After Activision’s Blizzard studios launched the highly anticipated PC game on May 15, players had problems logging on and said their accounts were being hacked.

“Despite very aggressive projections, our preparations for the launch of the game did not go far enough,” the company said in an apology issued last week. Yesterday, the company issued another statement, confirming that some accounts “may have been compromised.”

In addition to selling 3.5 million copies on day one, Activision said more than 1.2 million players received Diablo III as part of signing up for the World of Warcraft Annual Pass promotion. Based on that total, internal calculations and reports from distribution partners, Activision believes this makes Diablo III the biggest PC game launch in history.

By the end of the first week, Diablo sales reached 6.3 million. The game costs $60 for either the physical copy or the digital version.

“We’re definitely thrilled that so many people around the world were excited to pick up their copy of Diablo III and jump in the moment it went live,” said Blizzard’s CEO and co-founder Mike Morhaime. “We also regret that our preparations were not enough to ensure everyone had a seamless experience when they did so. I want to reaffirm our commitment to make sure the millions of Diablo III players out there have a great experience with the game moving forward, and I also want to thank them for their ongoing support.”

In the game, players take on one of five heroic characters — barbarian, witch doctor, wizard, monk or demon hunter. As that character, they must save the world of Sanctuary from the forces of the Burning Hells. As they engage in the virtual world, players gain new abilities and acquire artifacts.

For the first time ever, those artifacts can be traded for real-world currency through an auction house.

During the company’s first-quarter conference call two weeks ago, it confirmed that consumer feedback from the beta test had gone well, especially when it came to the new trading method.

Blizzard does not intend to sell any items in the auction house, in contrast to other game models where companies profit from selling in-game virtual goods. But interestingly, Blizzard will charge players a transaction fee on sales, or roughly 15 percent on most items.

But he said Skylanders: Spyro’s Adventure, which attempts to bring physical toys to life through videogames, has been worth it.

“It was scary,” he said. “But if you truly have a breakthrough idea, then you have to have the confidence to treat it as one because they don’t come around very often.”

To be sure, the game was a major deviation from the company’s war-based roots.

It melds physical toys with videogames by using a “portal,” which is plugged into the game console. Once a Skylanders toy is placed on the portal, the character transports into the game and comes to life on the screen.

In 2011, the game was the tenth-best seller after launching in October, and was the only title to make the list that wasn’t a sequel. Additionally, it was the only kids game.

Hirshberg appeared this morning as the keynote speaker at DICE, an annual videogame summit held in Las Vegas.

His speech, titled “The Eric Hirshberg Experiment,” addressed how he has a nontraditional background as a CEO, but that Activision Blizzard’s CEO Bobby Kotick saw the usefulness of his creative background. Rather than being a trained operations or finance manager, Hirshberg is a marketing type who is more likely found drawing and bringing a sketch pad to meetings.

“There are other creative CEOs, but they generally founded the companies, like Bill Gates or Steve Jobs,” he said. “But if creativity is at the core of your business, maybe it should be at the core of how they make decisions.”

Skylanders is just one case in point.

To make it the best experience possible, Hirshberg said they delayed the game’s launch by a year and spent the time getting the toys right, so they could compete side by side with characters developed by Pixar or Disney.

They also spent time making sure the game could work across platforms, so kids could play it at any of their friends’ houses regardless if they had a PC, Xbox, Sony PlayStation or Nintendo Wii.

As a result, every decision resulted in taking on more risk and spending more money.

Last night, Skylanders was voted as the most outstanding innovation in gaming as part of the 15th Annual Interactive Achievement Awards, which are decided on by members of the Academy of Interactive Arts & Sciences.

“We knew a lot of things had to go right — the core to that was bringing the toys to life. We knew that was magical, and if we got it right, it would have huge potential,” Hirshberg said. “We had the whole package. We had a great game and a great story and then pushed with all of our might with a big marketing plan.”

Yesterday, Activision reported fourth-quarter results, reporting well above its internal guidance and Wall Street analyst expectations, driven by extremely strong sales of Call of Duty, but also strong sales of Skylanders as well as, plus stable subscriber figures of its online game, World of Warcraft.

