In other words, we could see a board game of FarmVille, Words With Friends or CityVille in the not too distant future. In addition, we could potentially see action figures based on some of its game characters.

Merchandising around videogames is not new, and has recently spread like wildfire to mobile and social gaming with rising stars like Rovio’s Angry Birds or ZeptoLab’s Cut the Rope.

In a press release, Zynga says Hasbro has obtained the license to develop and distribute a wide range of product lines based on Zynga’s game brands, but does not get into too many details.

It also says the deal covers opportunities for co-branded merchandise featuring a combination of both Hasbro and Zynga brands, it said. Could we see a co-branded Words With Friends Scrabble game?

Hasbro already has a long-standing relationship with Electronic Arts, which publishes such titles as Scrabble and Monopoly across many platforms.

In a statement, Zynga’s CEO and founder Mark Pincus said, “This partnership is so special because it represents an exciting leap forward in enabling people to connect their virtual and real worlds. Hasbro has inspired play through their famous toys, games and action figures and we look forward to working with a company that continually creates meaningful and fun brands.”

The two companies said the first products will hit shelves in the Fall.

Its multi-million dollar investment in Star Wars: The Old Republic, is starting to pay off.

In EA’s third quarter, the massively multi-player online game generated 1.7 million active subscribers and sold more than two million units in a little over one month.

Is that enough units sold to call off the critics?

In an interview, EA’s CFO Eric Brown said he thought so. ”We were able to sell more units beyond what we were able to plan, and because of that, it was a big part of the upside of our EPS of 99 cents a share,” he said.

The company said non-GAAP diluted earnings per share, which excludes acquisition costs and other non-cash items, totaled 99 cents, exceeding its guidance of up to 95 cents, and exceeding analyst expectations of 93 cents.

The company’s non-GAAP revenues also exceeded estimates, totaling $1.65 billion, which was slightly above the top end of internal guidance and the $1.61 billion that analysts were looking for.

Additionally, its big first-person shooter, Battlefield 3, performed well.

To date, Brown said the game has sold 11 million units, and that it was able to gain 12 points of market share in the category year over year. “It’s an incredible success,” he said.

Still, in after-hours trading, the company’s stock continued to slip, dropping 4.3 percent, or 79 cents, to $17.65 a share.

The company’s fourth-quarter outlook suggests that it will not be able to sustain the levels seen at the end of the quarter. It predicts that non-GAAP revenue will be between $925 million and $975 million, and earnings per share will fall between 10 cents and 20 cents.

In the third quarter, EA’s GAAP revenues, which follow all accounting standards, totaled $274 million. Its loss per share was 62 cents, weighed down by the acquisition of PopCap as well as other expenses.

Brown said it was also worth calling out that its digital revenues for the 12 months ended in December hit $1.07 billion, exceeding the company’s goal of hitting $1 billion in digital revenues by March.

Digital revenues in the quarter grew 79 percent year over year with the assistance of Star Wars and digital revenue coming from Battlefield 3, he said.

The videogame company’s stock has also been hammered by recent concerns about how well its new online blockbuster title Star Wars game is selling after launching in December.

In 2011, U.S. retail sales of new physical videogame content — including portable and console hardware, games and accessories — totaled $17.02 billion, an 8 percent decline over the $18.6 billion generated the year before, according to NPD.

Additionally, multiple reports indicate that while unit sales were up year over year in December, overall revenues suffered from steep discounting. Game retailers, such as GameStop and Amazon, both reported that holiday sales fell below expectations.

Electronic Arts’ third-quarter figures will be released today after the bell.

Its stock is trading down 12 cents, or .62 percent, to $18.46 a share. That has fallen significantly from its recent high of $25.20 back in November.

Back in October, the company said it was expecting third-quarter revenues of $1 billion to $1.1 billion and a loss per share of 77 cents to 63 cents. Excluding some stock-based compensation, acquisition-related expenses and other charges, the company said it is expecting a profit of 85 cents to 95 cents a share.

Analysts are expecting revenues of $1.61 billion and earnings per share of 93 cents.

The company also faced a setback when it announced that Barry Cottle, who was in charge of the company’s digital efforts, was leaving the company. Cottle took a job with Zynga, the company’s rival when it comes to talent and publishing games on Facebook.

And, while the industry is continually contracting on the hardware and physical retail front, one area of tremendous growth is digital.

At the time of Cottle’s departure, which was the third high-profile steal Zynga made over the past year, EA confirmed the company had achieved more than $1 billion in digital revenues in 2011.

Digital revenues include everything from downloadable content on consoles to social games, like the company’s hit The Sims Social, to the new release of Star Wars: The Old Republic, which is set to challenge Activision’s World of Warcraft game.

In the second quarter, EA said digital revenues were growing 30 percent year over year, and because of that, it was able to raise its full-year guidance.

Check back here to see if the company can deliver.

Electronic Arts is predicting that the New York Giants will defeat the New England Patriots in the Super Bowl, by a single field goal.

For the past several years, the videogame publisher has been using its hit title Madden NFL to simulate the outcome of the Super Bowl — and in six out of the past eight matchups, it has guessed correctly.

But unlike the camel in the New Jersey zoo that has picked the winner of five of the last six Super Bowls, EA breaks down the score quarter by quarter.

EA simulates the Super Bowl by using artificial intelligence and real data from each team. It even includes variables such as injuries. The simulation is powered by Madden NFL and Xbox 360, the official console sponsor of the NFL.

EA replays the game’s highlights in a video, including Giants quarterback Eli Manning being named MVP for completing 25 of 39 passes with two touchdowns, and the Patriots’ Tom Brady throwing for 327 yards and three touchdowns.

Spoiler Alert: To win the game, Giants kicker Lawrence Tynes will make a 40-yard field goal, with the final score 27-24.

But one of PopCap’s original developers, Roy Liu, believes he has come up with an alternative. Gimmie, based in San Francisco, has created an incentives platform for mobile app developers.

It launches today with 10 mobile app developers in its beta program.

It works like this: In return for using the app, a player can earn points which can be redeemed for real-world products. It’s sort of like a traditional arcade, where players earn tickets that can be redeemed for candy and toys, but instead of gumballs and baseball cards, Gimmie primarily doles out game downloads and other mobile content.

Gimmie is also announcing today that it has raised $200,000 in funding from Tandem, an incubator in Silicon Valley.

