As most know, the San Francisco gaming company has struggled to find the right balance as consumer behavior has shifted from playing social games on Facebook to playing games on their phones.

In the third quarter, 60 million people played Zynga’s games on a daily basis, up 11 percent from the year-ago period. But those gains were only possible due to mobile offsetting declines on Facebook. The worry of Wall Street investors over the situation is apparent in the price of its stock, now at $2.66, which remains 72 percent below its initial public offering price at the end of 2011.

But Zynga management believes it knows how to turn things around, including expanding beyond its classic Ville-style titles, like FarmVille, to more genres that appeal to a wider audience, including casino and more hardcore titles.

In a story earlier today, I wrote about the three executives that CEO Mark Pincus has appointed to help turn things around. One of them is Steve Chiang, the company’s new president of games.

Here are some highlights from an interview I recently did with Chiang:

Tell me a little bit about your background.

Chiang: I got into computers early, when I was six or seven, and I was really into videogames and playing games on my computer. And then I got into programming. First, I got into the industry when I graduated from school as a programmer, by creating games for Super Nintendo. That’s when making a game included one programmer and two artists, or two programmers and five artists, so they were really small teams, so you really had to know all aspects of game development.

And then, in 1994, myself and some guys I went to high school with, and John Schappert, started Tiburon. We started making Super Nintendo games, and then we started working on Madden when the contract came up after the other company didn’t ship the game on time. It was the best-selling game on PlayStation that year, which led to the acquisition by [Electronic Arts].

I stopped programming in 1998 or 1999. When I left EA, I was overseeing all sports development for Peter Moore, who was heading up the sports label, and I headed up development across Vancouver and Orlando.

What was the attraction to Zynga?

Chiang: In 2009, when I was thinking of joining Zynga, we had FIFA Ultimate Team, which was a card-based microtransaction mode. It was a $10 mode you paid for, and then you had $1.50 card packs. We quickly saw the microtransaction part of it surpass the $10 for the mode. So you reduce the $10 to free to reduce the friction.

Microtransactions and free-to-play seemed like the future, for sure. The second aspect was time. Having an hour to sit down and play a game is not easy to come by when you have a family, so, as a person who loves games, the idea of playing games for five to 10 minutes with friends was really appealing. I saw myself reconnecting with people from high school, and I saw my parents playing with my kids. The only game my ex-wife will play is Words With Friends, except for SingStar, a karaoke game on PlayStation.

When you are creating a place where women, children and older parents are all playing, it’s an incredible feeling and experience. It’s like the first time I saw “Star Wars” in the movie theatre — that’s what we are creating for people. That’s what we are trying to create on a day-in and day-out basis.

I’ve spoken to people before about the initial draw of Zynga being that so many people end up playing your game, unlike a console title that has a limited audience.

Chiang: Absolutely, in entertainment, you want to make hits. When you are working on sports games year after year, it’s not super appealing. But the idea you get to work on a game played by millions of people? That’s great.

I mean, I always tell people, you spend the same amount of time on a game that gets canceled as one that is seen by millions of people.

Do you believe the definition of a social game is changing?

I do. It’s a moniker, like casual gaming. We label stuff, but essentially the business model is free-to-play, and gaming has always been social. I look at us as doing free-to-play games on multiplatform.

For a while, social equaled Facebook.

Yeah, that’s how I interpreted it, as well. But when you look at Words With Friends, that’s what a social game looks like, where you are interacting with a friend on a daily basis.

Zynga and Facebook just changed their contract language, which is less restrictive and will free you up to do more things, right?

Chiang: I think Facebook is a really valuable partner. We struck a new agreement, which enhances our partnership in some ways, and allows you to invest more in our platform and mobile.

Everyone talks about gaming as a hits-driven business. Is it possible to sustain that over the long term?

Chiang: I think we’ve seen companies like EA and Activision be able to sustain [that]. There’s aways peaks and valleys.

With social, it’s more about gaming as a service — it’s a TV model, if you will. We continue to put out new content every week, and on Facebook every single day. That keeps our players engaged. There’s games like Poker that have been around forever. There are certainly franchises. It’s not that different from a Call of Duty or a Madden Football, which has been going on for 15 years now. We have some of the same characteristics in Poker and Words With Friends.

Tell me about the story arc for Zynga’s Villes. How come some are not as successful as the ones in the past?

What we’ve seen is a few different things. We are seeing consumer tastes changing, and there’s a player movement toward mobile gaming. If you look at just a single platform, you’ll see a peak or a leveling-off of gaming on Facebook. But we are seeing growth on mobile. As we go multiplatform, we may have peaks and valleys on a single platform, but we’ll see overall growth.