Additionally, the NPD Group said yesterday that the Skylanders toys were a top-selling accessory in January. It said that the toys were the highest-ranking item last month, and that collectively, Skylanders accessories represented 22 percent of all accessory sales.

For sure, Hirshberg has early successes to point to, but the experiment is ongoing.

The Chinese company is perhaps originally known for bringing World of Warcraft to China through a prior partnership with Activision. More recently, it invested in U.S.-based OpenFeint, which was acquired by Japan’s Gree last year. It continues to work with OpenFeint on a version of the social gaming platform for China.

But the deal with Sony Ericsson in China will be a first for The9, which will be the exclusive operator of its PlayNow app store. It will provide technical and operational support, including testing, releasing and promotion of all apps.

The partnership is not unheard of; Sony Ericsson has leaned on other providers in the U.S., such as GetJar, to manage its app store here.

The PlayNow store in China will include games, as well as other apps and content, such as ringtones. It will work on Xperia phones that operate Android and Java.

Feature phones continue to be the dominant phone factor in China, but increasingly smartphones are being adopted, said Chris Shen, general manager of The9’s Mobile Business Unit, in an interview.

He said that since games are the company’s strength, it will be looking to partner with other content providers to integrate other products into the PlayNow experience. So far, 50 games have already been added to the store.

Shen said it will receive a cut of the revenues from sales of games, advertising and microtransactions. The9 must also share the revenue with third-party developers.

The company, which trades on the Nasdaq, has struggled to regain revenues that were lost after its World of Warcraft contract was not renewed in 2009.

In the second quarter of 2011, it reported a loss of $1.9 million on revenues of $3.9 million. The company’s stock fell 2 cents today, to trade at $6.80 a share.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

And those costs don’t stop on launch day.

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

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

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

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

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

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

During the quarter, revenues from digital channels increased 27 percent year over year and accounted for 37 percent of the company’s total net revenues.

Strong digital revenues also contributed to record profits.

Activision reported record earnings per share of 29 cents as compared with 17 cents in the second quarter 2010. Revenues were also up, totaling a new record of $1.1 billion compared to $967 million in the year-ago period.

In a release, Robert Kotick, Activision’s CEO said, “Today, there are more ways than ever for players to access entertainment online and play games which have truly become one of the most compelling forms of entertainment in the world.”

A majority of the company’s digital revenues come from subscriptions, downloadable content and full-digital downloads.

On a non-GAAP basis, the company reported diluted earnings per share of 10 cents on revenues of $699 million. This exceeded the analyst consensus of 5 cents a share on revenues of $599 million.

Activision is also raising its outlook for revenue and earnings per share for calendar year 2011.

It is now expecting non-GAAP revenues of $4.05 billion and 77 cents a share for the year, up from previous expectations of non-GAAP revenues of $3.95 billion and 73 cents a share.

The company’s stock is trading up in after-hours duty by about 3.64 percent or 43 cents to $12.25 a share.

You get Supercell.

“The company was founded on the idea that there’s a gap between the social games on Facebook, like FarmVille, and the hardcore MMOs (Massively-multi-player online games) like World of Warcraft. We are trying to build a bridge between the two with a very deep and rich game experience and combine that with the power of social networks,” said Ilkka Paananen, Supercell’s CEO.

Today, Supercell is announcing that it has raised $12 million in capital and that its first game, Gunshine, is coming out of beta.

Finland-based Supercell was founded in June 2010 by a number of former Digital Chocolate employees. Paananen, who is CEO, also worked there for about a decade, most recently as President. He joined Digital Chocolate following the acquisition of a game company he founded in 2000.

Accel led the financing along with Klaas Kersting, the founder of Germany’s Gameforge and CEO of flaregames, with London Venture Partners also participating. Other previous investors of the company include Initial Capital, Cerval Investments and Lifeline Ventures.

Kevin Comolli, a Partner at Accel Partner’s London office, said the Supercell team has a huge amount of experience in the gaming sector.

“The more time we spent with them, the more I was impressed with their knowledge and insight into the next generation of online gaming,” he said, adding that the team is creative while still being grounded by business acumen and defensible technology.

The funding will be used for growth, including expanding its 20-person team. It also wants to release more games, and is exploring other platforms such as tablets and mobile phones.

