especially when they are forced to make the same fail-tastic games as everyone else as opposed to keeping the spark that made them good to begin with... well, it's hard to feel sorry. The first half a dozen times maybe people were blindsided, now if you don't know what's going to happen and what EA stands for business wise, your just stupid, you can't be excused for ignorance with people basically screaming it from the rooftops.

Ryan Hughes:
Wow. Really, Zynga and Mattrick's next move might be to take over HSBC's job of laundering money for Drug Lords. . . really, it is not like they have any shame or scruples, they have proven that already.

Also, you lay off 300+ employees, then spend $500 million on a company that is perhaps worth about $150 million . . . Words cannot express the level of cynical idiocy on display here. Assuming those employees averaged $50,000 per year, if you have paid a reasonable price for the acquire company -say $200m- you would have enough money to pay those salaries for roughly 20 more years. Way to take charge, Mattrick.

Technically I believe most drug lords are more interested in virtual currency right now, the recent Bitcoin bust had to do with dealings with "Silk Road" which is an underground trading hub for things like drugs. For organized crime to get involved they need to be dealing with something where large chunks of money can be expected to change hands at one time. Zynga's operations usually rely on smaller micro transactions which are harder to work with.

If Zynga was to start going outright criminal I'd expect them to want to launch something on the level of "Second Life" with a framework that technically justifies the transfer and exchange of large sums of virtual currency which can be traded for real money. Indeed Second Life was apparently used heavily for this kind of thing (and arguably still is).

That's a more serious answer than you were doubtlessly expecting. :)

Truthfully I suspect Zynga's purchase was because they see potential in the simple little games this developer was making, and wants the rights to those styles of games in hopes it can intergrate the ideas into other things. Zynga does very little innovation. We also don't know what this company might have been working on behind the scenes or if they scored a big license.

GrinningCat:
I ain't so good at the math while I'm going on about two hours of sleep, but a quick estimate would say that for 300~ employees laid off to be a 15% drop, that would mean there was about 2000 and it dropped down to about 1700. And then, with this purchase, it's pretty much back up there anyways. Again, very quick and crude math. Super sleepy right now.

But why does a social games creator need so many employees? I'm genuinely curious. That seems to be a hefty amount of employees, more than a lot of AAA studios. I'm not mocking or anything. I'm admitting my own ignorance of this and I would like to know if there's a reason behind it.

Also, good luck to the guys who lost their jobs. Hope you can find someone better than Zynga next time.

The reason Zynga has so many employees is the company went on a large spending spree back in 2011/ early 2012 before it's IPO. They spent so much money they had to aritifically infalte their numbers that year by selecting a really weird timeline to measure profits with as not to make an eye-watering loss.

The reason for this was to quickly use up a lot of the capital they had got from the social gaming bubble and try and create the illusion of a large, respectable company before their IPO. Like I've said before Zynga's structure, assets, profits and user numbers are basically all smoke and mirrors. It soon became apparent that Zynga had effectively lied to potential shareholders and had sold off their own sock BEFORE other people had a chance to even buy any and realize the price was crashing. This is insider trading and fraud.

As the profits and users from Framville and the like continue to plummet Zynga wants to hold onto (and keep buying it seems) other people's ideas to mine for more money. BUT as their corporate woes continue it becomes obvious that they are miss-managing the studios they do own and so are closing them as their mobile/social gaming fads fall out of favor.

The basic point is this; Zynga is spending billions of dollars looking for that next massive smash by buying every studio it can. When the hits fail to materialize they simply lay everyone off and start again. They are idiots basically; greedy, lying and possibly actual criminal idiots.

Yeesh, what is up with this company? Laying off people and then acquiring another company that also gives them more employees? And people think capitalism is a good thing sometimes... It's always going to be a mixture of law and capitalism that'll work out in the end. And even then...

Scrumpmonkey:
*snip*

This is why its necessary to protect people from others like this. But that's why we're in this recession to begin with... Then again, maybe I'm over exaggerating. Still feels like we keep getting screwed out of money because other people are too greedy.

I feel sorry for any aspiring artists, programmers or player-moderators/ect that got conned by Zynga. Zynga... not only do they make bad games that are made on the budget of a ham sandwich (with supermaket-own ham, too) they're more than willing to cut 314 jobs to make more bad games with the budget of a cheap ham sandwich.

God, do I just hate mobile gaming.

Therumancer:
-Snip-

You're basically getting mad at them for trying to survive in a capitalist system. If the US was more socialized, or just had a better system for dealing with the unemployed or those with less money, you could easily fault them for taking a job with such a company. As it stands, you need money to survive because government services are not always a guarantee so you either take a job that pays or you risk not being able to provide for you and yours.

I feel bad for these people because they have just lost their means of providing for themselves, while the company spent about 500 human lifetimes worth of money to buy a new company, which will likely see a similar fate. I'm all for righteous anger and contempt, but don't direct it at victims of a broken system and claim their support alone merits punishment. Zynga, for all its faults is an employer, and when the options are survive on government programs which are critically underfunded, or take a decent-paying job, ethics tend to take a back seat. I think it's awful, but we have to accept the realities of the situation.

Another:
Wait... Natural Motion, as in the owners of the Euphoria physics engine? The thing that handles physics for games like GTA 5?

If this buyout includes all rights to the Euphoria engine and the licensing agreements that were made to other companies, than this could be a huge play by Zynga.

I also thought that at first, but it seems that "NaturalMotion Gaming" is just the name of a mobile game publisher. I would not know, what Zynga would want to do with a sophisticated ai-driven 3d-animation system, so I was shocked as well ;-)

 

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