That seems to be a platform issue, but is there something about Villes in particular that is no longer popular?

Chiang: When I look at FarmVille 2, it’s reengaging a lot of players, and is off to a great start. There’s an aspect of something new, and so players are saying, “Let’s try that.”

A game like Pokemon peaked at a $1 billion business, but over time, it’s still a big business and it has sustained. Traditionally, you’ll see a massive pop and then it will sustain. It’s a great business, and when we put out great content like FarmVille 2, our players respond and they engage.

Let’s go back to the cross-platform approach. Zynga is going after both Facebook and mobile, and has restructured its leadership team around that. How has your job changed?

Chiang: I took over all of the games business, so I have every game on mobile and Web, and just recently I reorganized around our players and genres.

We have some great leaders, and some of the most experienced in social gaming in the western world. We are going to run our “Invest and Express,” which are our Ville games. We have a new group in PVP (player versus player), which is focused on men 18 to 34.

Then we have our casino group, which is poker and male-skewing, and we have slots and bingo, which is focused on women. And then we have our mobile casual group, which is focused around some of our big franchises, like Draw Something and Words With Friends.

Some critics say that Zynga’s games are not fun. What do you say to that?

Chiang: I think when you look at a game like FarmVille 2 or Elite Slots, we are driving new innovation, and we are continuing to push innovation. At the same time, if we change too much, players complain. We saw it in sports games, and you see it in social gaming, you want a consistent feel and familiarity. You don’t want to redo everything.

Zynga is such a data-driven company, I’m curious what metrics do you look at every day, and which ones are most important?

Chiang: We look at the net promoter score, where we ask players to rate the game from one to 10. A nine to 10 is a promoter, and below a six is a detractor. We certainly look at overall how many people are playing and what our retention is, especially after launch, to check out retention after seven days to see which way it’s headed.

Why didn’t The Ville do well? Zynga announced it was cutting back on it as soon as it went live.

Chiang: I think with The Ville, the team made a great effort. But we did not deliver.

Our players didn’t respond to it as we would have expected. We hit a high DAU (daily active user), but they did not retain as well as some of our other games. We looked at all of that, and applied that to our future games. When you are going for hits, we’ll also have some failures.

Do you have a mantra, or a way to rally the troops right now that makes everyone believe you can create another hit? Something to inspire them? How do you manage the turnaround process?

For us, it’s about focus and getting back to basics. Our team across the board has delivered hits. We’ve had a number of great game makers who have been tied up with games, and now they are focused on new projects. We are reducing the number of games we are making, and focusing on a fewer with the highest potential in Invest and Express, player versus player and casino.

With many departures over the past few months, does Zynga still have the talent to make good games?

Chiang: Absolutely. We had a lot of people joining before the IPO, and some of those folks have opted out, but the bench is still really deep. We are also still attracting a lot of folks. Social is not for everyone, so some people came here to try something, but the future is really bright. We have a strong network of players on Facebook and mobile, and a number of great games in the pipeline that should be — and we’ll see how they do — but are going to be really fun and social.

Is there a message that you’d like to get out to people on Zynga’s game creation? Do you think there is an impression people have that you’d like to correct?

Chiang: I never thought about that. I firmly believe that we have a huge bright future and have the best position for talent, and in terms of our network and in terms of mobile and Facebook players to drive the biggest and best entertainment in the world. We are well-positioned that way, and hopefully you’ll see things in the future that will surprise and delight a lot of people.

Was it only just over a year ago that Zynga was the hottest game company on the planet?

Today — after seemingly endless executive departures (among the missing in action are the COO, CMO, CFO and the chief creative officer), a falloff in the popularity of its many games on the important Facebook platform, and a perpetually moribund stock price from a $9 billion valuation at its IPO in December of 2011 to $2 billion today — such a moment of glory seems but a very distant memory.

Now, in the wake of the crash, Zynga founder and CEO Mark Pincus is betting his dwindling chips on a trio of lieutenants to make things right: Steve Chiang, who is now president of games; David Ko, Zynga’s former chief mobile officer, who has been promoted to COO; and Barry Cottle, who was named chief revenue officer.

Establishing the three executives’ credibility and skill sets will be instrumental in regaining Wall Street’s confidence in the San Francisco gaming company, and perhaps reestablishing it as a growing and thriving concern.

So, can they do it? To find out, AllThingsD interviewed all three, as well as more than a dozen current and former co-workers of the managers, to get a handle on who they are and what roles they are playing in the company’s turnaround process.