Supercell’s games are free to play and supported by users paying for virtual goods from inside the games. They are accessed from the browser, meaning they don’t require any downloads. Users can sign in with their Facebook credentials in order to invite and play games with friends.

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.”

On April 2, the free online game will be unveiled, marking the culmination of two and a half years of development. It represents a significant undertaking for the network.

Kyra Reppen, SVP and general manager of Nickelodeon’s Virtual Worlds Group, who was showing off the game at GDC last week, declined to quantify the investment, but said it will be heavily promoted, much like a new TV show.

Monkey Quest is comparable to other so-called massively multiplayer games, such as the insanely popular World of Warcraft, which has roughly 12 million subscribers.

Except for that it is cute and cuddly, and something even parents can approve of.

“What we did was take the big adult games and adapt them for kids, which is something you don’t see very often,” Reppen said.

That doesn’t mean they cut any corners.

While it runs in a PC’s browser, it has the quality look and feel of a console game, thanks to a development platform company called Unity, which has been the basis for a lot of other high-quality games.

Monkey Quest takes place in the World of Ook. It spans a vast territory that encompasses five different tribes, which are connected by a network of highways. Initially, there will be 50 levels for players to achieve, but new content will be added daily.

Even after the game launches, the Nickelodeon team will be busy adding missions, characters and other tribes–indefinitely.

In the game, each player creates an avatar monkey that can be customized. Even without a lot of work, the monkeys are very animated and have kid-friendly attributes, like the ability to burp, or take a nap if they aren’t being very active.

Challenges include fighting monsters, or venturing into volcanoes, where they may meet Maurice the Gorilla, a friendly giant that enjoys roasting marshmallows. Players never fight one another, and even when shooting monsters, they use silly guns like the Kernal Blaster, which is an ear of corn. The monkeys are also rewarded with bananas for completing tasks.

The game is targeting 8 to 12 year olds, and keeps things safe by limiting what can be said. Players are never allowed to know each other’s real names, and some phrases are filtered out of text-based conversations automatically. Nickelodeon monitors conversations around the clock, and parents can even choose to limit chats to a handful of canned phrases, like “do you want to trade x for y.”

Still, they find that doesn’t keep kids from interacting with one another.

While the game is in beta, they are noticing that a lot of the players are learning how to interact with one another through gestures. For instance if a monkey squats down and puts his hands above his heads, it implies that it is offering to give another monkey a boost up to a higher ledge. If you give someone a boost, it’s only proper etiquette to reciprocate.

Like many social games today, the game is free, and users never have to pay if they don’t want to.

But there’s two premium offers to entice kids. Subscriptions will cost $9.95 a month, or users can choose to pay as they go, by buying Nick Cash. Parents can enter their credit card online, or they can buy game cards in 40,000 retail locations through a partnership with InComm. Players who pay have access to additional content, including premium missions and items for your avatar.

The idea for Monkey Quest is an evolution from Nickelodeon’s roots in the gaming space, starting with Neopets, which Viacom purchased almost six years ago.

Neopets, which launched 11 years ago, allowed kids to take care of virtual pets, by buying them food, toys and clothes. Similarly, users had to purchase virtual currency to play.

However, the company’s shares slid more than 6% after-hours after Activision issued a forecast for the current quarter and fiscal year that were both sharply lower than Wall Street’s expectations.

The company also said it’s discontinuing its once-popular Guitar Hero franchise, citing a sharp slowdown in the sales of music games. Another title, True Crime: Hong Kong, had been expected this year but will also be killed, Activision said.

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It’s yet another big-dollar buyout for the game industry, which has been in an M&A frenzy for about a year, and one of the biggest investments by a Chinese company in an American digital property.

The transaction was first reported by Bloomberg, and Riot confirmed the deal to VentureBeat, though neither outlet has the financial details. Here’s how they break down, according to people familiar with the transaction:

• Tencent, which had already invested in the game maker, will pay “just south” of $400 million to buy out other investors, primarily Benchmark Capital and FirstMark Capital, which along with angels had put approximately $18 million into the company.
• The company’s management team will receive some portion of that buyout themselves, but will also retain an equity stake; some will receive “stay packages.”
• The total investment values the company at $472 million.

