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.

Disney confirmed the acquisition, but would not disclose terms. However, Studio Ex has yet to officially launch any games, so this is pretty much a grab for the talent, which includes David Moon, the former director of game services at NHN, one of the largest gaming destinations in Asia.

“The Walt Disney Company has acquired Studio Ex, a games development studio in Korea that focuses on multiplayer, free-to-play online and mobile games,” Disney said, in a statement. “Through a stock purchase agreement, Studio Ex is now a wholly owned subsidiary of The Walt Disney Company reporting into Disney Interactive.”

The game studio will focus on developing free-to-play games for the Asian market based on new brands or existing Disney properties. The games will be developed for both online and mobile.

Prior to the acquisition, Disney announced a partnership with Korean firm Smilegate to develop a game based on Marvel’s iconic heroes, also targeting the Asian market. It also formed a  partnership with Korean game developer Zipi Studio, which, along with other partners, will launch Zipi Racing, a massively multiplayer online racing game featuring characters from “Toy Story” and “Cars.”

Much of Disney’s entrance into gaming has been through acquisitions. Over the past few years, it has purchased Club Penguin, the online multiplayer game aimed at children; Playdom, which is focused on making social games for Facebook; and Tapulous, the mobile game maker.

Last week, Facebook let its longtime dominant gaming partner Zynga out of a long-term contract that will allow the game developer more freedom to create games for other platforms. In turn, it levels the playing field for other developers, and should go a long way toward eliminating the fears of anyone on the platform getting special treatment.

That wooing has apparently included a dinner that Mark Zuckerberg recently hosted for the top brass in social gaming. Also present was Facebook games boss Sean Ryan.

The gathering included some of the top five to 10 social game companies on the platform, such as King.com, Kixeye, Disney’s Playdom, Electronic Arts and Kabam, and was held at the Fuki Sushi restaurant at Facebook’s new Silicon Valley headquarters. Facebook’s largest partner, Zynga, was not present, which is not particularly surprising for a partner it meets with essentially every week. Bloomberg also reported some details about the dinner last week.

A wide range of subjects was on the menu, sources said, with a lot of proposals and ideas floated. Developers did much of the talking, attendees said, with Zuckerberg and Ryan listening but making no promises.

One of the highlights was a discussion about new ways of monetizing games, including different revenue shares. Currently, Facebook charges 30 percent for virtual goods sold inside of games, just like Apple and Google. One idea was to have a sliding scale, so that developers just getting started on the platform would pay a lower rate, while the Zyngas of the world would continue to pay full price.

In other words, game developers would be taxed based on volume versus a flat fee, no matter how popular the game was. Likewise, the game execs argued that the rate structure would provide additional incentive to Facebook to market up-and-coming games.

A Facebook spokesperson was not immediately available for comment, but sources close to the company said that Facebook has no immediate plans to change the revenue share agreement for payments.

But the idea is not so far-fetched, given that most of Facebook’s payment revenue today is coming from a small percentage of large players. Specifically, Zynga contributed seven percent of the company’s Q3 payments revenue, down from 10 percent in Q2. Following that earnings report, Zuckerberg acknowledged: “Gaming on Facebook isn’t doing as well as I’d like.”

One thing Facebook could potentially do is build its own social games, which is now allowed, according to the contract it just signed with Zynga.

However, that idea was immediately shot down by a Facebook spokesperson: “We’re not in the business of building games, and we have no plans to do so. We’re focused on being the platform where games and apps are built.”

If Facebook is truly worried that a lot of its developers are ditching the social network for greener fields on Apple’s iOS or Google Play — and a lot of them are — then the dinner meeting was likely just the beginning.

Red Robot’s Co-Founders Pete Hawley (left) and Mike Ouye (right) standing in front of the company’s booth at PAX.

“Gamers are lazy,” said Pete Hawley, Red Robot Labs’ co-founder and chief product officer. “You can’t expect them to get off the couch.”

A year ago, the Mountain View, Calif., company attended the Penny Arcade Expo (a.k.a. PAX) in Seattle to launch its first game, Life is Crime. That weekend, three Red Robot employees hustled to make the convention a virtual game board, getting attendees to virtually commit more than 20,000 “crimes,” in addition to hospitalizing more than 1,000 people and stealing $35 million from real places.

The company is back at PAX this weekend with a much larger presence — 15 employees. It also secured a very small kiosk, which you practically need a map to find, given its far corner location behind Sony’s massive PlayStation booth.

But despite the company’s larger presence on the show floor, location-based gaming is still in its infancy, with many of today’s concepts still centered around checking into locations, like Foursquare. But Red Robot co-founder and CEO Mike Ouye said the company believes that there will be a much larger opportunity in the future for what they call “playing the planet.”

This year, Red Robot is here to show off its new fantasy game, Life is Magic, which will be launching soon for free on Android and iOS. In the fantasy land, players pan around a map of the U.S. to discover dungeons, where they must fight monsters. To purchase armor or new weapons, they virtually visit shops that exist in the real world, even if the stores — say, Best Buy or a candy shop — wouldn’t normally sell those items.

Given what Red Robot has learned over the past year, the game has two elements that the company believes are very important.

The first is to make it appear as if the player is in an actual fantasy land, while using real-world geographic data. Red Robot Labs does not use Google Maps. Rather, it has taken some of the underlying data found on maps, like lakes, rivers and mountains, and then places a fantasy-land overlay over that. Players may still feels like they are in Seattle because of the geographic layout, but also like they have escaped to a different land.

The second important aspect of the game is solving for gamer laziness.

In Life is Magic, players can travel to anywhere in the U.S. — without actually getting on a plane, taking a bus, or walking. Even if they aren’t really at the Starbucks on the corner, they can still interact with other players there. But the farther away the player goes from their real-world location, the more energy points they will need to conduct a task (those energy points can either be earned or purchased).