Liu, who was one of the lead developers on Plants vs. Zombies for PopCap before it was purchased by Electronic Arts, co-founded the company with CEO David Ng.

The idea is not so different from other in-game incentive programs, which ask users to fill out a survey or download a different game in exchange for free virtual goods or other benefits.

Those types of programs, served by companies like TapJoy and others, have been immensely successful — although more recently, they have been received poorly by Apple and others because they can affect the most popular games list.

Gimmie believes what it is doing is different because it rewards users with items outside of the app for performing actions inside it.

Other companies are also trying to come up with alternative advertising platforms for mobile games. In games, banner ads are often completely ineffective because people are focused on playing the game, and don’t take the time to read the ad or leave the page to investigate it further.

A Chicago-based start-up called Tap.me is creating an ad network for virtual goods, which can gain advertisers on a broad scale for generic items, such as being able to jump higher or more energy across many games.

Zynga was up 42 cents, or almost 5 percent today, to close at $8.87 a share.

That’s a huge reversal from earlier this week when the stock nosedived to an all-time low. Meanwhile, none of the traditional game makers were having such a good day.

Electronic Arts closed down $1.47, or 7.5 percent, to $18.04 a share; THQ fell 7 percent to 66 cents a share; Take-Two Interactive fell .5 percent to $14.50 a share; and industry-leading Activision Blizzard slipped 2.5 percent $12.24 a share. GameStop also traded lower, finishing off the day down 2.8 percent to $23.51 a share.

The game makers were universally feeling the impact of an NPD Group report that revealed yesterday that videogame software sales fell 8 percent in December compared to the same month in 2010. When including hardware and accessories, like game cards, the entire industry contracted by 21 percent year over year.

Potentially, investors were betting that if the traditional game-makers weren’t fairing well, then Zynga was a good bet. The leading Facebook game-maker operates purely online and on mobile, so it potentially would be more isolated from the retail and packaged goods sectors.

The old guard vs. new guard battle also played out on the front lines yesterday.

EA was dealt an additional blow when Zynga announced it had hired away Barry Cottle, head of Electronic Arts’ Interactive division. Cottle, who was in charge of the company’s digital strategy, including social and mobile games, was EA’s biggest weapon in fighting Zynga’s dominance on Facebook and had led EA’s rise on mobile.

But EA’s loss was Zynga’s gain.

The social games leader appointed Cottle to the position of EVP of business and corporate development in charge of new global partnerships, acquisitions and other development roles.

According to NPD data released today, about $6.7 billion, or 40 percent of consumer retail spending, was spent on the Xbox, breaking down into two categories: $2.1 billion on consoles and $4.6 billion on games.

The figures take into account U.S. retail sales of new physical videogame content, including portable and console hardware, games and accessories.

In all, those sectors generated revenue of $17.02 billion in 2011, an 8 percent decline over the $18.6 billion generated last year. (Yes, I repeat, Microsoft got 40 percent of that in 2011.)

The initial report does not take into account sales from digital formats such as downloadable content on the console, social and mobile games, or other categories, including used and rentals.

Those so-called “newer” categories generated $7.24 billion in revenues last year, an increase of 7 percent over the prior year.

The increase in spending on alternative formats, however, wasn’t enough to offset declines in physical retail. All told, consumer spending across both categories totaled between $16.3 billion and $16.6 billion, falling 2 percent over last year.

Separating physical and digital sales is quickly becoming an outdated concept, since the two are so intertwined. Consumers have the choice of purchasing many of the games over the Internet via a digital download versus buying them at Wal-Mart or Target.

NPD acknowledged today that it needs “deeper visibility” into digital distribution to get a complete picture of the industry, which will be its focus in 2012.

Still, the report can still be used as a litmus test to see what is performing well.

Overall, a surprisingly disappointing December is what dragged down results for the whole year, NPD discovered.

“Because of the great slate of content that came to market during the fourth quarter, I had expected December sales to represent a larger portion of total year sales than what occurred,” said NPD Group analyst Anita Frazier, in a release.

Frazier added that December sales accounted for just 23 percent of the annual total, compared to the past 10 years, when December, on average, represented 28 percent of the total.

In addition to Microsoft’s Xbox, Sony’s PlayStation also performed well, with both witnessing a 5 percent increase across all game categories for 2011. Meanwhile, the Nintendo Wii, which cannot display HD content, saw a decline year over year.

In a separate statement, Microsoft said that it outsold the PlayStation, the second-place console, by 2.7 million units, and that in all, it has now sold 66 million Xboxes and 18 million Kinect accessories. On a global basis, Sony said in a statement that it sold more than 6.5 million units worldwide this holiday season.

Here are the Top 10 best-selling games in December, according to NPD:

1. Call of Duty: Modern Warfare 3 by Activision Blizzard
2. Just Dance 3 by Ubisoft
3. Elder Scrolls V: Skyrim by Bethesda Softworks
4. Mario Kart 7 for 3DS by Nintendo
5. Battlefield 3 by Electronic Arts
6. Madden NFL by Electronic Arts
7. Assassin’s Creed: Revelations by Ubisoft
8. NBA 2k12 by Take Two Interactive
9. Super Mario 3D Land for 3DS by Nintendo
10. Batman: Arkham City by Warner Bros. Interactive

Last year, Zynga hired Electronic Arts’ COO John Schappert, who now holds the same title at the social games company. It also picked up EA Play’s EVP Jeff Karp, who is now Chief Marketing and Revenue Officer.

Most recently, Cottle was overseeing EA Mobile, Playfish, Pogo, Hasbro and PopCap, and had been one of the key driving forces behind transforming the company from primarily a packaged goods company to a digital company.

At Zynga, Cottle will serve as EVP of business and corporate development in charge of new global partnerships, acquisitions and other development roles.

In a letter sent to employees today, Electronic Arts CEO John Riccitiello downplayed the departure of Cottle, and said it was going to fold EA Interactive into the entire organization now that “everyone and everything is digital.”

Four years ago, when it originally set up EA Interactive, it was to oversee mobile, social and Pogo, he explained. But today, those initiatives are part of every group within the company.

“It’s abundantly clear that the digital transformation is not confined to one group,” he wrote. “Therefore, we have decided to begin 2012 by folding EAi into the organizations noted below. This reflects our new reality: everyone and everything is digital.”

Executives now leading the charge include EA Labels President Frank Gibeau, COO Peter Moore, CTO Rajat Taneja and EVP of digital Kristian Segerstrale.

