In late 2010, the social gaming company Zynga was on a buying spree. Riding high on the success of FarmVille, the San Francisco-based startup was snatching up smaller rivals across the country, including Dallas' Bonfire Studios some three months after the firm released the not-at-all derivative We Farm.
But there's only so much digital farming Facebook users can do before it starts to seem like actual labor, and Zynga's fortunes have steadily faded over the past year and a half. After a much-ballyhooed initial public offering, the company's stock price peaked in March 2012 and then, starting with Facebook's IPO two months later, took a nosedive. The price has been hovering at about $3 per share for months, about a quarter of its 2012 peak.
Zynga responded today by slashing 520 jobs, reducing staff costs by $80 million, and closing offices in New York, L.A. and Dallas. All Things D explains the move in more detail:
The reason? Mobile -- a business Zynga must conquer, despite its currently smaller prospects for monetization compared to its Web business.
After a rocky IPO and trying to cope with rapid changes in its core businesses, Zynga now must refocus the company's flagship franchises and network on the shift to mobile and a narrowing of focus at the company.
In other parlance, this is a "right-sizing" of Zynga to reflect a more somber reality that these mobile businesses are not as large as its Web-based ones that rode the startup to glory on the explosive growth of social networks, primarily Facebook.
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Zynga's fate remains to be seen. That of its Dallas employees is, unfortunately, quite clear.