“It’s less about where you are, and more about where you can go,” Hawley said, given that 50 percent of mobile gaming happens in the home.

Ouye added that Red Robot is also licensing its technology to other game developers, including its maps, 3-D rendering capabilities, and points-of-interest database. Ultimately, he envisions having enough data from those games to make a “location interest graph.” A location interest graph would be able to reveal such data as the most popular app or the best gamers for a given area.

Three companies are currently licensing Red Robot’s technology, and the company has two internal games in the pipeline that will launch by the end of the year, including Life is Magic.

Red Robot has raised $15.5 million in capital from an impressive list of investors, including Benchmark Capital, Shasta Ventures, Rick Thompson, co-founder of Playdom, and Chamath Palihapitiya, a former Facebook executive.

And because of its strong association with a brand, the game makers are hoping that this time the game won’t be as easy to replicate by competitors — unlike what happened with Disney’s big hit Gardens of Time.

Animal Kingdom Explorers, which will launch over the next couple of weeks, challenges players to find a number of items within a scene. Butterflies and birds, for example, are hard to decipher among the lush vines of a jungle; leopards, crocodiles and elephants are camouflaged in the deserts of Africa.

The game is Disney’s second to fall under the category of “hidden objects,” a genre that Disney arguably helped define with the launch of Gardens of Time, which Facebook named as the most popular game of 2011.

“After we launched Gardens of Time, we wanted to follow on that with something that would appeal to those who loved it and reinforce the elements that they loved the most,” said Eric Todd, the VP of product at Playdom and creative director of Animal Kingdom Explorers. “And what they said is that they really like learning.”

They also wanted a game that couldn’t be copied as easily by competitors, which frequently occurs in social gaming when a particular title or genre suddenly takes off.

For instance, the Gardens of Time game had a Victorian theme, with players traveling throughout multiple eras, learning about history as they went. After its success, many copycats followed, including Zynga’s Hidden Chronicles, which also had a Victorian look and feel. I pointed out the similarities between the two games after Zynga launched the game following its initial public offering.

But by partnering with one of Disney’s big brands, Todd is hopeful that this one will be more difficult to mimic.

He said the Disney-owned Playdom team traveled to Orlando to meet with the engineers who created the Florida theme park, so that the game would be scientifically accurate and would be familiar to anyone who had visited the park. In all likelihood, equivalent resources wouldn’t be available to other game makers.

“Hidden object games are tremendously popular among a broad and very enthusiastic audience,” Todd said. “It’s flattering to the degree in which our previous game was intimated.”

Generally, if you’ve played the Gardens of Time, or many other social games — the mechanics of this new game will be familiar; it doesn’t stray too far from the commonly used playbook.

For instance, as part of the game, players will have a space — in this case, it’s a nature reserve — where they have to decorate and add animals and other items. Users will be able to visit each other’s reserves, much like visiting another user’s farm or city.

In addition, the game uses a common game mechanic to get users to cough up a few dollars for the free-to-play game. After playing for a certain period of time, a player will run out of energy. They can either wait to play some more, or pay to buy more energy.

Another advantage in leveraging a Disney brand is being able to tap into the company’s massive entertainment marketing engine. The game will be promoted on Disney’s Web sites and within the theme park itself. Likewise, the park will be promoted from inside the game. Also, because of the close tie-in with a Disney property, the developers are using the name Disney Social Games, rather than Playdom, which Disney bought in 2010 for more than $500 million.

Playdom plans to release a dozen games this year, several of which will finally leverage Disney’s big brand names. The first game built on Disney’s intellectual property – Marvel: Avengers Alliance –   launched in January.

Starting next week, Playdom said it will begin publishing Triple Town, which has already been on Facebook for some time.

Spry Fox said it will retain all creative authority over the game, and added that, going forward, it won’t have to worry about acquiring new users or figuring out how to run advertising campaigns.

In a statement, Spry Fox said: “Our games have reached millions of users, but never concurrently. We have constantly worried about our ability to scale without major service interruptions or other related problems … We are grateful for the opportunity to learn from [Playdom] and lean on them.”

The idea of publishing third-party content is not new in the world of gaming, but it is for Disney’s Playdom. It said while it sees an opportunity to leverage the creativity of independent developers, it will not be at the sacrifice of developing games internally.

Over the past year, Playdom has struggled to keep up its development after being acquired by Disney, but now it claims to be back on track and has more than a dozen titles under development, including a game based on Marvel superheroes.

“Playdom’s in-house development studios are still hard at work … but we also recognize that there are a lot of independent social game developers creating amazing new experiences, too,” the company said in a statement.

Spry Fox’s Triple Town, a puzzle game that challenges players to build cities by matching three or more of the same game pieces, has received some acclaim of its own. The trade magazine Gamezebo recently named it the best game of 2011.

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.

Today it is launching Hidden Chronicles, the company’s first-ever “hidden objects” game on Facebook.

So far, the casual game genre, which challenges players to find wineglasses or candlesticks in a crowded and messy illustration, has not had a major presence on Facebook.

That is, with one exception: Facebook deemed Gardens of Time by Disney’s Playdom division the most popular game of 2011.

In many regards, Zynga’s Hidden Chronicles is a copycat of the game or others found on the PC. The launch is important to Zynga since it marks one of the first times it is branching out from creating ’Ville games. Such hits as FarmVille and CityVille laid the foundation for Zynga’s $1 billion public offering in December.

Cara Ely, creative director of Hidden Chronicles, said the category is popular on the computer, but today the games are single-player experiences.