Riccitiello provided further evidence of EA’s digital transformation by announcing that the company had achieved more than $1 billion in digital revenues in 2011.

The loss of another high-profile executive to Zynga represents a signficant blow to the company, which has been clear about its attempt to challenge Zynga’s dominance in social gaming. Last year, it paid $750 million to acquire PopCap to become the second-largest social game maker on Facebook.

Cottle, who was at EA for the past five years, previously worked at Palm, where he held the position of COO, and at the Walt Disney Company, where he was he was an SVP and chief marketing officer.

“It’s rare that you find someone who possesses a deep operational background and also has the vision to see where your business and your industry are headed,” said Zynga’s CEO Mark Pincus in a release. “His skill set, combined with his deep understanding of the games, technology and entertainment spaces will help us accelerate our mission of connecting the world through games.”

The e-commerce giant (a term typically reserved for Amazon in these woods) is one of the larger examples companies from the Bay Area that are setting up shop here and looking to soak up some of the Northwest’s rich engineering talent.

Other companies with satellite offices in the Seattle area include Google, Facebook, Zynga and Salesforce.

“I’m surprised I ended up at eBay, but the story is compelling,” said Ken Moss, who was hired in November to be eBay’s VP of managed marketplaces technology; Moss is GM of the Redmond office.

A long-time Microsoft employee whose claim to fame includes inventing the Pivot table in Excel, Moss more recently co-founded CrowdEye, a start-up focused on search technology and later on stock market prediction.

He said eBay’s dedication to the region is one of the biggest selling points for recruitment.

Most of the 75 employees that currently work there were hired over the past few months, and a small team has been here for seven years. Among the newbies I met were a number of Microsoft veterans who had been there for 12 to 15 years.

Moss says he will report directly to eBay’s CTO Mark Carges, which is “a signal to the whole company that diversified development is for real.”

“We are first-class citizens,” Moss said, referring to sometimes strained relationship between remote workers and a company’s headquarters.

Eric Brill, VP of eBay’s research labs, is also based in the Redmond office, and has been working part-time there since joining the company in 2009.

Moss said eBay will be looking to hire a range of technologists, from college graduates to senior leaders, including developers, testers, researchers, data miners and other positions.

While I was at the office on Tuesday, the mountains were peeking out from the clouds and were easy to spot from the floor-to-ceiling windows on the fourth floor. It was easy enough for everyone to have a window seat in the open-floor plan.

Although the employees just moved in on Monday, a sign outside the building already announced eBay’s presence. Inside, workers were busy putting the final touches on the space to make it feel like eBay. Primary colors of red, blue, yellow and green highlighted the office walls; with a bit of Seattle flair, conference rooms were named after Northwest tribes such as Puyallup and Quinault (and other names that might be difficult for San Jose-based employees to pronounce).

But missing were some of the perks that some recruits expect these day — no shuttles to and from work or fancy cafeterias, for instance. 

In fact, eBay has a long way to go to compare with what Google has done here. Since entering the market seven years ago, Google has hired more than 900 employees, spread across two locations, a spokesperson confirmed.

One office is in Seattle’s Fremont neighborhood; the other is on the Eastside.

The two offices are geographically divided by Lake Washington, which can be crossed by one of two floating bridges — or by boat, if you are crafty enough. The traffic bottlenecks make for a horrendously notorious commute, so having two locations that straddle both sides is a huge perk — like having offices in both San Francisco and San Jose.

Because of Google’s size here, many of its perks are similar to its Mountain View headquarters, including free meals prepared by chefs, frozen-yogurt bars and other, mostly food-based, luxuries.

In eBay’s case, the new digs are located deep on the Eastside, a couple of miles past Microsoft in Redmond, and roughly 15 miles from Jeff Bezos’s empire in downtown Seattle. Recently, Amazon relocated its headquarters to a brand-new campus in South Lake Union, a neighborhood being revitalized by former Microsoft executive Paul Allen.

Other outside companies that have also established sizable tech centers here include Facebook and Zynga. A couple others have gained offices through acquisitions. Electronic Arts, for instance, now has a large office here, after acquiring PopCap; EMC now has big expansion plans here, after purchasing Isilon.

And Geekwire, a Seattle-based technology blog, is good at keeping an ongoing tally, including recent moves into the area by Jawbone and SweetLabs, a San Diego-based start-up, based by Intel Capital and Google Ventures.

Two years ago, Facebook opened an office in the heart of downtown Seattle. It plans to move soon to a 27,000-square-foot space that will have room for about 135 employees. The 70 or so engineers in the office today have worked on projects such as video calling, the Facebook iPad app and other big issues, such as security.

Last April, social game maker Zynga opened an office in Seattle’s historic Pioneer Square neighborhood, hoping to absorb some of the game talent here, spawned from Xbox and Nintendo, and cloud-computing knowledge from Amazon. It has 50 employees today, but declined to say how many it planned to hire in the near future.

As with most of these companies, eBay believes it can find a diversity of talent here that can’t always be easy to hire in the Bay Area.

As a Seattle native, and having covered tech here for the past 12 years, including an eight-year stint at the Seattle Times, I might not be the most unbiased on the subject. But I’ve seen first-hand the breadth of talent here, from Microsoft, Amazon, Expedia, T-Mobile and many others, including a strong start-up pool.

Despite that, the local tech community often suffers from an inferiority complex when it compares itself with the Bay Area, which is much larger. Still, it seems that Silicon Valley companies are finding a number of excuses to travel north to drink from the area’s plentiful tech waters.

The two independent moves illustrate how quickly the social games industry evolves.

Rather than tell the stories separately, here’s an overall look at how Google plans to chip away at Facebook’s dominance as a platform, and how EA is challenging Zynga as the top social game maker.

Google said this morning that its third exclusive game has launched on Google+, meaning that it will have the game before any other social network for the next 30 days. The other two were Rovio’s Angry Birds and Kabam’s The Godfather.

The new game, Pirates: Tides of Fortune, was created by Israeli developer Plarium.

The game has a city-building theme, where you must build rum distilleries, lumber yards and gold mines so you can build ships and defend yourself. A fun twist is that the game can be set to speak to you in Pirate or English, French, German, Spanish or Russian.

Meanwhile, Electronic Arts, the second-largest social game maker on Facebook behind Zynga, is following up the successful launch of The Sims Social with a Hasbro game title, Risk: Factions.