Steve Chiang, president of games:

Chiang, 41, who is now leading all game development, has one of the toughest jobs at the company.

Zynga operates a hits-driven business, and must continue to make compelling games to draw in large audiences, something it has of late struggled to do.

One problem is that it has persisted in churning out its once powerful Ville-style games — FarmVille, CityVille, et al — while its competitors moved on to other genres, such as casino games and action-packed games aimed at males.

Those two new categories, as well as its original Ville genre, which it calls “Invest and Express,” will be at the top of the company’s priority list, in addition to developing across social and mobile.

In this, Chiang’s efforts are critical. But what has made this executive’s path at Zynga unusual was his rise, then fall —  and then rise again — within the corporate ranks.

Ahead of the IPO, Zynga was relentless in its efforts to build out a strong bench of C-level executives. One impressive hire was John Schappert, who came on board as chief operating officer to lead the company’s game strategy.

Schappert hailed from Electronic Arts, where he knew Chiang better than anyone else. Together, Chiang and Schappert co-founded Tiburon Entertainment, which was acquired by Electronic Arts in 1998, and continues to be responsible for hit games such as Madden NFL.

Chiang arrived at Zynga first, in March 2010, as EVP of Games. But when Schappert joined Zynga in April 2011, Chiang’s responsibilities naturally decreased as less work was left to go around.

Zynga’s former chief creative officer, Mike Verdu, who worked closely with Chiang, recalled the transition. “There was certainly a period, especially as other executives came in, that the weight of influence shifted away from Steve,” he said. “All of our roles changed a bit when John was there. He had a very different way of doing things, and when he left, there was a realignment of the organization.”

Schappert stepped down in August of 2012, one of the company’s highest-profile departures.

Because Schappert was the front man in the company’s IPO, the shy Chiang is not as well-known, despite having worked there for three years. His resume at the company includes releasing CityVille, which became the biggest game at the time. He also grew the company into a worldwide organization, adding studios across the U.S. and internationally. He pushed the company into new categories, such as arcade-style gaming and hidden objects. Recent credits include the launch of FarmVille 2, the company’s most recent hit.

Chiang spoke briefly and without a lot of actual detail about his time working with Schappert at Zynga. “He’s a personal friend of mine, and he brought a lot to the company, and we made some internal changes and he decided to move on,” he said.

Now, with the reins in Chiang’s hands, he says he will focus on developing games that appeal to a wide audience. To free up talent to work on new projects, the company is sunsetting 13 of its games, including PetVille, Mafia Wars 2 and Indiana Jones Adventure World.

“We’ve had a number of great game makers who have been tied up and now they are focused on new projects,” Chiang said. “We are reducing the number of games we are making, and focusing on fewer with the highest potential in Invest and Express, player versus player, and casino.”

Whether Chiang can pull it off remains to be seen. But one of Chiang’s direct reports — who declined to be named — said: “We aren’t all driven by money or fame. A lot of people are driven by pride. Steve internalizes that. He’s a champion for the game makers, but ultimately, for the players themselves.”

For more on Chiang, click here for an exclusive Q&A interview.

David Ko, chief operations officer:

There’s a long list of reasons why David Ko, 41, earned the promotion to chief operations officer. Over the past two years as chief mobile officer, the former Yahoo exec has overseen the release of 30 mobile games and closed two of Zynga’s largest acquisitions.

The first acquisition was Newtoy, which is known for the very popular Words With Friends mobile game. The second acquisition, of OMGPOP, was less successful. Immediately after Zynga purchased the company for $180 million in cash, its hit product, Draw Something, fell dramatically in the rankings, although it still accounts for the bulk of the company’s mobile users today.

That said, if mobile is critically important to the company’s future, then having Ko as the second in command was a clear message of its importance.

Ko is now second in command, with purview over 3,000 employees, as well as being the public face for the media and Wall Street. On Tuesday, in fact, he will make his first appearance on the company’s fourth-quarter earnings call.

He has a lot to learn, which is why Ko asked everyone to stand up and introduce themselves at a recent meeting of 130 managers. “It was interesting to go around the room and hear from people who had been there for four to five years, or for two months,” he said. “It was a great diversity of talent, and they came from all different backgrounds.”

Ko’s more inclusive management style is likely to be welcomed by employees, especially since Pincus is known for valuing data over people. “Mark [Pincus] misses that stuff at times,” one former employee said. “It’s a mercenary culture; he looked at people as fungible.”

But Ko’s fast ascent to COO is not sudden as it may look, say insiders.

“In spite of the fact that he looks like he is 12, he’s the adult in the room,” said a former co-worker of Ko’s, who knew him from his days at Yahoo. “That’s the irony.”