The chief appeal of Tencent is Riot’s League of Legends game, which is free to play but encourages players to pay for extra goodies via micro-transactions. (Thanks to readers who educated me about what you can and can’t buy with real-world money in the game.)

In that sense it’s like Zynga’s FarmVille and other popular social games. But it’s a much more sophisticated game, with arcade-style action: Think of World of Warcraft, on steroids and amphetamines.

The deal follows a string of Web-based game deals in the last year. Among the more notable ones: Walt Disney purchased Playdom, Electronic Arts purchased Playfish and DeNA purchased Ngmoco.

Powering the Tianhe-1A are some three million processing cores from Nvidia, the Silicon Valley company that has sold hundreds of millions of graphics chips for videogames. That’s right—every time someone fires up a videogame like Call of Duty or World of Warcraft, the state of the art in technology advances. Hug a geek today.

What a switch. For centuries, the military has driven technology forward, fostering new waves of industrialization and corporate use. James Watt’s steam engine was perfected with the help of a cannon-boring tool. Computers were created during World War II to calculate artillery firing and to break codes. The military bought half of all semiconductors until the late 1960s. Even the first global-positioning systems (GPS) were funded by Congress, not for navigation but as a nuclear detonation detection system. Add microwave ovens from radar, Blu-ray discs from lasers, or Velcro and Tang from NASA, and there’s no doubt how much government acquisition programs have shaped our lives.

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Yahoo spokeswoman Dana Lengkeek just emailed a statement saying that some Yahoo users were required to reset their passwords. “As part of our ongoing security measures we issued a password reset to some users. Yahoo! does this periodically to ensure the security of users.” She didn’t specify whether or not this was in direct response to the Gawker incident, but it’s not hard to conclude that it was, given the timing. I’ll update if Yahoo says anything further.

I have a Yahoo account and was required to change my password today, and yes, I also had a Gawker commenting account, so at this point it’s safe to say they certainly seem connected.

Meanwhile, Blizzard Entertainment (developer of World of Warcraft and provider of the Battle.net gaming service) was abundantly clear about the connection in an email to its customers. “We’ve recently been informed that several Gawker Media websites have been compromised…To help minimize the effects of this compromise and help keep your Battle.net account safe and secure, we’ve reset your account password,” it said.

Other Web incidents–perhaps connected to Gawkergate, perhaps not–have occurred during the past few days as well. For instance, McDonald’s disclosed that a database containing email address and birthdates of people who had signed up to receive promotions was compromised. It notified those customers on Monday. Again, it’s not clear what connection, if any, there may be to the Gawker incident, but the timing certainly makes it seem possible. I’ve asked McDonald’s for a comment and will update if I get one.

In another incident, drugstore chain Walgreens disclosed on Friday that a database of email address belonging to its customers had been breached. Given the timing–the Gawker incident happened over the weekend–it’s probably not connected, though it’s hard to be sure, as the folks at Anonymous Gnosis, the group that attacked the Gawker sites, say they’ve had access to the database for about a month. I’ve asked a Walgreens spokesman for a comment, and as with all the other cases above will update if I hear back.

This comes on top of other related forced password changes at Twitter and LinkedIn, as my colleague Peter Kafka reported earlier today.

Meanwhile, our friends at Digits have a fascinating graphic on the Top 50 passwords used on Gawker. Topping the list: “123456,” “password” and “12345678.” The two lessons in all this? Make your passwords complex, and don’t use the same password for multiple sites.

Merchants that sell digital goods lost 1.9 percent of all revenue to fraud in 2009, compared with a 1.1 percent fraud rate for companies that sell physical goods online, according to CyberSource Corp., which processes credit cards for online merchants.

Such percentages seem small, but can translate into sizeable sums of money as social networks like Facebook Inc. expand the market for virtual goods, which have long been associated with games like Second Life and World of Warcraft, where players buy items like virtual gold and clothes for avatars.

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In a post on those same discussion forums Friday, Blizzard CEO and co-founder Mike Morhaime said the company has “been constantly monitoring the feedback you’ve given us, as well as internally discussing your concerns about the use of real names on our forums.”

“As a result of those discussions, we’ve decided at this time that real names will not be required for posting on official Blizzard forums,” Morhaime wrote.