Instead of replicating the board game or console version of the game, EA says it has added a plot. Players must pick a faction, either the Humans, led by General William P. McGutterpants; an army of fearless Cats led by the honorable Generalissimo Meow; or a militia of brain-starved Zombies led by the cadaverous Colonel Stiffenberg.

Each develops special weapons, which give each faction a different strategy, and then players get to attack one another by rolling the dice. Players can also develop their military base to build up their troops and construct factories to produce weapons.

Some social games companies are opting to offer Google an exclusive because the search company says it will help promote the game. Also, although Google+ has a smaller network of users, it takes a smaller cut of the revenues — 5 percent compared to Facebook’s 30 percent — so it’s possible any revenue difference can equal out.

Still, Facebook has the larger gaming presence, totaling around 200 million users worldwide. At this point, it isn’t worth mentioning that it has gained a new exclusive, either.

Zynga easily tops the social games charts, but Electronic Arts is slowly creeping up through a combination of acquisitions and games based on well-known brands.

At one time, The Sims Social was close to toppling Zynga’s CityVille game as the largest game on Facebook, but it has since slipped in the rankings, trailing behind several other Zynga titles, according to AppData.

EA has launched other Hasbro titles on Facebook, including Scrabble and Monopoly Millionaires, but neither became an overnight hit. Its second-most popular game is Bejeweled, which it gained through its acquisition of PopCap in July.

But it also warned that Tom Clancy’s Ghost Recon Future Soldier, one of the Paris-based company’s big franchise hits, would be delayed by three months, or until its fiscal first quarter of 2012-13.

The game is expected to launch in North America on May 22, and in Europe on May 24, for the Xbox 360 and the PlayStation 3.

Ubisoft said it was expecting third-quarter sales of 650 million euros ($828 million), up 8 percent over the same period a year earlier. That exceeds its previous guidance of 620 million euros ($790 million), which was at the high end of its range.

Two of the games that Ubisoft said performed well during the holidays were Just Dance and Assassin’s Creed: Revelations. The latter faced steep competition from both Activision’s Call of Duty and Electronic Arts’ Battlefield 3. Ubisoft also said it continues to see growth from online sales, which would include social games.

“In continuation of the robust trends recorded for the first half of the fiscal year, Ubisoft reported record-high sales for the Christmas period, exceeding expectations,” said CEO Yves Guillemot, in a release.

Due to its strong third-quarter performance, Ubisoft said it was revising its full-year guidance to 1.08 billion euros ($1.4 billion) on the high end. Operating income before some expenses is estimated to be up to 65 million euros ($82 million), up from the previous estimate of up to 60 million euros ($76.5 million).

Final third-quarter results will be published on Feb. 15.

Wedbush Securities analyst Michael Pachter maintained his neutral rating on the stock, and his 7 euro price target, based on the unclear release schedule and recurring delays.

Ubisoft, which trades on the Paris stock exchange, is currently trading at 5.23 euro.

At one point today, the stock dipped as low as $7.97 a share before closing at $8 even.

At that price, it is $2 below it’s initial stock price of $10, and has lost at least 20 percent of its market value in less than a month.

But why?

The San Francisco social games company has launched at least two new games since going public, and over the past few days, no harsh analyst report has come out with a negative rating.

It appears the once high-flying Silicon Valley company — known for addictive games on Facebook like FarmVille and CityVille, and mobile games like Words With Friends — is having a hard time gaining the market’s confidence.

To be sure, there’s no clear answer for the price drop; and other tech companies that recently went public, such as Groupon or LinkedIn, have experienced their own fluctuations. But there is one theory making the rounds.

Analysts and other sources suspect Zynga’s stock has been propped up over the past month by the underwriters, who agreed to buy shares if the stock started to perform poorly. The stock purchases would have created steady demand for the stock and kept the price relatively stable.

Furthermore, the theory goes, the underwriters have since met their obligations for buying the stock, and therefore are are no longer buying as many shares.

Incidentally, on Friday, Morgan Stanley — one of Zynga’s underwriters — disclosed that it had purchased nearly 16 million shares in December.

But while the disclosure, filed with the with the Securities & Exchange Commission, adds fuel to the theory, it is unclear if those shares were purchased as part of the IPO, or if they were spread out throughout the month.

Zynga declined to comment, citing its quiet period.

Still, whatever the reason for the drop, Zynga’s shares are seeing less demand.

As recently as last week, the stock was trading at $9.45 a share, but since then, it has struggled to stay above $9. On Friday, it lost 12 cents; today, it lost 81 cents, or 9 percent.

But even if the underwriting theory is on the mark, it doesn’t explain the broader question of why Zynga’s stock price is falling. Shouldn’t there be other investors who are willing to buy up a piece of Zynga?

Unfortunately, it seems the market isn’t sure what to do with the stock, or how to value it.

A social games company fits somewhere between traditional game makers, like Electronic Arts and Activision; and an Internet stock, like Google or LinkedIn.

Zynga gives away its games for free, but still manages to be profitable from selling virtual goods, such as a tractor or more power-ups, that a small number of players elect to purchase inside the games.

It’s also heavily reliant upon Facebook, which could be another problem. Facebook, too, operates privately, and reveals only as much information about its business as it has to — at least until it files to go public, which could be later this year.

In all likelihood, many of these investor fears could be settled when Zynga reports its first period as a public company. No word on when that will be yet, but the fourth-quarter report should come as soon as this month, and no later than February.

Here’s the first — Marvel: Avengers Alliance.

The combat role-playing game on Facebook leverages some of the biggest names in superheroes, including Spider-Man, Iron Man, Thor, Captain America, Wolverine and many more. It will go live by the end of March.

In the game, players must add heroes to the Avengers team and then train them to unlock specific abilities and attacks. Players will also be challenged to face off against other friends who are playing the game.

But as with other social games, the battles are asynchronous, meaning that they do not occur at the same time, but rather occur on a turn-by-turn basis.

The game takes place in a “galaxy-wide disaster, known as the Pulse,” which makes Manhattan vulnerable to an attack. The players are agents on a peace-keeping mission to keep New York safe from the villains.

The game, built by Playdom, is the first to incorporate a Disney brand since the company was acquired for $563.2 million, plus a $200 million earn-out, more than a year ago.