Prior to Zynga, Ko worked at Yahoo for a decade starting in 2000. He was based initially in Asia, where he ran the Silicon Valley Internet giant’s mobile business. In 2009, Ko then returned Yahoo’s headquarters as the SVP of mobile, but was quickly promoted amid much executive turmoil to be the North American audience head.

Ko said his non-gaming background is a plus, because he has extensive experience monetizing content.

“We have lots of people with all kinds of backgrounds in social or gaming, but what the company needs is about making sure the content is available to everyone and can be monetized in different ways, whether it’s advertising or user pay.” he said. “I have a lot of experience with this. Advertising is becoming a bigger piece of monetizing, and that’s one of my core competencies.”

In his first three months as COO, Ko said, he has made three priorities at the company: To create a sense of discipline, to make the company’s strategies clear and to have fun doing it.

The reality of it all, Ko said, is that he has spent most of his time on the first two: “I have to remind myself at times, we are still a games company. We do have to do some fun things.”

One time the whole company has fun is for an hour every Wednesday when Zynga staffers drop everything they are doing to play a game under development. It was a practice that the company used to do in the early days, and Pincus asked Ko to bring back. After the employees play, they then provide feedback on what they liked and didn’t like about the game.

“Ultimately, we are a games company, and we have to make sure that people find the games fun that we are going to launch,” Ko said.

Barry Cottle, chief revenue officer:

Barry Cottle, 51, is the newest to Zynga of the three top execs, having joined the company in January 2012 as EVP of corporate and business development.

Previously, he was head of EA Interactive, where he oversaw a group the size of Zynga, including the company’s social and mobile gaming divisions and its PopCap unit. As such, his departure was a particularly big blow to EA.

As chief revenue officer at Zynga, Cottle is now responsible for securing partnerships and advertising, plus he is responsible for sales operations and the company’s real-money gaming initiatives.

And also the care and maintenance of Zynga’s most significant relationship — with Facebook.

In November, Zynga and Facebook announced that the two companies had renegotiated their contract, which will make their partnership less complicated. It also provided some benefits to Zynga, such as the ability to launch games first for mobile. Cottle worked directly with Facebook’s Dan Rose on the new terms, unlike the original contract, which was negotiated directly between the two Marks: Mark Zuckerberg and Mark Pincus.

He also moved quickly on the company’s online gambling efforts by setting up a partnership with Bwin in the U.K., which will go live early this year, and also kicked off the years-long process of getting a real-money gaming license in the U.S., starting with Nevada.

The deals are a demonstration of just how eager Cottle is to drum up new revenue wherever he can.

In Cottle’s previous jobs, he had to be equally scrappy. He joined EA in 2007 to manage the company’s roughly $700 million acquisition of Jamdat, a mobile games company. At the time, mobile gaming consisted of developers making Java and Brew games.

But when the iPhone came out, Cottle took on the job of convincing his superiors that smartphones were the future.

One of his former reports at EA recalled that as soon as Cottle made the decision to develop five games for the iPhone’s App Store, “We were in the war room the next day and were moving resources to the iPhone.”

Prior to EA, Cottle co-founded a company called Mobile Digital Media. (The company, which was later renamed Quickoffice, was acquired by Google last year.) The entrepreneurial effort was a spinoff from Cottle’s days at Palm, where he was part of the executive team that took the company public. Earlier in his career, he was a Disney executive for 10 years, working on the company’s TV and Internet services.

In many ways, Cottle’s job at Zynga is similar to the one at EA. But instead of managing the move from feature phone to smartphone, this time he’s transitioning the company from social gaming to mobile gaming.

As part of that, one of Cottle’s biggest challenges will be finding a way for Zynga’s games to be discovered on mobile.

With Facebook, Zynga leveraged virality — friends invited friends to play, or discovered games through their news feeds. But mobile does not have the same dynamics, making distribution much more challenging. Last year, Cottle inked a deal directly with T-Mobile USA, which preloads some of Zynga’s games on to smartphones, and which is actually a throwback to when games were best distributed through the carriers.

Recognizing the pace at which the business is moving, Cottle said, “You have to be able to move fast and adapt and ensure that you bring your consumers with you. They’ll move from platform to platform; we just need to bring our franchises along with them.”

To accomplish this, Cottle has one key strength in his corner: A reputation for working as hard as it takes.

Zynga’s general counsel, Reggie Davis, who has known Cottle since they both worked at Hallmark Cards in Kansas City 25 years ago, said: “He’s Midwest like me. We got taught to show up early and to clean up afterwards — and if you do, you might get asked back. That’s totally Barry.”