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On Tuesday, Blizzard announced that it will begin forcing participants in its game discussion forums–where players go to gab about World of Warcraft and other games–to post comments using their real first and last names. The change will go into effect mid-July on forums for Starcraft II, an upcoming online game, and follow after that for World of Warcraft discussion forums.

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Judging by the valuation of Electronic Arts (ERTS), the answer might be yes. Even after a recent selloff, the company’s enterprise value is nine times estimated 2010 earnings before interest, taxes, depreciation and amortization. Better-performing Activision Blizzard (ATVI) is at seven times.

That premium is hard to justify given the transition underway. Activision derives roughly 30 percent of revenue and a higher portion of profit from recurring subscription fees on online multiplayer games like World of Warcraft. EA, in contrast, is more reliant on traditional packaged games, a market that shrank nine percent globally in 2009, according to EA, and that it expects to fall a further three percent this year.

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The video, called “War of Internet Addiction,” is a send-up of government censorship starring videogame characters that has become one of the hottest things on the Chinese Internet, epitomizing the unruly spirit that thrives on the Web despite an intensifying crackdown on free expression in China.

The 64-minute video consists entirely of footage shot in the virtual universe of “World of Warcraft,” a wildly popular online game from Activision Blizzard Inc. (ATVI) in which millions of players around the world do battle via magical avatars.

The movie’s plot centers on gamers’ frustration with an actual bureaucratic battle over regulation of the Chinese edition of the game, but its subtext is a broad, biting allegory of the fight against government Internet controls, peppered with allusions to a list of real-world conflicts in China over the past year.

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This week: We walked down University Avenue to the Silicon Valley headquarters of Booyah Games to talk with co-founder and CEO Keith Lee. Booyah is the maker of MyTown, an Apple (AAPL) iPhone app that combines Foursquare and Monopoly into a novel kind of augmented-reality game. The start-up has added about 100,000 news users a week over the last two months.

Who: Keith Lee

What: CEO and co-founder

Why: Keith was a lead producer on Diablo III at Activision Blizzard (ATVI), but left with some colleagues to start Booyah and dip his feet into the social-gaming space. He wanted to explore ways to connect the real world to the game world. After some trial and error, he decided to build an experience around the iPhone GPS platform.

Where: Booyah.com (Web site); Search “MyTown” (iTunes); Palo Alto, Calif. (analog place)

Who else: Booyah’s MyTown competes directly with Foursquare and Gowalla as a location-based game for the iPhone.

Five Stats You Won’t Find in His Facebook Profile

Game of the Moment: I’ve just started playing Demon Soul, and it’s probably the hardest game I’ve played in the last five years. It’s very stats-based, so stuff like the weight of your sword or knowing how a halberd (a type of battle ax) works matters. It’s full of some real innovations for player interactions as well.

Has a Geek Crush On: Rob Pardo. He’s the creator of Starcraft, Warcraft and World of Warcraft. His philosophies have really influenced how I build games.

Gadget of the Moment: I was really disappointed in the Kindle. I got one for Christmas. I had to subscribe and pay to read TechCrunch or Kotaku. It didn’t make sense.

Best Gamer High: It is about doing the hardest thing in the game, reaching the extra goals and doing it faster than everyone. So, when people are talking about that goal or feature I can be like, “Yeah, I already got that.” I played Mass Effect twice, just to get the highest score in our group. It’s all about the bragging rights.

Fails At: I’m a total fail at a lot of things–basically everything that involves real life. I have, like, zero common sense. A perfect example is this one time I was supposed to take care of my girlfriend’s little dog. Without thinking, I set the dog down on the top of this high speaker, and I went off to do something else. Well, the dog decided to jump down and she broke her leg. When I called my girlfriend, she knew what I’d done. She just picked up the phone and said, “What did you do to the dog?” It’s all the normal-living stuff I can’t do.

Bio in 140 Characters

Globetrotted growing up. Educated at Exeter and Stanford. He went into finance at parent’s request, but his internal gamer won out.

The Five Questions

You seem like a pretty hardcore gamer. Where does that come from?