The brand will conceivably help to lift Playdom’s position on Facebook, but also may indicate that the kinks are starting to be worked out, post-merger, between Playdom, which is based in Palo Alto, and its parent company 350 miles away.

Currently, Playdom ranks as the 15th-largest app developer on Facebook, with 15.3 million monthly active users. Zynga and Electronic Arts are at the top of the list, with 221 million and 50.8 million users, respectively.

Daily deal industry tracking firm Yipit reports that the daily deal industry in North America experienced marginal growth in November, as the major sites were adversely affected by the Thanksgiving holiday.

The number of deals offered increased only 1 percent while total industry gross billings grew by 2 percent during the month.

The largest provider, Groupon, saw the biggest decline.

Groupon grew 6 percent in November, but experienced a double-digit decline during the Thanksgiving holiday week.

Yipit bases its estimates on the sales of vouchers, which it tracks closely. Although Groupon no longer reveals exact sales data on its site, Yipit maintains that it is still able to make fair predictions based on historical data and industry insights.

The daily-deal declines were in stark contrast to the Black Friday experience of online retailers, which saw sales increase to $816 million on the day after Thanksgiving. ComScore said it was the heaviest online spending day to date in 2011, representing a 26 percent increase over the same day in 2010.

The holiday declines occurred despite ambitious programs by both Groupon and LivingSocial, which tried to take advantage of the heavy retail season.

Groupon stepped up its marketing efforts through “Grouponicus,” a holiday shop selling local gifts, deals and travel getaways.

LivingSocial’s Black Friday efforts included offering deals for 20 national brands, including gift cards from Electronic Arts, OfficeMax, Verizon Wireless, Skype and BlueNile.com. LivingSocial even launched a national TV campaign and radio spots to promote the deals.

But Yipit says those efforts didn’t pay off.

For the seven-day period ended Nov. 28, LivingSocial’s gross billings were down 30 percent and 19 percent compared to the two previous periods. And, because of the lower-priced national deals, the average size of its deal price fell to $28 in November from $32 a month earlier.

Yipit did not try to explain why the drops occurred around the holidays, except that they are similar to other periods, such as the Fourth of July.

But the patterns could be compared to social gaming space, which saw its usage sink during the holidays because people were not at work.

A secondary factor may be that more traditional retailers are known for Black Friday offers for others, while daily deals have historically been looked at as items you buy for yourself, and are not necessarily thought of as gifts.

Finally, Yipit said following Groupon and LivingSocial, Travelzoo, AmazonLocal and Google Offers ranked as the third, fourth and fifth largest national providers in November.

No word yet on how daily deals performed in the lead-up to Christmas in December.

The drop-off in players affected almost all developers, but did not hit all titles equally.

For example, Electronic Arts saw 1.2 million fewer monthly users over the past week for its top title The Sims Social; Zynga’s Empire & Allies game lost one million monthly users, and its newest game, CastleVille, lost 900,000, according to AppData, which publishes such information.

On the flip side, many of the games that performed well were old favorites; these logically would have longer-term, more-committed players, who would make a point of returning during the holidays to take advantage of seasonal promotions.

The games that benefited from the holidays include Zynga’s Words With Friends and FarmVille, which gained 1.3 million and 800,000 monthly active users, respectively, according to Inside Social Games. Other gainers rounding out the Top 5 were Tetris Online’s Tetris Battle; Wooga’s kingdom-building game, Magic Land; and Men vs. Women, a role-playing game by Social Point.

Still, the general direction for the week was heading down.

That contrasts with other game platforms, such as consoles, PCs and mobile, which largely benefit from the holidays and from more free time in general.

Console games often skyrocket in popularity as kids and adults unwrap new titles for Nintendo, Xbox or PlayStation on Christmas morning.

PC gaming also typically surges during the season. EA timed the launch of Star Wars: The Old Republic ahead of the holidays, in hopes of drawing new players who would be sold on sticking around for months, after spending time on the game during their time off.

But perhaps the biggest competitor came from mobile, which benefited from breaking records for the number of new Android and iOS devices that were gifted during the holidays. Flurry reported that more than one billion apps were downloaded worldwide during the last seven days of 2011, breaking the all-time weekly record. Games are often one of the most-downloaded categories of apps.

So the more important question to ask is, why would Facebook be an exception, if other platforms performed well?

Clearly, all of the platforms are competing for a limited number of minutes in the day, and so are other forms of media, like the Internet, TV and the movies. But when it comes to Facebook, a larger driver may be the environment — after all, it’s no big secret that a lot of social networking and social gaming is done in the workplace.

In a study conducted last summer, advertising agency Saatchi & Saatchi found that 47 percent of respondents said they play social games at work during a typical day, and that 28 percent play for at least 30 minutes. Without that dedicated time in front of the computer every day, people may have had the opportunity to be more obsessed with other screens, such as phones or TVs.

Another potential reason that Facebook and social games did not see a lift from the holidays is because they have not yet figured out how to capitalize on the Christmas economy.

For years, console games have been timed with the end of the year, so they could be wrapped up and placed under the tree. More recently, smartphones and gift cards for music and apps have helped mobile prosper. Perhaps there wasn’t enough hype and promotion for social games to compete for people’s dollars.

Regardless of the reasons, the drop may ultimately be a small a blip on the radar screen for most game developers, who also see several spikes in activity during the year.

The bigger impact may be felt at Facebook, which takes a 30 percent cut of all virtual goods sold inside social games, and would feel the cumulative impact across all of the games.

The new multiplayer online game has gotten off to a strong start, but has a long way to go if it plans to challenge the fan base World of Warcraft has amassed over the last six years.

So far, Electronic Arts has confirmed that Star Wars: The Old Republic has registered more than one million players since officially launching on Dec. 20. In that time, those players have created 1.66 million characters and logged more than 60 million hours of game play, which is roughly the equivalent of watching all six Star Wars movies more than four million times.

It’s a good beginning, but the game has a lot riding on it.

Star Wars: The Old Republic, which was developed by Electronic Arts-owned BioWare, cost hundreds of millions to build and took several years to develop.

The critical question is whether it has enough star power to attract players away from other titles, namely World of Warcraft, which has built a dedicated subscription base.

Today, World of Warcraft has about 10.3 million subscribers, and a year ago it was able to sell 3.3 million copies of its latest expansion pack in the first day of it being available. A fourth expansion pack, adding even more content, is expected in the near future but currently has no launch date.

Still, some analysts believe a takeover by Star Wars is possible.