“Zynga has so much knowledge about social play,” she said. “People who already like hidden object games will have this new twist, and then people who have been playing ’Villes will enjoy them if you are a puzzle solver and like that completion-ist feeling.”

The premise of the game is that your Uncle Geoffrey has died under suspicious circumstances, and he’s left behind a number of clues to solve the mystery.

After arriving on the estate, the game feels like a scavenger hunt, where you search the uncle’s home and its grounds, including tree houses or secret gardens that you gain access to over time.

And, because it is a social game, you will need friends for some components of the game.

Challenge your friends to a contest of who can find the most hidden objects in a particular scene within 60 seconds, or earn “reputation points” by interacting with friends to unlock new content and scenes. If you don’t want to interact with friends, you can always pay to unlock these new scenes.

After all, Zynga’s got to have a way to make money.

Ely said the game will be able to live on forever with no final conclusion as to why your uncle died.

“We have a lot of story written that goes beyond that. We’ve structured it so you solve one piece, and then you have another avenue to go down,” she said. “It’s like a TV series that goes on as long as you have new narrative and story content.”

Ely, who joined Zynga last year, was the creator of the popular Dream Day Wedding series of hidden object games on the PC and worked at Sierra Online and iPlay.

Hidden Chronicles, which is expected to go live on Facebook later this morning, will be available in 15 languages.

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)

What you’ll find on Subtext is a lot like the special features you’d find on a DVD, but for e-books. And you can create your own annotations.

Subtext’s founders come from the gaming industry and their hope is that readers will comment, endorse and share notes on the books themselves. For that participation they will be rewarded with in-app points to be spent on additional author and expert content.

Subtext works most seamlessly with Google Books but it also supports reading and annotations across editions of the same book on various platforms. “To be social we must be open,” said co-founder Rachel Thomas in an interview last week. Subtext doesn’t yet support proprietary books from distributors like Amazon and Apple.

Thomas was previously at Playdom; co-founder Andrew Goldman was CEO at Pandemic Studios.

At launch, Subtext offers 18 enhanced books, including commentary from George R.R. Martin’s editor and researcher on “A Game of Thrones,” character updates by Frances Mayes for her “Under the Tuscan Sun” and movie scenes and interviews for Lisa See’s “Snow Flower and the Secret Fan.”

Readers mark up books with comments, questions, polls and links to Web pages; they can dictate instead of typing; and they can mark anything with a “spoiler alert” tag. They can navigate books page-by-page like normal, hop around through annotations, and see what page their friends are on.

Subtext is iPad-only for now, and is next working on a Web version. The 14-month-old company has 12 employees and raised $3 million in funding from Google Ventures, Mayfield Fund, New Enterprise Associates and Omidyar Network.

See also: my coverage of another social reading start-up called Readmill.

According to sources close to the situation, Yahoo has hired Heidrick & Struggles for its CEO search.

It will be a dicey job, since the effort is on a separate track than the Silicon Valley Internet giant’s wide-ranging strategic review, which is looking at a range of options including the sale of the company.

That’s why many see the move as window-dressing for Yahoo’s board, rather than any real interest in hiring a new leader.

Sources said that will make the search a difficult one for Yahoo, since any CEO candidate would be coming into a very volatile situation. In addition, Yahoo has been struggling — Struggles, struggling, get it? — to recharge its advertising and search business and also its product innovation cycle.

That’s the reason — among several others — that the board of Yahoo suddenly fired its former CEO Carol Bartz last month.

Heidrick has worked for Yahoo previously, in the now ill-conceived placement of Bartz by partner John Thompson. A different partner will be handling this assignment, sources said.

The pool of possible CEOs to lead Yahoo is not a large one, but could includes execs such as Juniper Networks CEO Kevin Johnson, Chegg CEO Dan Rosensweig, Skype CEO Tony Bates, John Pleasants of Disney’s Playdom, Hulu CEO Jason Kilar, Facebook COO Sheryl Sandberg and any number of top Google execs, as well as Yahoo board member and Akamai President David Kenny.

(I am, of course, waiting by the phone for the call.)

A Yahoo spokeswoman declined to comment.

Of course, higher quality means bigger budgets.

To that end, the San Francisco company is announcing today that it has raised $10 million in a second round of capital.

The investment comes from Idle co-founder Rick Thompson, the former chairman and co-founder of Playdom, the social games company Disney acquired last year. Thompson previously led Idle’s initial round of $9 million.

In a recent interview with Thompson, he told me, “I think developers are having to retire old practices and will have to provide experiences that people do enjoy. What I am saying is that the bar is being raised and the established players are having a harder time reacting to the environment, and it’s hard to let go of that. The innovation is coming from emerging players.”

But even the established companies are starting to see that players on Facebook are becoming more discerning.

Zynga announced on Tuesday that its upcoming release on Facebook, called CastleVille, will be one of the first social games to have music recorded from an orchestra, which is more typical of console productions.

Today, San Francisco Mayor Edwin Lee is scheduled to visit Idle Games’ new 36,000-square-foot offices as part of a campaign to increase the number of tech jobs in the city.

Jeff Hyman, Idle Games’ CEO and co-founder, said in a release, “We believe that Facebook games will only thrive by delivering the highest quality entertainment experience to users. That’s why we’re taking a new approach to Facebook game design with an emphasis on delivering a truly social experience, while raising the bar for creativity, quality and innovation.”

The company’s first game, Idle Worship, will launch soon. In the game, you are a god vying for the worship of friends, strangers and the indigenous population of Mudlings. The game will allow players to play synchronously, meaning that you’ll be playing together with friends in real time.

For a peek at what they consider quality, watch this trailer:

In that time, he says, the nascent industry has gone through a radical transformation.