The game maker started off as a Facebook developer, but over the past year has moved aggressively into mobile gaming. It is known for building mid-core social games, including such hits as Kingdoms of Camelot and The Hobbit: Kingdoms of Middle-earth.

The San Francisco company said its gross revenue increased 70 percent year over year, and that it is now on a $200 million run rate.

In this case, the numbers are the equivilent of a public company’s bookings, Kabam said. That means the figures do not take into account the 30 percent cut that Kabam must pay to Facebook or Apple when items are purchased inside of games.

By releasing the numbers today, Kabam gets out in front of social gaming leader Zynga, which will report 2012 results next Tuesday. Despite Zynga’s recent challenges, it still is expecting to record bookings of up to $1.1 billion in 2012.

It is important to note, however, that Zynga’s bookings already take into account the 30 percent cut it pays to Facebook and others, which means the comparison is not exactly accurate. A better comparison would be Zynga’s 2012 gross revenues, which won’t be reported until next week.

“Kabam blew past its plan in 2012,” said Kabam’s co-founder and CEO Kevin Chou in a statement. “At this time last year we forecast 2012 revenue to grow by 30 to 40 percent. Because of our team’s focus on strategic growth across diverse game genres and platforms, including mobile and the Web, we exceeded our own expectations.”

Kabam attributed its rapid growth to diversifying beyond Facebook. At the end of 2011, nearly all of the company’s revenue was coming exclusively from the social network. Now, it also has games on iOS, Android and the Web. Additionally, it said seven of its games grossed more than $1 million a month in 2012.

Based on the company’s last fundraising in May 2011, it was valued privately at $500 million. The valuation would have been determined before Zynga went public, and before there was anything directly comparable on the public market, so it easily could have changed by now.

While being able to play classic games for a small fee will be a definite crowd-pleaser, an overlooked aspect of the announcements had to do with Nintendo’s plans for launching apps for smartphones.

The creation of any software for non-Nintendo hardware is groundbreaking for the company, which has been dead set against sharing its well-loved brands with any other device manufacturer.

But yesterday, Nintendo said that the Wii U’s social network, called Miiverse, will be expanding to smartphones this spring. And while initially gamers will be able to connect to the network from a smartphone browser, in the future Nintendo plans to create dedicated Miiverse apps.

Currently, Miiverse appears on the Wii U’s start-up screen as a virtual hangout, where avatars walk around a virtual “plaza.” Game players will be able to post their thoughts in “speech bubbles” that appear over their heads with text or drawings — sort of like status updates on Twitter or Facebook.

Over the past two years, Nintendo has made it abundantly clear that it is not interested in developing games like Zelda or Super Mario Bros. for any other platform. While the company still is not saying that its policy has changed on that front, a good experience with the Miiverse could help change its mind.

In what could be another sign of changing philosophy, the company confirmed last week that it is planning to bring together its console and handheld gaming teams in recognition of the trend toward the popularity of gaming on portable devices. The two groups will work under one roof in a $340 million facility in Japan.

But otherwise, Nintendo has been very clear about its aversion to other platforms.

A year and a half ago, Nintendo’s shares jumped on word that Pokemon was coming to the iPhone. But as it turned out, Nintendo, as a minority owner, had no influence on the decision, and it shot down speculation about its strategy, saying it “hasn’t changed and won’t change.”

Most of the opposition in developing for other platforms has to do with the business model.

For instance, the company is comfortable developing its own tablet-shaped controller for the Wii U, and it has its own mobile devices, like the 3DS, but it draws the line at free-to-play games.

“I’m not interested in offering software for free of charge,” Nintendo’s Global President Satoru Iwata told AllThingsD in June. “That’s because I myself am one of the game developers, who in the future wants to make efforts so the value of the software will be appreciated by the consumers.”

Iwata said the revenue that Zynga — and platform-makers like Facebook and Apple — is generating would not change his mind.

“If we are going to destroy the value of the game software — once we have done so, it’s a difficult job to recover from that situation,” he argued.

Nintendo did not disclose pricing for the Miiverse app.

J.P. Morgan now owns 2.6 million shares, or less than half of a percent of the social games company. Based on today’s stock price of $2.59 a share, the shares are worth only $7 million.

A big reduction by an institutional investor, like J.P. Morgan, implies that it doesn’t have a lot of confidence that the company can turn things around in the coming months.

The last time J.P. Morgan updated its stake was a year ago. In January 2012, J.P. Morgan said it owned 6.7 million shares, which equated to a 6.7 percent stake. Back then, shares were trading at $9.12, so the stake was worth a whole lot more, roughly $61 million.