Last month, Activision Blizzard said its membership base fell nearly 10 percent to 10.3 million, down from 11.4 million in March. Each subscriber represents a massive recurring revenue stream of roughly $15 a month, so that’s a tough loss to swallow.

The games in this category are not found on Facebook and they are definitely not free.

They are deep, story-telling experiences with high-end graphics that players pay a lot for. Star Wars is charging $60 for the initial software download, plus one free month. From there, it will cost the players an additional $15 a month for access, which is on par with others.

Last month, Lazard Capital Markets’ Atul Bagga downgraded Activision from “buy” to “neutral” after hearing about the drop in subscribers and after getting the results of a survey that polled 381 online gamers.

The study, which was conducted by Lazard in conjunction with Peanut Labs, found that Star Wars may benefit as World of Warcraft gets older, reports GameSpot.com.

Of those who are currently playing World of Warcraft, 50 percent of respondents said they plan to buy The Old Republic, and 95 percent of the survey’s respondents who were also participating in the Star Wars beta said they would buy the game.

Today, Electronic Arts is trading higher, up 1.8 percent, or about 37 cents, to $21.08 a share. Activision, which is also being supported by the strong launch of Call of Duty, is down about 3 cents to $12.17 a share.

For players, the goal is to clear as many gems as possible, but going forward, PopCap’s goal is to get as many people as possible to play the game.

To do so, the company’s strategy is to make it free.

AllThingsD visited PopCap’s Seattle office this week, and caught up with Giordano Bruno Contestabile, franchise business director for Bejeweled, to see how the game is evolving after more than a decade.

Earlier this year, PopCap was acquired by Electronic Arts for up to $1 billion, thanks to Bejeweled and other hit games, including Plants vs. Zombies.

Up until now, players had to pay for Bejeweled in order to play it, but PopCap has recently launched free versions on Facebook and the iPhone.

In the free version, players can challenge others to score as many points as possible in one minute. They have the option to pay for “power boosts” to increase their odds.

A paid version on the iPhone allows players to knock out gems without a time limit.

With the switch to the free-to-play model, Contestabile said, PopCap has a way of reaching a half a billion users, up from 40 million paid users. That’s comparable to Rovio, which claims to have achieved 600 million downloads in two years — both free and paid.

In this video interview, Contestabile talks about the benefits of the approach, while also disclosing that Microsoft and Electronic Arts had the chance to buy the game a decade ago for cheap, but passed:

]]> http://allthingsd.com/20111223/popcap-says-making-bejeweled-free-will-lead-to-a-new-high-score/feed/ 0 http://allthingsd.com/20111221/surprise-the-most-popular-facebook-game-of-2011-wasnt-made-by-zynga/ http://allthingsd.com/20111221/surprise-the-most-popular-facebook-game-of-2011-wasnt-made-by-zynga/#comments Wed, 21 Dec 2011 23:18:25 +0000 Tricia Duryee http://allthingsd.com/?p=156050 Facebook has released its list of the 10 most popular social games for 2011, and while the chart was dominated by Zynga titles, other companies received the top two slots.

The list revealed some other surprises, too.

For instance, at the top of the list was Gardens of Time by Disney’s Playdom division, which developed a social spin to the “hidden objects” game genre. The second-most popular game was Electronic Arts’ The Sims Social, which had done fairly well but never was able to leapfrog other Zynga titles, such as CityVille.

In general, the list looks different than the daily and monthly active user charts released by AppData, which nearly always show Zynga dominating the top four or five slots. Facebook explained that it based the chart on games that not only attracted the most active users but also received the highest user recommendations.

So perhaps it was the popular vote that elevated others to the top of the list.

Zynga garnered four spots on the list, but other independent companies made the rankings, including DoubleDown Entertainment, Buffalo Studios and Wooga. The chart also revealed players’ love of casino games, which we previously reported were ringing up big revenues on Facebook.

Here’s the full list:

1. Gardens of Time (Playdom-Disney)
2. The Sims Social (Electronic Arts)
3. CityVille (Zynga)
4. DoubleDown Casino (DoubleDown Entertainment)
5. Adventure World (Zynga)
6. Words With Friends (Zynga)
7. Bingo Blitz (Buffalo Studios)
8. Empires & Allies (Zynga)
9. Slotomania-Slot Machines (Playtika-Caesars Entertainment Corp.)
10. Diamond Dash (Wooga)

]]> http://allthingsd.com/20111221/surprise-the-most-popular-facebook-game-of-2011-wasnt-made-by-zynga/feed/ 0 http://allthingsd.com/20111220/digital-game-revenues-werent-enough-to-offset-broader-industry-declines-in-q3/ http://allthingsd.com/20111220/digital-game-revenues-werent-enough-to-offset-broader-industry-declines-in-q3/#comments Wed, 21 Dec 2011 01:37:21 +0000 Tricia Duryee http://allthingsd.com/?p=155639 Revenue from mobile and social games, among other categories, is growing, but not at a fast enough clip to offset the declines witnessed in the traditional games market.

The NPD Group released a new report today that calculated the amount of money Americans are spending on games from the nontraditional market. That includes a lot of digital content, such as subscriptions, digital downloads, social games and mobile games, but also used games and rentals.

In the third quarter, it found that the amount spent on that “other content” totaled $1.64 billion.

While significant, NPD said it wasn’t enough to offset lower revenue from the traditional game market. NPD defines the traditional market as packaged goods sold at retail. In the third quarter, that totaled $1.3 billion.

“New physical retail sales had a rough third quarter,” said Anita Frazier, an analyst with NPD. “Increases in sales from some of these other monetization methods, and full game and add-on digital downloads in particular, only partially offset the decline see in the new physical retail channel.”

She said the overall market, including hardware, totaled $4.2 billion, down 11 percent compared to the same period a year ago.

For companies like Electronic Arts, which is investing heavily in mobile and social games and is placing big bets on online content, like today’s release of Star Wars: The Old Republic, the results of these monthly and quarterly reports are unrepresentative of the trends they are seeing.

“Everything is growing. If you look at the total interactive business, it’s a $50 billion market internationally, and that’s up double digits. That’s where we play,” said EA’s President of Labels Frank Gibeau. “We find it frustrating because it doesn’t tell the whole picture.”

In the second quarter, EA’s digital revenue, which includes downloadable console content, mobile and social — was up 30 percent year over year.