Disney’s recent struggles with finding its way since the $532 million acquisition is a case in point, but Thompson says it is a general trend that is affecting everyone in the space as the bar for producing better and more engaging games gets raised. [More on Disney's current plans for Playdom in a separate story today.]

Today, since leaving Playdom last August, Thompson remains active by helping to start and fund around a half a dozen new social games start-ups.

Here’s an edited version of our conversation:

Q: When did you leave Playdom?

Thompson: At the time of acquisition. I was chairman. And, then the next day, I wasn’t.

Q: What are you doing now?

Thompson: I am helping develop exciting opportunities in social and mobile.

My thesis is that the rules are different now than they were back in 2008 to 2009. Back in those days, the viral channels were wide open, and lots of folks were competing. The reality is that the best companies at exploiting the channels — those companies, which had their DNA in Web marketing — were the ones who had the winning strategy.

Then, of course, there was the over-exploitation of those channels, which led them [Facebook] to dial them back, so that they were inaccessible by all. It got rid of the noise and the signal. These communication channels were largely app to user, they weren’t user to user.

When the rules changed, they changed radically, but they also changed slowly. They slowly turned the valve, so some companies rather than reinvent themselves, tried to apply band-aids to 1,000 cuts that were coming.

Here we are now in 2011, with the viral channels greatly reduced. And, some are still executing against the playbook that was used in 2008 and 2009.

Q: What do you think about Facebook’s latest moves to reopen the viral channels?

Thompson: They did the right thing by clamping down on spam and it has taken them awhile for them to let through the signal through again.

They’ve invested heavily, by hiring 40 to 60 people, who are focused on maximizing Facebook revenue through games. The overarching trend is toward Facebook building an environment, where users who want to share apps with each other, will make it easy for that to occur. Things that don’t have natural virality will suffer.

Q: Is natural virality really possible?

Thompson: It’s interesting, within mobile, we’ve had some really outstanding successes, such as Angry Birds and Cut the Rope. We haven’t seen that on Facebook. That’s ironic, I think that user-to-user communications are alive and well when the noise gets cut out.

I think developers are having to retire old practices and will have to provide experiences that people do enjoy and then I think Facebook will make it easier.

Q: So, you think mobile can be more viral than Facebook?

Thompson: Yes, if you go back to the classics. If you are standing in line and playing a game and laugh and pass along what you are doing to the person next to you, that’s how the really great games are being passed in mobile. It’s a general virality. It’s not spam-driven. Mobile is more viral than Facebook.

Q: Do you find very many Facebook games enjoyable?

Thompson: I think they are fairly scarce. I think there’s Backyard Monsters, which is a terrific niche game that appeals to the player and provides a great experience. Gardens of Time [made by Playdom], is also a well-done game that appeals to a certain audience.

But what I am saying is that the bar is being raised and the established players are having a harder time reacting to the environment, and it’s hard to let go of that. The innovation is coming from emerging players, like Electronic Arts. The Sims Social is a terrific example and it came out of nowhere. Personally, I’m drawing lots of inspiration from it.

Q: What are your investments focused on?:

Thompson: Through the investments I’m making, the overarching theme is about quality and games that people want to share. That’s the new playbook and some of the investments I have made, like in Funzio, is innovating on Crime City on Facebook and now taking a multi-platform strategy to iOS.

Q: So, how do you feel about the farming mechanic that has become so standard on Facebook. Is that here to stay?

Thompson: I tend to think that those will not be very interesting in another two years, and they aren’t social games. They are single-player games with the possibility of visiting your friend’s aquarium – that’s not social.

In addition to quality, I’m excited about making advancements on a number of fronts, where companies are each developing unique capabilities and competences. Kabam [which is making social games for hardcore game players] is in a similar camp. I think that’s really viable and it’s a niche strategy.

Q: Should we expect that social games will commonly attract 100 million daily active users, such as CityVille?:

Thompson: That’s a very ambitious goal. I think that requires a big investment and commitment. It’s a big effort. The big mega-hits are likely going to involve a strong creative team with a vision and a production team and a large budget. It’s not inconceivable that in two to three years, it will look like the console business.

Q: How else has the business changed?:

Thompson: The philosophy of shipping a product has also changed. Users used to be free and infinite, so you would ship a minimal viable product, and as long as it worked for a enough people, it was good enough and you would iterate later.

Now, when users are expensive and it costs $2 to $3 to acquire each one, you don’t want to squander those users. The maturity of the products is way beyond what we saw two years ago. Rather than releasing after six months months of development, essentially you’ll have an extra 12 months of development and have beta customers.

Q: You seem to look down on companies that are driven by analytics, why?

Thompson: Analytics is important, but should it be what is it that’s driving the bus? Or should it be the creative vision and passion for creating a game? We put creative and the vision as driving the bus and put analytics in the back seat, making sure we are doing the right thing and are catching any problems. But it doesn’t lead.

Q: What happens if it leads?

Thompson: I think it leads to bad consumer experiences. The classic problem is if our goal is to increase virality, and my team says lets do a test whether adding an extra prompt to invite your friends, leads to virality, and it does. Then, maybe you add a second or third. To me, it’s not where you want to be.

Q: What are some of the things you are invested in?

Thompson: Wild Needle, Rumble Entertainment, Funzio, Red Robot Labs, Project Slice, Airy Labs, Noise Toys, Viki, SocialShield, Udemy, Triangulate, Idle Games and AdChina.

I have supported some efforts through my friends or things that are so compelling. It’s a fascinating space to be a part of.

Q: What platforms are you interested in?

Thompson: I’m bullish on Facebook, and mobile is a real threat and Google+ is a threat. I am excited about mobile and Google+ for the simple fact that developers have choices. I know a number of developers, who are now emphasizing mobile. As the quality game developers go to mobile. The more successful Steve Jobs is, the harder Mark Zuckerberg will work to get them back on Facebook.

