Troubled game-maker Zynga Inc. closed its Cambridge office Tuesday as part of a company-wide cost cutting plan as it continues to struggle with the decline of game playing on Facebook and increasing competition.
The local outpost had grown to about 50 employees, formed after the San Francisco company acquired two Boston-area start-ups in 2010 and 2011, Conduit Labs and Floodgate Entertainment. The unit, known as Zynga Boston, launched its first game, “Adventure World,” in September 2011. That game evolved into Indiana Jones Adventure World a few months later.
“Earlier today we initiated a number of changes to streamline our operations, focus our resources on our most strategic opportunities, and invest in our future,” Zynga chief executive and founder Mark Pincus wrote in a memo to staff. “As part of these changes, we’ve had to make some tough decisions around products, teams and people.”
Pincus wrote that the company plans to reduce its workforce globally by five percent and is also proposing to close its studios in Japan and the United Kingdom. The company also reduced its headcount in Austin, Tex.
“This is the most painful part of an overall cost reduction plan that also includes significant cuts in spending on data hosting, advertising and outside services, primarily contractors,” Pincus wrote.
The company is also phasing out 13 older games and significantly reducing its investment in web game, The Ville.
Revenues at Zynga, best known for Facebook game Farmville, have fallen as gamers moved on to newer offerings on smartphones and other mobile devices. Zynga’s stock price has plummeted 76 percent so far this year, and executives earlier this month warned they would be implementing cost cuts.
The company, which went public in December, is scheduled to release its third-quarter earnings on Wednesday. Shares of Zynga on Tuesday dropped 5 percent.
Nabeel Hyatt, who ran Zynga Boston until last February, when he left to join venture capital firm Spark Capital, said he heard the closure from local employees who said they were surprised by the announcement.
Hyatt said the studio was within a few weeks of wrapping up work on a new game. “I think this is about getting Zynga back to profitability, which is a big goal for Mark [Pincus],” Hyatt said. “And by eliminating a satellite office, maybe it’s seen as something that doesn’t affect the morale at headquarters as much.”
Fareed Behmaram-Mosavat, the most recent head of Zynga Boston, could not be reached for comment. Earlier today, he tweeted, “All we have as leaders is trust and loyalty. Squander that and you lose everything.”