It’s not clear exactly when J.P. Morgan sold its share or at what price. Typically, institutions update their records when their holdings drop below 5 percent.

J.P. Morgan’s relationship with Zynga began during its public offering, with the bank serving as an underwriter. As part of the deal, the bank agreed to buy an undisclosed number of shares associated with the IPO.

Since then, the bank’s research department has flip-flopped about the company’s prospects.

In March, three months after the IPO, J.P. Morgan’s analyst downgraded Zynga to “neutral” from “overweight,” which sent shares sliding by 6 percent. A month later, J.P. Morgan reversed its upgrade and returned the stock’s rating to “overweight.”

It was optimistic about the company’s acquisition of Draw Something and Zynga’s management team’s decision to raise full-year guidance based on the performance of the acquired mobile game.

Of course, Zynga’s troubles started shortly after, with the company having to revise its guidance downward more than once. Not only did its Draw Something game fail to meet management’s expectations, but its revenue on Facebook also dropped.

Zynga’s stock jumped 4.4 percent today to $2.59 a share. The 11 cent spike was tied to the news that Zynga’s patent portfolio has increased as it begins investing more heavily in online gambling.

Sterne Agee analyst Arvind Bhatia downgraded the company’s shares from “buy” to “neutral,” calling the Street’s estimates “overly optimistic.”

Bhatia is concerned about the company’s performance when it came to its big console game titles of the year. But Electronic Arts is increasingly offsetting its declines in the traditional packaged goods market through the sale of digital content.

But will digital will be able to generate enough revenue this time to make up for its poor-performing console games?

In a note to investors, Bhatia said that he believes EA should have lowered full-year guidance “following disappointing early performance of Medal of Honor Warfighter and the cancellation of NBA Live in October of last year.”

This morning, EA’s shares were down 3.6 percent, or 52 cents a share, to trade at $13.93. Yesterday, after the note went out, shares fell 2.9 percent. The videogame publisher is still trading way below its 52-week high of $20.64, but is still above its low of $10.77 a share.

Electronic Arts’ guidance for third-quarter earnings per share was 50 cents to 60 cents, which at the time, was well below consensus estimates of 71 cents (excluding some items). For non-GAAP revenue, it guided $1.25 billion to $1.35 billion, which was lower than the consensus estimate of $1.38 billion. For the full year, Bhatia is now projecting revenue of $3.87 billion, which is 5 percent below consensus and 6 percent below the midpoint of management’s guidance range of $4.05 billion to $4.25 billion.

Bhatia figures that the company will have a tough time matching its 2012 performance, which saw strong sales from the first-person shooter Battlefield 3.

He estimates that Battlefield 3 sold 13 million units; in comparison, Medal of Honor Warfighter has shipped roughly three million units, creating a 10 million unit gap, which pencils out to $500 million. In addition, EA’s title slate in 2013 was smaller, with only 14 titles, compared to 2012, when it shipped 22 titles. By his estimate, that creates another $200 million hole.

However, EA continues to talk about how digital revenue is more than making up for the drop it is seeing from packaged-good sales.

In the second quarter, it reported that digital revenue was 40 percent higher year over year.

For instance, the FIFA soccer game generated more than $115 million in digital revenue in the first half of 2013, and Battlefield 3’s premium service has sold more than two million subscriptions to date (all of that revenue will be recorded in the fourth quarter). Additionally, the company’s Simpsons game on iOS, called Tapped Out, has been the top-grossing game for the past four weeks.

While digital revenue is up, the company is not as bullish on Facebook as it once was, and is scaling back its investments in the platform. In addition to developing fewer games for Facebook this year, EA also started shutting down underperformers such as World Series Superstars, EA Sports PGA Tour Golf Challenge, Monopoly Millionaires and Age of Immortals.

Similarly, social games leader Zynga recently said it would shutter 13 titles.

EA’s CFO Blake Jorgensen told AllThingsD last quarter that the company believes social will be key for games going forward, but not necessarily as an individual platform. “I would say that, overall, digital is growing the fastest, and within digital, it’s the mobile business that’s growing the fastest,” he said. “Clearly, mobile is up dramatically, and it’s no surprise — it’s driven by smartphones, tablets.”

The event looks like a pretty big deal, judging by the invitation alone. The thick card stock features a hologram flipping back-and-forth between the Disney Infinity logo and a 3-D view of the Magic Kingdom.

You can also tell it’s important based on the speakers. Presentations will be made by both John Pleasants, the co-president of Disney Interactive, and John Lasseter, the chief creative officer of the Walt Disney and Pixar Animation Studios. Lasseter is also the principal creative adviser for Walt Disney Imagineering.