Q: Do you think that the 30 percent cut that Apple and Facebook takes will fall?

Thompson: I would think it comes down overtime. Competition will force it. I think it would increase the market if they cut it. Someone has to give.

In an interview in Silicon Valley, Brad Serwin, the COO of Playdom’s social games unit, said the company has finally started to come out of hiding after being acquired for $563.2 million, plus a $200 million earn-out, more than a year ago.

One reason it took so long, according to Serwin: The general pains of integrating a small company into a larger organization.

Since the acquisition, Playdom has moved to new offices in Palo Alto, Calif., which it shares with Disney Mobile (which was formed through the acquisition of another Silicon Valley start-up, Tapulous).

Both have been learning to work with a parent company that is headquartered 350 miles away.

“A year after the acquisition, we are successfully transitioning into an operating division within Disney,” Serwin said. “We are 100 percent back to work.”

It took long enough, especially given the radical change the industry has undergone since Facebook launched its third-party application platform in May 2007. [More on how the industry has changed  in an interview today with Rick Thompson, a founder of Playdom.]

Since then, games have become the most popular applications on the platform, and have evolved from simple and inexpensive time killers to graphically rich applications.

Facebook has changed the rules, too.

This has impacted everyone in the space, not just three-year-old Playdom. Two of the biggest challenges emerged when the social network shut down its viral channels: When it became difficult to acquire new users by posting messages on users’ pages, and when Facebook implemented Credits, a virtual currency that requires developers to cut Facebook 30 percent of all revenues.

Playdom execs believe the company has finally reorganized, and are planning on making a big splash in what many worried was a dead pool.

Of the dozen titles slated for the next year, two games will come as soon as this month, and up to three games — coming in January, March and August — will leverage Disney brands.

Playdom’s next game is called Secret Agent X. For now, it is only available in beta in some international markets, but it is coming to the U.S. in the fall. In the game, a player leads a dual life as an average citizen who at night becomes a secret agent, exploring new locations and completing missions with the help of high-tech gadgets.

In the trailer for the game, seen below, a suburban housewife manages to save the world, all the while keeping her cover by making sure dinner is on the table on time.

As the seventh-largest app maker, according to AppData, Playdom falls below Zynga, Electronic Arts and even such new entrants as Germany’s Wooga.

That said, Playdom’s recent launch of Gardens of Time was considered a breakthrough hit that used game mechanics rarely seen on Facebook. The social game falls into the category of “hidden objects,” where players try to find a list of items in a room, similar to “Where’s Waldo?”

The concept behind hidden objects is not new to gaming, but it is new to Facebook, and was recently identified as a niche worth pursuing. Today, Playdom’s game is garnering nearly three million daily active users, which registers slightly below Zynga’s new Adventure World.

Playdom hopes it will prosper by bringing new concepts to social gaming and also by leveraging Disney’s big brands to catch players’ attention.

As a recent test, Playdom renamed its game GnomeTown as Disney’s GnomeTown. Serwin said the game performed much better with the new name.

Playdom’s close competitor Playfish is also relying on the intellectual property of its parent company, Electronic Arts. It has seen its Sims Social title climb the charts to become the second-most-popular game.

On the other hand, Zynga, which is the largest social games maker, has made up all of its own properties, ranging from FarmVille to its newest property, Adventure World. More recently, it has used name-brand promotions within its games to garner attention, such as Lady Gaga in FarmVille, and more recently, Enrique Iglesias in CityVille.

“Competitors have chunks of IP, but we have a lot to choose from,” said Serwin, adding that it’s not as if Playdom alone needs intellectual property: “Everyone needs IP.”

Serwin said the Playdom division’s plan is to work closely with Disney; it has hired a liaison who works in Burbank every day to make sure Playdom’s plans are on course with what Disney has in mind.

Still, Serwin can’t deny that the lull in game making has dragged down the results of Disney’s Interactive Group. Disney reported $21 million in accounting adjustment in the third quarter and $34 million in the second quarter tied to Playdom alone, and the losses are expected to continue.

In the second-quarter earnings call, President and CEO Bob Iger tried to explain its multimillion dollar charges to analysts:

“We thought it would be wise to improve the quality of the games that we’re going to release. So, we took a five-month hiatus, which had not been planned, from releasing games, to build a higher-quality game, and then also to re-stack our technical capabilities to deal with volume or to deal with scale, which we are hoping to achieve.”

Iger declined to say when the group would hit break-even, but that it was expected to get into the black by 2013.

Iger gave Gardens of Time as an example of a game that is monetizing well. “We feel good about the direction of Playdom, particularly with this new hit game in the marketplace,” he said, adding that new games in the pipeline will be based on Disney, ESPN and Marvel brands.

It has taken more than a year, but Serwin believes Playdom is ready.

“We’ve made a connection with people at Disney to get it done,” he said. “Whether it should have happened faster or slower, I don’t know, but it’s happening and it’s great.”

How does it intend to do that? By integrating real locations into the experience.

Last month, Red Robot Labs unveiled its first location-based game, called Life is Crime, which required players to commit virtual crimes at various landmarks in Seattle.

The experiment took place over the weekend at the Penny Arcade Expo, where competing players “committed” more than 20,000 crimes at the convention center and “hospitalized” more than 1,000 criminals, “trafficked” $1 million in contraband and “robbed” a total of $35 million.

The round of funding was led by Benchmark Capital with Shasta Ventures, and existing investors Rick Thompson, co-founder of Playdom, and Chamath Palihapitiya, former Facebook executive, also participating.

Red Robot Labs said it aims to grow its game studio and develop its gaming platform. It will also form third-party studio partnerships.