We moved around a lot when I was growing up. I was born in Hong Kong, then we moved to the Netherlands, lots of other places. My parents were very strict. I was forced to play piano and violin two hours a day. We never had any videogames; I could only play them over at friend’s houses. I wasn’t allowed to read sci-fi or fantasy books either. I was only allowed to read biographies and classics….I think because I was never allowed to read that stuff, that’s all I ended up reading when I went to Exeter and college, and why I needed to be a part of making games.

So, what makes MyTown worth playing?

From the very beginning, we wanted to get into this to forge a new category of social games. We don’t really see ourselves as being in competition with Farmville or any of the others because the games are so different, but maybe just in terms of mindshare. We want to be the leader in location-based gaming, or real-world gaming. With MyTown, we’ve created a way, by partnering with Citysearch, to let people have virtual ownership of real places. Our strategy moving forward is about widening the gap between us and our competitors in certain metrics and trying to be very agile. It’s sort of like in World of Warcraft. You can work methodically on something until someone comes and scouts you and sees what you are doing. Then, you have to build like mad so you can rush them.

What are you making that hasn’t been scouted yet?

As for future stuff, I’m pretty sure we’re going to be doing something music-related. We have a few products that are already in the works for Facebook that are a totally new type of social game. They have real-world tie-ins like MyTown. We could leverage GPS from a smartphone, but also focus on tie-ins with music, celebrities and businesses.

We’re actually 70 percent done with that, and we are pretty close to announcing. Probably early Q2. I really feel like [in this arena] there are a lot of Atari-style games, in that everyone is just cloning each other. I think we have the opportunity to be a Nintendo and bring that killer Super Mario Brothers game that changes everything.

How heavily are the personalities of the developers here affecting the products?

Yeah, I mentioned the music thing before. I don’t know it you saw when you came in, but that was my DJ equipment in the corner. I’m really into the house and electronic music scene–I fly down to Los Angeles to DJ pretty frequently. That’s a pretty direct link.

There are a lot of interesting people here. We have a developer who used to be a Buddhist monk and then became a sort of Indiana Jones figure. He has this amazing skill to think not just deeply but laterally and connect things in games that wouldn’t normally be thought of as associated with each other. That alternative way of thinking lends itself to our strength.

What was your “Living in the Future” moment in gaming, when you knew the arena had come of age?

Its hard to say. I think it was probably the first time I played an MMO [massive multiplayer online] game. It wasn’t anything like crazy “Minority Report” technology stuff. It was when I played Dark Age of Camelot and everything afterward. I actually felt like I was completely in the a community environment, like a virtual world. Before, when I went in and came back out of the game, it went with me. But now, even if I’m not there, it keeps moving. Like it was something that would evolve without me. I felt like I had to get back in there, because I wouldn’t even know what it would be like 20 days later.

The In Living Color Interview

]]> http://allthingsd.com/20100208/almost-famous-keith-lee-of-booyah-games/feed/ 0 http://allthingsd.com/20091123/china-to-claim-half-of-online-game-market-report-says/ http://allthingsd.com/20091123/china-to-claim-half-of-online-game-market-report-says/#comments Mon, 23 Nov 2009 18:15:40 +0000 Juliet Ye http://voices.allthingsd.com/?p=18291 Videogames are serious business in China. The country’s online game market will reach 41 billion yuan ($6 billion) by 2010, accounting for half the global market, according to newly released data from Cnzz.com, a Beijing-based data analysis firm.

The Cnzz.com report says that almost two-thirds of China’s 338 million Web users are now online gamers. The online-game industry, which currently accounts for more than half of the total Internet economy, will see strong annual growth at a rate of 20 percent in future years, the report says.

The mainstream remains the awkwardly named sector of Massively Multiplayer Online Role Playing Games (MMORPGs). In October, six out of the 10 most popular online games in China are MMORPG games, according to the report. World of Warcraft by Activision Blizzard (ATVI) still tops the list with the most registered players and peak simultaneous online users. But the current government regulatory fighting over its Chinese license, held by Netease, may yet have a negative impact on the game, according to the report.

