Troubled game maker Zynga Inc. closed its Cambridge office Tuesday, part of a companywide 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 5 percent and is also proposing to close its studios in Japan and the United Kingdom. The company also reduced its head count in Austin, Texas.
“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 a Web game, The Ville.
Revenues at Zynga, best known for the 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 this year, and executives earlier this month warned they would be implementing cost cuts. The company also lowered its outlook for the rest of the year.
The company, which went public in December, is set to release its third-quarter earnings Wednesday. Its shares fell 5 percent Tuesday to close at $2.20.
Nabeel Hyatt, who ran Zynga Boston until last February when he left to join venture capital firm Spark Capital, said he heard about the closure from local employees. 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. On Tuesday he tweeted: “The outpouring of support for us has been incredible. Love this Boston scene.”
Downsizing at Zynga came on the same day 38 Studios LLC, Curt Schilling’s failed gaming company, held an auction in Providence to sell some of its remaining assets. The company abruptly shut its doors in May, laying off about 400 workers. Many of them have landed on their feet, whether at rival firms or starting their own ventures.
Similarly, other gaming firms were already courting laid-off Zynga employees on Twitter Tuesday afternoon, including Eitan Glinert, founder of Fire Hose Games, a Cambridge game maker. “It feels like a funeral in some ways,” he said of the closures, adding, “these people are talented and I have no doubt they’ll get snatched up by companies around here.”
He also said he thought the timing of the Zynga layoffs — while Apple was unveiling its latest iPad — was “crummy.”
Said Glinert: “These people were, from what I understand, blind-sided.”