The nine-month-old company was founded by Mike Ouye, who previously headed up monetization and revenue for Playdom, which was bought by Disney, and Crowdstar, an independent social games company. The other co-founder-slash-investor is Palihapitiya, who is also the founder of the Social+Capital Partnership, a venture fund focused on the social and technology spaces.

The funding comes after a $100,000 fellowship grant to Airy’s founder, Andrew Hsu, from Peter Thiel’s much-publicized and politicized “20 under 20″ grant program, in which the PayPal co-founder paid 20 young entrepreneurs to leave or forgo college in favor of starting companies.

The announcement also makes Hsu the first alum of Thiel’s program to get a business idea venture funded.

Airy’s mission, according to Hsu, is to “make games that parents can feel good about handing to their kids … and that don’t suck.”

The games, which will initially teach English, math and memory building, will be targeted at the 5 to 13 age range, which is coincidentally about the same age Hsu was when he started studying neuroscience at the University of Washington.

It’s somewhat ironic that the first funded Thiel fellow has spent almost half his life in college.

While Hsu said that Thiel’s cash was “nice to have,” he said he knew he’d have to raise a lot more to build out his vision for cross-platform learning games.

Hsu said Airy’s first products would be offered initially on Apple’s iOS and Google’s Android platform, with the hope that the games will evolve “into a larger platform where social learning can take place.”

So, what might be next for the aspiring social network?

Probably a social game network, and based on what I am hearing from multiple sources, it sounds like Google is close to launching one that could rival Facebook.

A Google spokeswoman would not confirm that a social game network was in the works, but provided this statement: “It’s important to keep in mind this is an ongoing project and this is just the beginning. We plan to add a lot of features and functionality to Google+ over time. We’re just excited to get started.”

Over the past three years, Facebook has helped spawn a whole new category of games that allow you to play with your friends online.

Along the way, it has also helped build several million-dollar companies. Zynga, which is reportedly going to file for an IPO any second, is the largest. Others, such as Playfish and Playdom, have been acquired by Electronic Arts and Disney respectively.

The Google+ project is the company’s most cohesive social strategy yet, so it would be the most likely candidate for more services and features to be layered on top over time, including a social game network.

Google already sells games, like Angry Birds, through its Chrome Web Store, and recently has gotten more seriously into social gaming, for example, through its venture arm’s lead investment in Kabam. (There are also some hints in the Google+ source code that games are coming. Engadget discovered that the code says “have sent you Game invites and more from Google+ Games.”)

Google’s quest to enter the social games market likely kicked off more than a year ago.

Last summer, Google invested more than $100 million in Zynga, which TechCrunch reported was part of a larger strategic partnership.

Shortly after the investment, Eric Schmidt, Google’s CEO at the time, verified the company’s involvement in the game company. When asked about Google’s partnership with Zynga, Schmidt told the WSJ, “we haven’t announced it” but “you can expect a partnership with Zynga” in the future.

If Zynga files for a public offering, we may find out more of the details as soon as today.

Strategically, Google’s entrance into the space could be a big deal to developers looking for a platform to build on outside of Facebook, which has a lot of control over the social games market.

For example, starting Friday, it will be mandatory for all game companies to use Facebook Credits as the only in-game currency. And Facebook takes a 30 percent cut of all of that revenue.

Google could offer an outlet for developers that charged less to use. Plus, for all of the companies that are sick of competing (and losing) against Zynga all the time, Google’s entrance could give them the opportunity to start again with a fresh slate.

Google will still have to prove it can be a successful platform to make it worth a developer’s time.

The agreement highlights the risks social media companies face as they navigate privacy and disclosure norms while providing consumer entertainment online. The settlement, a consent decree, reflects neither an admission or denial of the charges by the defendants.

The FTC said Playdom, now a Walt Disney Co. unit, and former executive Howard Marks disclosed information on hundreds of thousands of children between 2006 and 2010 as they operated 20 “virtual world” websites where users could access online games and other activities.

Read the rest of this post on the original site »

The agreement highlights the risks social media companies face as they navigate privacy and disclosure norms while providing consumer entertainment online. The settlement, a consent decree, reflects neither an admission or denial of the charges by the defendants.

The FTC said Playdom, now a Walt Disney Co. unit, and former executive Howard Marks disclosed information on hundreds of thousands of children between 2006 and 2010 as they operated 20 “virtual world” websites where users could access online games and other activities.

Read the rest of this post on the original site »

In its first-quarter results released today, the company, which is known for its Call of Duty and World of Warcraft games, said its revenues from digital channels increased 30 percent year over year in the first quarter.

What’s more, on a non-GAAP basis, digital channels accounted for more than 50 percent of net revenues, or roughly $378 million.

However, what’s becoming clear is that the definition of digital is a moving target for all parties involved, a trend that will likely continue as companies experiment with new business models and ways to deliver games to consumers.

Activision’s big source of digital during the quarter came from the $15 content pack for Call of Duty: Black Ops, which provides new areas for players to explore that were not included in the the original game sold at retail. It’s available on Xbox today and is expected to launch on Sony’s PlayStation Network and the PC in the second quarter.

That’s much different from Electronic Arts, which said last week that its digital revenues for its fiscal year ended March 31 totaled $833 million, exceeding its forecast of $750 million.

When EA talks about digital, it refers to mobile games and social games on platforms, such as Facebook. For the most part, it’s not referring to downloadable content available on consoles (although it has that, too).

The differing points of view also come down to business models.

Mobile games and social games are often free and either monetized through advertising or through virtual goods that are purchased in the game. Online games are often paid for via subscriptions and console games frequently require a $60 upfront payment with the option of paying for more downloaded content later.

