Game over for 520 Zynga workers

• Job cuts of 18%25%2C or 520 employees worldwide%2C are deepest in Zynga%27s 6-year history
• Company%27s shift to mobile and midcore games is latest gambit to reverse fortunes
• Zynga CEO Mark Pincus hopes to save %2470 million to %2480 million in costs

SAN FRANCISCO -- Beleaguered game maker Zynga zapped 520 jobs today in a deep cost-cutting move that increases questions about its future.

The company, based here, said it will lay off 18% of its workforce worldwide and shutter offices. Zynga declined to say where but sources, who asked not to be identified, said the locations are in Los Angeles, Dallas and New York. Zynga says the move, which should be completed by August, will save it $70 million to $80 million.

Zynga on Monday said it anticipates a second-quarter loss of $28.5 million to $39 million.

The news sent Zynga shares tumbling 12%, to $2.99 -- far below its IPO price of $10 per share.

"None of us ever expected to face a day like today, especially when so much of our culture has been about growth," Zynga CEO Mark Pincus said in an e-mail message to employees on Monday. "But I think we all know this is necessary to move forward.

"The scale that served us so well in building and delivering the leading social-gaming service on the Web is now making it hard to successfully lead across mobile and multiplatform, which is where social games are going to be played," Pincus said.

The largest layoff in the nearly 6-year history of Zynga is its latest blow. The company has endured player defections, increased competition amid slumping revenue, and the elimination of 18 titles in the past six months. Last fall, Zynga announced about 150 job cuts.

That has caused Zynga to focus more on mobile and so-called midcore games in hopes of changing its course. Zynga defines midcore as games that "blend the depth of hard-core games, traditionally played on a PC or console, with the approachability and accessibility of casual games that are mobile, free-to-play and social," says Steve Parkis, senior vice president of games, midcore, at Zynga.

"The market for mobile gaming is morphing in super-quick cycles, and companies in the space can get whipsawed as a result of it," says P.J. McNealy, CEO of Digital World Research. "Zynga's layoff news, again, is clear evidence. It's also clear that this won't be the last round of layoffs."

While Zynga struggles to maintain users, the number of people in the U.S. who play games online, on their phones or through social networks continues to grow. That figure is expected to grow 5.6% to reach 80.3 million this year, according to eMarketer.

"Our opportunity is to make mobile gaming truly social by offering people new, fun ways to meet, play and connect," Pincus said in the e-mail. "By reducing our cost structure today, we will offer our teams the runway they need to take risks and develop these breakthrough new social experiences."