Even a company like Activision, which has been slower to develop games on Facebook and mobile, said that during the second quarter, revenue from digital channels — mostly downloadable content — increased 27 percent year ove year, and accounted for 37 percent of the company’s total net revenue.

For all-digital companies, like Zynga, which went public last week to raise $1 billion, its impact hardly seems to register.

“I think that ultimately we are an interactive entertainment company, not a packaged goods company,” Gibeau said. “We are platform and channel agnostic. The physical channel is a great channel and it’s going to be around longer than people think. … We are fine with that model, but then, when you bring that game home, you should be able to connect to the larger online world.”

]]> http://allthingsd.com/20111220/digital-game-revenues-werent-enough-to-offset-broader-industry-declines-in-q3/feed/ 0 http://allthingsd.com/20111220/ea-banks-on-universal-appeal-of-massive-online-star-wars-game/ http://allthingsd.com/20111220/ea-banks-on-universal-appeal-of-massive-online-star-wars-game/#comments Tue, 20 Dec 2011 18:36:48 +0000 Tricia Duryee http://allthingsd.com/?p=155237 Electronic Arts is officially releasing its most ambitious online game to date, called Star Wars: The Old Republic.

The game is long overdue and over budget, but now that it is actually here, the LucasArts-blessed project is likely to become one of the company’s most significant game launches over the next decade.

The Star Wars title falls into the category of a massively mutliplayer online role-playing game (MMORPG), a subscription game that people can escape into for hours, acting out the role of characters and interacting with others inside a virtual world.

Other games in the genre have done extremely well, including Activision Blizzard’s World of Warcraft, which has more than 10 million subscribers after more than six years in existence.

In an interview, Frank Gibeau, president of EA Labels, told All Things D, “This is our most ambitious game of my career, and the biggest project ever made at Electronic Arts.”

The project started as early as 2007, when BioWare received the license from LucasArts. Electronic Arts acquired BioWare in 2008.

The game is on a completely different scale than a social game, and is closer to premium titles found on videogame consoles. But really, a better standard of comparison would be a blockbuster movie production.

“If a social game is a speedboat, this is like a nuclear-powered aircraft carrier,” Gibeau said.

There are at least 300 hours of game play possible within Star Wars: The Old Republic. EA hired 1,000 actors to perform 250,000 lines of dialogue — more than in all six “Star Wars” movies combined. The game is produced in English, French and German.

“It’s the most voiced-entertainment property in history — film, book, anything,” said Gibeau. “We are thinking of this game in terms of a 10-year life cycle.”

One of BioWare’s co-founders, Ray Muzyka, has been working on the project nonstop for the past several years. He told me that, despite having plenty of access to the game, “I still want to play it. I still haven’t scratched the surface, and it’s still compelling.”

Star Wars: The Old Republic officially launched at midnight, but has been slowly adding 200,000 players a day over the past week, to ensure that the servers were ready to handle the crush. Gibeau said that by today there will already be around 1.5 million people playing in the game.

The game costs $60 for a digital download or physical copy. The first month is free; it costs $15 a month after that.

One of the key differences between Star Wars and other MMO-style games is the voiceover, Gibeau said. Most MMOs require the player to read a lot of text in order to receive instructions on what to do next. BioWare lets the characters do the talking to make the players feel a part of the game.

“That’s the biggest overall thing we brought to the genre,” BioWare co-founder Greg Zeschuk said in an interview. “It’s an approachable story with real living and breathing characters who get to choose their own outcome. It creates a way to be attached to the game.”

“It grows on you over time,” Muzyka added. “Once you’ve played The Old Republic, you can’t go back (to other MMOs). It’s woven into the experience. That emotional engagement is very natural. … They feel alive. They feel like they are helping someone, or your alliance, or your village. You can be a hero or a villain.”

Electronic Arts is reluctant to say that it is betting the farm on the game, when it has so many other franchises and big projects in the works. But the potential for profit is an open question.

The release of Star Wars: The Old Republic will automatically draw in players because of the movie franchise’s mass-market appeal. Who doesn’t want to play the role of Luke Skywalker, Princess Leia or Darth Vader? (Except that those three names are banned in game play, since everyone can’t walk around the Republic with the same name, duh.).

Of course, EA will have to pay LucasArts handsomely for the right to use a big brand name like Star Wars. There’s no secret why other social games are generic — it’s cheaper. There are also hundreds of millions in development costs that Electronic Arts will have to recoup.

And those costs don’t stop on launch day.

EA and BioWare are already developing more content for the game, and have hired a team of customer-service reps in Ireland to take calls from players.

Gibeau defines what he would consider a successful game: “It’s certainly not a make-or-break product for our company,” he said. “Star Wars is a really important part, but it’s in the context of the larger digital transformation. I’d love to have a business that lasts for 10 years; I’d love to have millions of subscribers and a huge hit from that standpoint,” he said. “But our conservative cases are much less than that, so we are in pretty good shape from any outcome.”

Muzyka is a big poker player, so I asked how he is betting the game will do.

“I like to bet on things that win, and I think it’s going to win big,” he said.

To set the scene, the game takes place thousands of years before the rise of Darth Vader, when war between the Galactic Republic and the Sith Empire was dividing the galaxy. Players choose to play as a Jedi, a Sith, or a variety of other roles.

Watch this trailer and judge for yourself whether the game experience is as realistic as its creators claim:

]]> http://allthingsd.com/20111220/ea-banks-on-universal-appeal-of-massive-online-star-wars-game/feed/ 0 http://allthingsd.com/20111219/zyngas-stock-keeps-withering-on-day-two/ http://allthingsd.com/20111219/zyngas-stock-keeps-withering-on-day-two/#comments Mon, 19 Dec 2011 16:46:39 +0000 Tricia Duryee http://allthingsd.com/?p=155020 Wall Street was not any kinder to Zynga on its second day of trading.

Last week, the Facebook game company sold 100 million shares at $10 apiece to raise $1 billion.

On its first day of trading, the stock fell 5 percent, and its losses are even deeper today. In early morning trading, the stock was down nearly 8 percent, or 73 cents, to trade at $8.77 a share. UPDATE: The stock ended up falling 48 cents, or 5 percent, to close at $9.02 a share.

No anti-wither serum exists in the real world to revive a stock price the way virtual crops can be revitalized in FarmVille, one of the game-maker’s hit titles.

Zynga is not the only recent Internet darling to take a nosedive.

