Zango has laid off people and transforms in casual games distributor

Zango, the controversial online advertising company whose business tactics have been consistently attacked by privacy experts, has laid off 68 employees.

The cutbacks — announced internally Monday — come as the Bellevue provider of pop-up ads attempts to transform into a casual games distributor. The layoffs also come a month after Zango was named one of the best companies to work for in the state by Washington CEO magazine.

The company declined to comment beyond a prepared statement:

“Zango’s top priority for 2008 has been the planning, development and release of Platrium, a unique casual gaming experience launched in beta last month. During this time, it has become clear that this new product is the future of the company and, as a result, Zango is narrowing its focus. This significant shift for the company will impact 68 jobs across the company’s six offices in four countries … . While this was an incredibly difficult business decision which impacts Zango’s amazing base of employees, the company is very excited about its future and new direction with Platrium.”

Sources said that two executives also departed, Executive Vice President of Corporate Development York Baur and Chief Technology Officer Ken Smith. Smith, who co-founded the company in 1999, is the brother of Chief Executive Keith Smith. A Zango spokesman declined to comment on the departures.

Zango, formerly 180solutions, has been criticized over the years for installing its ad-serving software without computer users’ knowledge and making the uninstall process difficult to navigate. In 2006, the company settled a dispute with the Federal Trade Commission and agreed to pay a $3 million fine.

Since that time the company has made a series of acquisitions to broaden its focus, including New York-based HotBar and Tel Aviv, Israel,-based SmartShopper. It also has bolstered its casual games business, with more than 5 million monthly unique visitors to its portfolio of free games.

In 2004, the company launched a major expansion after landing $40 million from Spectrum Equity Investors. Its staff more than doubled to about 240 people, but layoffs started in October 2005.

With the most recent layoffs, the company continues to distance itself from the legacy pop-up advertising business that has landed it in so much hot water.

The privately held company, profitable with revenue of $50 million in 2004, did not say how many people it now employs. But a source with knowledge of the company put the figure at about 130 people, with staff in Tel Aviv, Montreal and Bellevue.

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Published by Reinout te Brake

Reinout is a games investor and strategic business consultant specializing in the games industry. Reinout established his credentials through his own successful investments, start-ups, consulting and (advisory) board positions that led through time to strong bonds with key stakeholders in this fast paced industry. He is known for his outstanding results in the gaming industry. He has worked with many game studios around the globe and is therefore well known in the international gaming industry. Check out his games podcast;

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