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]]> http://allthingsd.com/20091123/china-to-claim-half-of-online-game-market-report-says/feed/ 0 http://allthingsd.com/20091103/world-of-online-game-regulation-warcraft/ http://allthingsd.com/20091103/world-of-online-game-regulation-warcraft/#comments Tue, 03 Nov 2009 20:38:39 +0000 Juliet Ye http://voices.allthingsd.com/?p=17373 The turf battle between two Chinese bureaucracies appears to be escalating, with NetEase and the World of Warcraft videogame at its center.

According to a statement, China’s General Administration of Press and Publications said it rejected NetEase’s application to operate Burning Crusades, the latest version of World of Warcraft. NetEase acquired the license to the popular game after Activision Blizzard (ATVI) dropped its previous China licensee, The9.

The regulator demanded, however, that NetEase stop taking payments and registering new game accounts, or else face punishment that includes “suspension of its Internet service.”

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]]> http://allthingsd.com/20091103/world-of-online-game-regulation-warcraft/feed/ 0 http://allthingsd.com/20090615/game-site-omgpop-asks-teens-to-pay-up/ http://allthingsd.com/20090615/game-site-omgpop-asks-teens-to-pay-up/#comments Mon, 15 Jun 2009 12:00:18 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8161 Earlier this year, casual game site OMGPOP raised $5 million from venture capitalists. Now it’s trying to extract some cash from its users.

The tweens and twenty-somethings who flock to the site can still keep playing games there without paying. But the company wants to convince a few of them to start shelling out $5 a month for subscriptions that gives them access to bonus goodies and credits they can use for power-ups and other virtual goods. The credits will first be used on the site’s new “Hover Kart” game and will eventually be rolled out it to the rest of its 11-game portfolio.

Virtual goods + subscriptions + online games isn’t a new idea by any stretch. It’s really big in Asia, and there are several companies trying to port the model to the U.S. Some, most notably Activision Blizzard’s (ATVI) World of Warcraft and Disney’s (DIS) Club Penguin, are enjoying success on a large scale. I’m just noting OMGPOP’s foray for a couple reasons:

1) Gotta give the company credit for sticking to its guns, from an intellectual property perspective. The site has no problem taking games that have been successful for other people and offering refurbished versions of its own. “Blockles,” its first game, is a Tetris clone. And Hover Kart, its newest one, is an homage to Nintendo’s Mario Kart, which absconded with many of my hours in the mid-90s.

The folks at OMGPOP (and their backers, which include Twitter investor Spark Capital) think this is kosher because they’re not using the games’ trademarked names or characters–only their game play/mechanics (see: the Scrabble/Scrabulous/Lexulous imbroglio). But they’re already spending money defending a Tetris lawsuit, and it will be interesting to see what Nintendo’s legal team has to say about the new game.

2) Gotta give the company, and founder Charles Forman, credit for evolving. Two years ago, Forman was a Y Combinator graduate running a site called iminlikewithyou that was supposed to be some kind of flirting/dating/Facebook hybrid. It got glowing praise from the likes of Om Malik, but it was hard to see how it was going to amount to a business. So Forman changed direction and turned it into a game site.

Fast-forward to today and it’s still not clear if there’s a successful business yet–the site has sold a couple T-shirts, but that’s about it. But at least you can see how it might work. And compared to a lot of its Web 2.0 peers, that’s saying something.

]]> http://allthingsd.com/20090615/game-site-omgpop-asks-teens-to-pay-up/feed/ 0 http://allthingsd.com/20090429/will-world-of-fight-challenge-world-of-warcraft/ http://allthingsd.com/20090429/will-world-of-fight-challenge-world-of-warcraft/#comments Wed, 29 Apr 2009 15:32:09 +0000 Juliet Ye http://voices.allthingsd.com/?p=11313 Is a battle brewing in China over “World of Warcraft?”

Last week, the Web site wofchina.com went online, advertising a familiar-sounding game called “World of Fight.”

“WoF (World of Fight), a new game by The9 Ltd., is soon to come,” the page reads. Web site registration data confirm the site is owned by The9 (NCTY).

Casual viewers might be forgiven for mistaking it for the Web site for “World of Warcraft,” the popular U.S.-based online sword-and-monsters game that keeps hundreds of thousands of Chinese players in the country’s Internet cafes awake into the wee hours of the night. Its Web site address is similar to WoW’s wowchina.com. The layout looks similar too.

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