Thomas Tippl, Activision’s COO and CFO, said while digital revenues grew at 30 percent, it was also able to maintain margins of up to 50 percent since most of its digital content was leveraging the company’s large online communities and popular franchises.

Call of Duty and it’s $15 content pack is one example:

During the earnings call, Activision said that Call of Duty: Black Ops has now officially become the best-selling title of all time in dollars across the Xbox 360, PlayStation 3 and the PC in the U.S. and Europe. Additionally, the popularity of that title was able to drive massive sales of the digital add-on pack. While only released a few days ago, it has the potential to do better than most console games at retail.

“The Call of Duty content pack shattered records with 1.4 million downloads in the first 24 hours,” Tippl said. “We no longer think about launch events, but long-term on-going relationships with players. The response from fans underscores this approach.”

The company also discussed other digital initiatives, of which some could arguably be considered social, although they are not on Facebook.

In the works is a next-generation massively mutli-player online game; a micro-transaction game for China; a digital platform surrounding the Call of Duty franchise; a new property from Bungie; and Skylander’s Spyro’s Adventure, a new children’s game coming out that will tie the Internet together with real-life $10 toys.

But not ever in the company’s earnings release, or during the call, did Activision place much emphasis on mobile games or social games.

Actually, Facebook was mentioned once. Activision said that since Call of Duty: Black Ops First Strike launched on Feb. 1, players have spent an average of 58 minutes a day playing online, which is more than the 55 minutes an average Facebook user spends a day on the social network.

So, maybe it can build its own communities?

Still, one could argue that mobile and social are key components to the digital gaming experience.

In addition to Electronic Arts’ many investments in the space, including the purchase of Playfish, a social games publisher, Disney also acquired Playdom. Both plan to use the publishers to bring some of their more recognizable content from other platforms to Facebook. Social games are also becoming a massive business for privately held companies, like Zynga.

An analyst during Activision’s earnings call this afternoon asked about how the company viewed the various emerging platforms across the videogames industry.

In response, Activision’s CEO Robert Kotick said: “You hit on the most interesting of the fundamentals that are redefining interactive entertainment. More people are playing games than ever before.

“Facebook has done a good job of introducing interactive entertainment to people who have never engaged in gaming of that kind…We’ve always taken the approach of platform agnosticism. We deliver services across devices with a display and a microprocessor. We have to prioritize the resources based on the opportunity. As we look out three to five years, we see there being a lot more displays with microprocessors that will be capable of playing games. We are so excited about the prospects of the future. If it has a microprocessor and a display, our content can be there.”

According to sources familiar with the matter, Schappert is joining Zynga, the San Francisico start-up that is building a mini-empire based on games running on Facebook.

His departure was noted in a document filed with the Securities and Exchange Commission this morning. An EA spokesperson confirmed his resignation, but declined to comment on where he was headed.

It’s unclear what role Schappert will play at Zynga, although it is reportedly as COO. A Zynga spokesperson declined to comment.

Schappert’s hiring would be only the latest. Earlier this month, Kara Swisher’s BoomTown reported that Zynga hired Taylor Barada, Yahoo’s recently appointed head of M&A, for an unspecified role. On the same day, the start-up announced it hired former Cisco exec Debra Chrapaty as CIO.

Zynga, which has developed popular games like CityVille, FarmVille and Mafia Wars, is reportedly raising up to $250 million in new funding and could be beefing up its management team for a potential IPO.

In 2010, the three-year-old company reportedly earned $400 million on $850 million in revenues last year, making it a lot smaller than Electronic Arts. However, many have pointed out that the company’s valuation in its next financing could exceed EA’s current public market cap of $6.75 billion.

EA does not break out revenues of its Playfish subsidiary, which competes against Zynga, but it says it is on track to hit $750 million in digital revenues in 2011. Last year, its overall GAAP revenues totaled $3.7 billion.

Schappert’s departure is similar to the circumstances in which he joined EA 22 months ago. He replaced John Pleasants, who was leaving to become the CEO of Playdom, the social game developer that Disney eventually acquired. Schappert, who was working in Microsoft’s Xbox division at the time, had previously been the COO of EA’s worldwide studios.

We’ve obtained the letter that CEO John Riccitiello sent out to EA employees this morning regarding Schappert’s departure, which he did tersely:

All,

We’ve just started FY12 and the year promises to be one of the most exciting in EA’s history. Thank you for your hard work, commitment and success in FY11.  You will hear more on our FY11 results next week during our earnings call on May 4^th and at our global Town Hall meeting broadcast from EALA on May 5^th.

Today I would like to communicate some important organizational changes that I believe are beneficial for EA. Our focus is and must be on our IP, going digital and our great people. Effective immediately, Nancy Smith, Barry Cottle and David DeMartini will report directly to me. Nancy leads our global publishing organization and has been an industry icon and EA leader for over 25 years. Barry leads EA Interactive, and our Mobile, POGO and Social business and has proven to be one of the best digital leaders in our industry. Dave DeMartini is leading one of our most important strategic initiatives related to online infrastructure. I am proud to expand my team with these veteran EA leaders who are committed to and passionate about their teams, their roles and EA.

I’d also like to thank John Schappert for his contributions to EA.  John’s last day at EA was Monday of this week. We wish him well.

We have come a long way and EA could not have made it to where we are today without each of you. It is without question that the talented individuals and teams creating new ideas, products and services are what make EA a great company. The board, management team and I are very confident about where we are and where we’re going from here. I look forward to sharing more with all of you during our Town Hall meeting on May 5^th.

John

 

The France-based company said it is hiring in its San Francisco office, and that more than 15 percent of Ubisoft’s Bay Area workforce will be focused on its social gaming business this year.

Currently, there’s roughly 300 employees, but that number is expected to grow.