It took a while longer, but about a month after Groupon went public, its stock tumbled and was trading for less than half its first-day high of $30 a share. Groupon has since rebounded, but it is also trading lower today, at $22.47 a share.

Zynga has not see those wild fluctuations yet.

Still, the losses do add up — at least on paper. Both the company’s public valuation and some of its largest shareholders’ shares are quickly dwindling in value.

The company is now trading at a valuation of $6.1 billion, down from its IPO valuation of $10 billion. Other big game companies, like Electronic Arts, are now more valuable, albeit only slightly higher.

Investors like Morgan Stanley are seeing their stakes drift further and further underwater.

Earlier this year, Morgan Stanley, which was also one of the Zynga’s underwriters in its IPO, purchased 5.3 million shares at $14 apiece, for a total of $75 million. Four other investors, which were unnamed, also contributed to the round totaling $490 million, according to the document.

Morgan Stanley’s stake is now worth only $46.5 million.

The dip is also hurting Zynga founder and CEO Mark Pincus’s stake, which is now worth less than $1 billion, or roughly $982.5 million.

One thing the company can look forward to is its first-quarter earnings, which will come out early next year and should be bolstered by a strong fourth-quarter performance. In the quarter, Zynga launched new games, including CastleVille, on Facebook, as well as some standalone titles for iPhone; the fourth quarter is typically strong because players have a little more free time to play — and pay — during the holidays.

]]> http://allthingsd.com/20111219/zyngas-stock-keeps-withering-on-day-two/feed/ 0 http://allthingsd.com/20111216/zynga-slumps-5-percent-on-first-day-of-trading/ http://allthingsd.com/20111216/zynga-slumps-5-percent-on-first-day-of-trading/#comments Fri, 16 Dec 2011 21:52:38 +0000 Tricia Duryee http://allthingsd.com/?p=154681 The FarmVille and CityVille maker fell a disappointing five percent during its first day as a public company.

The company sold 100 million shares at $10 a share to raise $1 billion in capital.

After pricing the stock at $10 a share late last night, it jumped in early morning trading to as much as $11.50 a share. But shortly after, Zynga’s shares tumbled, trading as low as $9.

To close below the company’s starting price on its first day of trading is not typical.

Only five out of 22 U.S. Internet IPOs this year closed below their issue price, according to the WSJ, which quoted information from Dealogic.

The lower debut will put pressure on the company to climb higher over the next several months, especially for the sake of employees and investors, who were likely hoping for a big pop.

Earlier this year, the company sold shares to investors for $14, which is roughly 30 percent higher than the $10 price. Employees, who were hired more recently, are rumored to have been issued stock options at even higher prices.

But generally, if Zynga doesn’t do well, it could hurt other social media companies, like Facebook, which is looking to go public next year. Facebook derives a big portion of its revenues from games.

It could also negatively impact the valuation of other social game companies — private or public — that use Zynga as a barometer.

Electronic Arts has invested heavily in social games, making the decision earlier this year to purchase PopCap Games for upwards of $1 billion. It has committed to transitioning much of its revenues from physical console game sales to digital over the next several years.

Electronic Arts’ stock fell 72 cents, or 3.4 percent, in after-hours trading to $20.20 a share.

At $9.50 a share, Zynga’s valuation falls to $6.6 billion, and the shares owned by founder and CEO Mark Pincus slump to $1 billion. At this morning’s opening price of $11 a share, the company was worth as much as $7.6 billion, and Pincus’s stake was worth $1.2 billion.

Still, Zynga is the largest game developer on Facebook by far, registering 50 million daily active users. That’s four times greater than its next biggest competitor, Electronic Arts, and it has many more game launches planned in the not too distant future.

The company celebrated its listing today by hosting the Nasdaq at its San Francisco headquarters, where Pincus rang the opening bell this morning.

]]> http://allthingsd.com/20111216/zynga-slumps-5-percent-on-first-day-of-trading/feed/ 0 http://allthingsd.com/20111215/zynga-confirms-its-billion-dollar-public-offering/ http://allthingsd.com/20111215/zynga-confirms-its-billion-dollar-public-offering/#comments Fri, 16 Dec 2011 04:41:45 +0000 Tricia Duryee http://allthingsd.com/?p=154313

Zynga is set to begin trading tomorrow morning, having achieved a $1 billion initial public offering.

This evening, the San Francisco company confirmed that it priced at the high end of its range by selling 100 million shares at $10 apiece. Shareholders also granted the underwriters a 30-day option to purchase up to 15 million additional shares if there is more demand. That will bring the total to $1.15 billion; however, Zynga will not receive any of the proceeds from those additional shares.

Zynga had been seeking to sell 100 million shares at between $8.50 to $10 each. By hitting the high end, it easily becomes the largest Internet IPO in the U.S. since Google in 2004. The company will now be worth around $7 billion, which is in line with other publicly held game companies, such as Electronic Arts.

But tomorrow will be the true gauge, once the company starts trading freely on the Nasdaq under the ticker symbol ZNGA. It is looked at as favorable if the stock jumps right out of the gate; if trading is more modest, it could signal that Zynga was priced fairly.

What is particularly stunning is the global appetite for game companies. Earlier this week, Tokyo-based Nexon went public on the local stock exchange, also raising $1 billion at the same valuation of $7 billion.

Investors and employees in particular will be banking on Zynga’s price to pop tomorrow. Earlier this year, the company sold shares to investors for $14, roughly 30 percent higher than the $10 price. Some employees’ stock options are rumored to be issued at even higher prices.

The worst-case scenario is that the stock falls. In November, Groupon shares jumped by 40 percent on the first day of trading, increasing to as much as $30 from the intial $20 pricing. But by the end of the day, the share price settled down at $26, and in subsequent weeks, fell to as low as $15.

Nexon’s stock fell modestly in next-day trading; however, that was largely blamed on a weak economy.

The social games leader, known for FarmVille and other franchises like Words With Friends, may have decided to price its offering modestly to avoid scenarios like that.

Already, it is choosing to do things a bit differently. Zynga won’t be flying to New York to ring the opening bell, as is customary.

Instead, the company’s founder and CEO, Mark Pincus, will ring the bell remotely from its brand-new San Francisco headquarters, where the Nasdaq has set up a temporary bell. Pincus will be joined by the company’s management team, board member Bing Gordon and Pincus’ wife, Alison Pincus.

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