The event will take place in Hollywood, Calif., at El Capitan Theatre, a fully restored 1926 movie house owned by the Walt Disney Company.

The unveiling of Infinity could be tied to an unannounced gaming initiative code-named “Toy Box.” Very few details are known about the secret project, but according to the New York Times, Toy Box is a console game that has “extensive mobile and online applications in which various Pixar and Disney characters will interact with one another for the first time.”

For years, Disney has aspired to do something big in the gaming space. But despite making several large investments, it has failed to gain much traction. Those investments include six console-based development studios, and in 2010, it purchased its way into social gaming with the $563 million Playdom acquisition. It also owns and manages a virtual world for children, called Club Penguin. More recently, it has been pushing into the free-to-play market around the world through smaller acquisitions and partnerships.

Despite some successes, especially on mobile with hits like Where’s My Water?, the Interactive division continues to drag down earnings. During the fiscal fourth quarter ended Sept. 29, interactive revenue for the year decreased 14 percent to $845 million, and the unit reported a loss of of $216 million.

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The interest in the six-person company shows how significant recording game play has become over the past year as other sites like Machinima and TwitchTV have become phenomenal hits within the gamer community.

What’s different about Kamcord is that it is recording mobile games, whereas other companies in the space have so far been focused on console gaming and PC gaming.

Matt Zitzmann, CEO and co-founder of Kamcord, said the company is announcing a seed round today totaling $1.5 million. Other investors in the round include Merus Capital, Y Combinator, XG Ventures, Digital Garage, Plug and Play Tech Center, iVentureCapital, GVA Capital and Netprice.

Kamcord is distributing its software to game developers via a software development kit, which records what’s happening on the phone’s screen while someone plays a game. After a level or game is completed, the gamer has the opportunity to watch the video and then share it to Twitter, Facebook, YouTube or email — which they very well might do if they achieve a new high score.

So far, the free SDK is live in more than 57 games on iOS, and is creating an average of seven videos per second. While that’s a lot of video, the number could be deceiving, since developers often automatically record game play regardless of whether a user ends up sharing or watching it. The video is stored on the phone until it is shared.

Zitzmann hopes to monetize the technology by helping developers drive downloads to their games. For example, last month he said that Kevin Rose, a partner at Google Ventures, tweeted a link to one of his videos. Afterward, 20 percent of the viewers clicked through to either the App Store or Google Play to see more info on the game (it’s unknown how many people downloaded it).

Zitzmann said Kamcord is playing off a number of trends that are currently hot, which is likely the reason for investor interest.

“We are riding a few waves: The rise of mobile gaming, plus app distribution changing and the popularity of recording and sharing,” he said.

Along with the potential for others to enter the space, Applifier, with offices in Finland and San Francisco, has developed a service called Everyplay that allows users to post their game play to social networks. The company recently raised $4 million, according to Inside Social Games.

According to Flurry, which gives developers tools to track consumer behavior, the most prolific business model is the free-to-play scenario, where consumers download the game for free and then pay for virtual goods or currency inside the application.

It says the most successful companies that understand this include Electronics Arts, Zynga, Mobage and Supercell.

In the report, Flurry’s Senior Director of Business Development Dan Laughlin examines consumer behavior, retention and demographics for the top nine most popular gaming genres. For this analysis, Flurry looked at more than 300 million consumers using iOS and Android games over a 90-day period. It only studied free titles, and then lumped them into four main categories based on their earning characteristics.

“The free-to-play business model (a.k.a. freemium), where consumers download and play the ‘core loop’ of a game for free, but then pay for virtual goods and currency through micro-transactions, is the most prolific business model in the new era of digital distribution,” he concludes.

For developers, the more important thing to know is what kinds of games are better at retaining customers and monetizing over the long-term. Here are the four profiles that Flurry says exist in gaming:

1. These games are used frequently for a long time, including slots, turn-based games that are passed between two people and simulation games. From a revenue perspective, the most successful companies maximize revenue through in-app purchases and by displaying ads to those who are not willing to pay.
2. Strategy games are the only genre that are played intensely for a short period of time. Game life cycles are short, and Flurry says the game’s live services must be executed flawlessly. Companies that monetize well encourage players to spend money on continuing their progress through the game.
3. The third profile is defined by infrequent game play for a short period of time, meaning that developers have fewer opportunities every week to monetize the user. The kind of gaming that falls into this bucket is defined as the “Card-Battle genre,” which is mostly popular in Asia, and has now started showing up in the U.S.
4. The final category are games that are easy to pick up and play, and may be enjoyed for years, such as solitaire. However, according to Flurry, the evergreen titles “may lack the depth required to generate sizable in-app purchases.” Instead, it’s better to focus on advertising impressions. The games can also be good for keeping a strong core audience that can be used to promote more apps to.

The game falls nicely into the trend of bringing casino games to new platforms using the free-to-play model. Players purchase virtual coins in order to play, but since they can’t ever cash out their winnings, it is not considered gambling.

Arguably, one could say that Zynga is the leader in casino space based on its Poker game, which has consistently remained at the top of the charts on both mobile and Facebook for years. But its following titles, such as Bingo, have not been as successful. For example, as part of the social game company’s layoffs in October, it cut back on that game’s development.

CEO Sumit Gupta believes Bash Gaming was successful by focusing on one game, which moved from Facebook to iOS nine months ago and more recently to Android. Today, most of its traffic comes from mobile devices.

“We believe the casino games, in general, have a very strong game mechanic. Once they start playing, they want to play more and more, and with the ability to play with friends, it makes it more exciting,” he said. “Players get a certain amount of free chips, and then they start buying those chips, and play more.”

Today, the game remains in the top 20 best grossing apps on iOS, and has at times been in the top five. Gupta said that 95 percent of its users — who are mostly women — play the game for free. The few players who do spend clearly spend a lot. Two of the most popular chip packages are 100 for $8 and 200 for $16. The company’s annual run rate of $55 million does not include the 30 percent cut it must hand over to Apple.

Based on the success of the game, Gupta said, the San Francisco-based company plans to invest in more casino titles under the Bash brand. Currently, the company has roughly 55 employees, a majority of whom are based in India. He expects the company’s headcount to double over the next year. The company, which is profitable, has only raised $1.2 million in financing.

To help ramp up game production, Bash Gaming hired Sean Eyen as VP of Global Gaming. Previously, Eyen worked at Caesars Entertainment, Liberty Media and Wagerworks before establishing his own consulting firm focused on the regulated casino and lottery industries.

Earlier this week, Zynga announced it had officially started the process of getting licensed in the U.S. for real-money gaming, and it previously inked a partnership with bwin in the U.K. Gupta said Bash is investigating the real-money space as well. “We are very focused on what we are doing today. This is a very exciting space, and dealing with real money is a green field opportunity, especially in Europe, where it’s legal. That excites us.”

The research firm, which tracks spending at physical retail stores on a monthly basis, said last month was a particularly strong period for both hardware and software sales. In November, videogame sales totaled $2.6 billion, down 11 percent from the year-ago period, when sales totaled $2.9 billion — the smallest year-over-year decline so far in 2012.

There are two trends that are contributing to the drop off: One has to do with consumers shifting to other platforms, such as tablets and mobile phones, but the other has to do with how NPD tracks its data. It records sales that occur at retail, whereas a lot of consumers have started to purchase games digitally over the Internet. Still, looking at NPD’s data provides a broad picture of trends in the game industry.

Most telling last month was that sales have continued to be strong despite the fact that most of the hardware is six to seven years old, with the exception of Nintendo’s Wii U.

For comparison’s sake, NPD looked at how sales did last month compared to November 2005, which was the last time the industry began to transition between console generations. NPD Group Analyst Liam Callahan said retail game sales are nearly double what they were in November 2005. “This really demonstrates the long-term health of retail sales even as many platforms are quite late in their life cycles,” he said.

In addition, he said last month’s figures provide a very good sign of momentum going into the December holiday period.

Here are some of the findings from NPD’s November report, which tracked spending between Oct. 28 and Nov. 24:

• Nintendo sold more than 1.75 million total hardware units, including nearly 910,000 portable game units and more than 845,000 original Wii and Wii U units. In particular, it sold 425,000 Wii U units during the seven days captured in the data.
• Microsoft sold a jaw-dropping 1.26 million Xbox 360 units during the month, making it the No. 1 console maker for the 23rd consecutive month.
• November was the second-highest month of sales on a unit basis for the PS Vita since it launched, fueled by bundling third-party content with the hardware.
• Videogame software sales, including console and portable, totaled $1.43 billion, down 8 percent from the year ago period, when it totaled $1.6 billion. That represented the smallest unit decline this year, tied with August.
• Half of the software sales in November were for the Xbox 360, which gained 8 percentage points in market share since last November.
• Not surprising, Activision’s Call of Duty: Modern Warfare 3 Black Ops 2 was the top selling game during the month. It reported yesterday that it hit $1 billion in sales in just 15 days.