To be sure, that’s a lot smaller than other social game makers, like Zynga, which employs 1,500, or even other major game publishers, like Electronic Arts and Disney, which have acquired social game companies Playfish and Playdom respectively.

But Ubisoft’s incremental investments in social demonstrate a broader appetite in the videogame industry for emerging platforms.

It’s part of a strategy Ubisoft calls “companion gaming,” said Chris Early, vice president of Digital Publishing.

We caught up with Early last week in San Francisco to hear more about the company’s increasing digital efforts.

Early defines companion gaming as having a single brand that crosses multiple platforms, including console, social and mobile.

An analogy he uses is how a baseball fan attends professional games, but also likes to read about the games in newspapers or on the Internet–a fan wants to engage across all platforms.

So far, Ubisoft has created 10 Facebook titles and has several more titles planned for the year, he said.

One of the more successful games is CSI Crime City, which Ubisoft made in collaboration with CBS.

It currently has a modest 1.9 million monthly users on Facebook, according to appdata.com. From there, Ubisoft’s titles drastically taper off, with its next title, Castle & Co., generating only 620,000 monthly users.

However, Ubisoft is using the platform to experiment with cross promotion.

For instance, it worked with CBS to create direct ties between the Facebook game and the TV show. During sweeps week last month, the TV show writers added clues in the show that could be used to unlock in-game bonuses on Facebook.

Early says the strategy is about putting the core intellectual property at the center of the experience and then building games based on that, whether it’s on Facebook, console or mobile.

Ubisoft’s mobile game efforts so far have consisted of mostly partnering with Gameloft, which builds the games. While Ubisoft used to own stock in Gameloft, its ties to the company are now limited to family relations. Ubisoft’s CEO Yves Guillemot is the brother of Gameloft’s CEO Michel Guillemot.

While questions arise in the industry on how much focus on social and mobile there should be right now, Early is cautious because he doesn’t see digital overtaking physical games anytime soon.

“Digital will not kill physical,” he said. “There will always be support for a certain percent.”

One primary reason for that is because digital platforms have infinite shelf space, which make discovery extremely difficult for the consumer, he said.

On Facebook, consumers must sift through thousands of titles to decide what to play. Same goes for Microsoft’s Xbox Live or Sony’s PlayStation Network. “You have to look at the top 10 sellers, or rely on a friend,” he said. “There’s a significant hurdle to digital.” The same has been said about mobile, where getting visibility on Apple’s App Store or the Android Market has been difficult.

He said with physical sales, stores have limited shelf space and customers can more easily browse through titles in a store and get recommendations from employees.

For now, there’s not a lot of pressure on Ubisoft from Wall Street to make a ton of money in digital. It hasn’t purchased a social-gaming studio for millions of dollars and therefore doesn’t have an urgency to see a return.

At least not yet.

It is forecasting revenues of $1.4 billion this year, which is about 17 percent higher than in 2010. It also expects that 2011 will mark a return to profitability and positive cash flow.

In addition to investments in Facebook, Ubisoft plans to support the launch of the Nintendo 3DS portable with more than six titles. It also is investing heavily in Microsoft’s well-selling Kinect platform. So far, it has sold more than two million games for the platform, giving it an 18 percent market share in the U.S.

However, exactly how it will be accomplished, no one quite knows.

WildTangent believes it has found the winning formula, and, surprisingly, it goes against what others, like social gaming leader Zynga, are already doing in the space.

Over the past 12 years, the Redmond, Wash.-based company has toyed with all sorts of business models.

But the picture started coming into focus a couple of years ago, when WildTangent made the decision to stop developing games itself in favor of helping other PC game makers distribute and monetize their games. Six months ago, it expanded from working on only PC games to social games, too.

In an interview, Mike Peronto, WildTangent’s president and CEO, and Dave
Madden, EVP of sales, marketing and business development, said social gaming has quickly become the company’s fastest growing segment, with revenues tripling year-over-year.

WildTangent is best known for its consumer-facing game platform, which comes preloaded on 85 percent of PCs sold today. The platform, which is also accessible online, attracts 20 million monthly active users and is monetized through a combination of players paying for coins at 25 cents a piece, subscriptions and ads.

Madden said the problem it is now focused on solving is how to monetize social games when only two to three percent of players are willing to pay for virtual goods.

That means advertising is inevitable, but it’s still too early to tell how it will play out.

Last month, Zynga told us it was focused on product placements within games, where virtual goods are sponsored by brands, like blimps in FarmVille and branded cars in Mafia Wars.

But Madden argues that approach doesn’t scale. “We know it doesn’t scale because we’ve tried to build a business doing it,” he said.

“Product placement is appropriate in some media, and games are no different, but it’s not supported well by agencies, and we are trying to chip away at the broadcast budgets. There has to be metrics for them to compare it to other mediums….It’s difficult to measure a sign or blimp.”

Today, WildTangent works with some of the largest brands, including PG&E, Unilever, automobile makers and insurance companies. It also works with some of the biggest social games companies, like Playdom, Digital Chocolate, Crowdstar and others.

While WildTangent does sometimes work with brands on product placements–like a Scoop Away litter box in the Happy Pets game on Facebook–generally, it requires players to watch a short video, or offers the option of playing a very simple game.

So far, Madden and Peronto have been happy with the results. Of all of its social advertising campaigns, WildTangent has been averaging a 10 percent click-through rate.

WildTangent, which has 130 employees, hit profitability two years ago and has been in the black ever since.

Next up is integrating social games into its platform so it can have access to their vast distribution network, and then it will bring what it has learned from advertising on social networks to mobile phones.

Here’s a video of Madden and Peronto talking to eMoney about the opportunities for advertising in social games: