Big Fish Games is expanding its casual cloud-gaming service across four major platforms today. The Big Fish Instant Games app is now available on smartphones, tablets, TVs, and the PC.

In doing so, the company is taking cloud gaming to the masses in a way that its rivals Gaikai and OnLive haven’t done.

Seattle-based Big Fish Games bills itself as the world’s largest producer of casual games. Its roots are as a maker of downloadable games on websites that primarily target older female gamers, who embrace titles that don’t involve guns and violence. It has published more than 3,000 games produced by its own developers and third-party gamemakers.

The company has been adapting to the growth of mobile gaming by launching a series of mobile titles, adapted from its casual web fare. But last year, the company also made a bold move by launching a cloud-based service, where games are stored and executed on web-connected data centers rather than on a player’s computer. The games are streamed to a user’s machine, which doesn’t have to process or store the game data.

That allows those games to be played on any device, and Big Fish Games is reaping the rewards of that investment today by launching its cloud service across all four major screens: PCs, smart TVs, tablets, and mobile phones. Big Fish Games is making the app for its cloud service available on the Google Play store today, and it is also releasing it on the Roku 3 set-top box, which will take the content to the television screen.

Customers can instantly play the entire Big Fish Instant Games catalog of more than 200 games. The idea is to give users maximum flexibility in where and how people want to play. The Big Fish Instant Games platform will come to more platforms throughout the year. Game progress is stored in the cloud, allowing players to play on one device and then log into the same game from another device.

Big Fish Games launched the service on the iPad last year. Since that launch, users have logged more than 200 years of gameplay from over 5 million game sessions.

“Adding Android smartphones and Roku to our supported devices has substantially increased the audience of users who can instantly play and enjoy games from Big Fish,” said Jina Heverley, the vice president and general manager of PC, Mac, and Cloud for Big Fish. ”Now
you can start a Big Fish game on your TV at home and pick it up later on the go on your smartphone without having to wait for the game to download.”

Big Fish charges $7.99 a month for subscriptions to the service. Big Fish also allows free access to a rotating catalog of games via an ad-supported service.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Arkadium is the scrappiest of game startups, starting 12 years ago as a couple-run business and growing into one of the largest providers for people who appreciate parlor games and other casual titles. But to keep up with huge rivals, the studio is announcing today that it has raised $5 million in funding from Edison Ventures.

The New York-based company, known for titles like Microsoft Solitaire Collection and Mahjongg Dimensions Blast, is one of the few that has made a major bet on Microsoft’s Windows 8 operating system with games that are targeted specifically at the cross-platform Windows environment. Arkadium has four games on Windows 8 now, two more scheduled, and more in the works. It is the only company of its kind with such an extensive strategic alliance with Microsoft.

“We are doubling down on Windows 8 and that ecosystem,” said Kenny Rosenblatt (pictured, left), the chief executive of Arkadium, in an exclusive interview with GamesBeat. “It is showing strong signs of success. We’ll also make Facebook games, roll out more mobile games, and expand our own distribution channel. This is going to accelerate our growth and give us more flexibility.”

Arkadium’s own channel includes distributing casual games to websites such as those run by the Washington Post, MSN, CNN, and the Los Angeles Times. The studio’s games have been played billions of times. More than 10 million people play its 300-plus games each month.

Jessica Rovello (pictured, right), the president and co-founder, said in an interview, “We haven’t needed the funding before. But it is difficult to compete in this space with companies that have raised hundreds of millions of dollars. Working against those war chests isn’t easy.”

Rosenblatt said Arkadium is profitable, and it has had to be for 12 years because it was bootstrapped. The additional money will give the developer more flexibility and the growth capital to increase the number of games it has in development. It will expand its proprietary online distribution network and double its staff of 150 over the next three years. Rivals include other casual-game makers like Zynga, Halfbrick, PopCap Games, Big Fish Games, King.com, and Wooga.

“It’s rare to find a high-growth technology company that’s been able to achieve the success Arkadium has without the benefit of ever raising capital,” said Ryan Ziegler, Edison Ventures interactive marketing and digital media practice leader. “Arkadium’s cross-platform capabilities and unified infrastructure enable the efficient production of best in class gaming content. We are excited to partner with an emerging market leader.  The demand and market opportunities for innovative content and enhanced user experiences are endless.”

Microsoft launched a new app store with Windows 8, and Arkadium launched its “easy-to-play, hard-to-quit” games Taptiles, Sparks, Trizzle, and Mahjongg Dimensions for it.

Rovello and Rosenblatt started the company in 2001. On a date, they challenged each other to see who was the better Ms. Pac-Man player. They couldn’t find a place to play the game online and so decided to start a company together.

Arkadium’s older web games provide a way for the company to cross-promote its titles. That is an edge, Rovello said, over rivals who only have games on iOS or Facebook.

“We face the same challenge of discoverability” in an age of hundreds of thousands of apps, Rovello said. “Are we going to pay a king’s ransom to get users? The distribution network is our competitive advantage.”

Windows 8 has been a polarizing operating system since its debut a quarter ago. But Rosenblatt is still enthusiastic about it and said, “We have had millions of downloads on Windows 8. We signed a deal with Microsoft, and we made it for the long term. They already have 60 million licenses sold. There is already an economy there. It may be several years before it is the dominant OS, but that will occur.”

But while the company is betting on Windows 8, it acknowledges that the “users are all over the place,” Rosenblatt said. “We go wherever they are on mobile, tablets, computers.”

Rosenblatt said the company could have raised $25 million, but it wanted to maintain control of the business and take only as much as it needed.

“This is the exact amount we need to do what we do,” Rovello said. “It may not seem like a lot, but we grew up stretching every dollar.”

The company has offices in New York, Toronto, and Ukraine. Its leaders have no desire to move out west.

“We are deeply rooted in the East Coast mentality,” Rosenblatt said. “We don’t liken ourselves to the entrepreneurs of the west. They may take money and hope to find a business model.”

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Among the cut-outs of monsters and knights at Wooga’s office in Berlin, under the banners and giant fake leaves, about 280 people from 40 different countries are working to craft the next big social games hit.

About 50 million people already play Wooga’s games, including flagship titles Diamond Dash and Monster World, each month. This week, the company announced four new games for web and mobile – and that it is currently profitable, with half of its revenue now coming from mobile.

It’s an impressive achievement for a company so young. Jens Begemann – Wooga’s very tall, very calm CEO – co-founded the company with Philipp Moeser and Patrick Paulisch in Berlin in 2009. Before that, he spent several years working as chief product officer for Jamba (the ringtone-maker founded by Germany’s Samwer brothers).

Wooga is still based here – it’s important, Begemann says, to have everyone working together under one roof – and is gradually taking over further floors in its building, an old 19th century bakery factory.

Here, we speak to Begemann about starting Wooga, keeping a healthy company culture, dealing with Facebook – and his thoughts on the hype surrounding startups in Berlin.

Video shot and produced by Glenn Goodison. This story originally appeared on VentureVillage, one of VentureBeat’s editorial partners, in Germany.

Related posts:

• Casual game developer Wooga experiments with new genres and platforms in 2013
• The “Feelgood Manager”: is ensuring workplace happiness a full-time job?
• Berlin social games maker Wooga reveals new games, first Kindle release – and profitability

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Miniclip and Univision Communications are announcing today that they are launching a co-branded online game property aimed at Spanish-speaking audiences in the U.S.

Neuchatel, Switzerland-based Miniclip, which is one of the world’s largest online game operators, and Univision, the big media company for Hispanic America, will launch Univision Juegos by Miniclip. The deal means that Miniclip’s library of more than 800 games will be available to Univision.com’s online users. The partnership underscores the growing importance of Hispanic gamers. In the U.S. alone, there are about 52 million Hispanics, or about 16.7 percent of the population. Univision reaches a lot of them with Spanish-language programming.

“Miniclip.com has been successful across a wide range of international markets, so it was only natural for us to continue expanding our content through a valuable relationship with Univision,” said Rob Small, the co-founder and chief executive officer of Miniclip. “Univision provides us with a powerful partner to extend our reach in the U.S. and other Spanish-speaking markets.”

Miniclip reaches more than 70 million unique gamers a month, with an emphasis on casual, online, and mobile games.

“This partnership is not only a testament to Univision’s commitment to deliver the very best content on-air but also attests to our pledge to deliver that same quality content online,” said Kevin Conroy, the president of Univision Interactive and Enterprise Development. “We are pleased to have partnered with Miniclip and look forward to increasing our footprint in the gaming space.”

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

YoYo Games landed a big fish today. The maker of GameMaker: Studio said that it’s working with Microsoft to offer support for its cross-platform game-development environment for Windows 8 and Windows Phone 8.

That means developers will be able to use GameMaker: Studio to create their games and quickly publish them on Microsoft’s PC, smartphone, and tablet operating systems. GameMaker can take the same code and easily export the games to other platforms, including Android, iOS (Apple’s iPhone, iPod Touch, and iPad), Facebook, HTML5, and the Mac, said Sandy Duncan, the chief executive of YoYo Games, in an interview with GamesBeat. The cooperation with Microsoft is a big sign of growing support for GameMaker, which has been around for a while. YoYo Games recently revamped it for cross-platform development.

“All it takes is one button click, and it will run natively on multiple platforms,” Duncan said.

GameMaker: Studio for Windows 8 will be ready for developers before the Oct. 26 launch of Windows 8, while Windows Phone 8 support will be ready later this year.

Dundee, Scotland-based YoYo Games wants to establish GameMaker: Studio as a lingua franca for making games that run fast on a variety of platforms, matching the speed of code written in native formats.

YoYo Games launched GameMaker: Studio as a $99 package for professional game developers in May. The tools are based on free versions of GameMaker, which was originally released in 1999 by game creator Mark Overmars and has been downloaded more than 10 million times. For the past six years, YoYo Games has been working on beefed-up versions of the development tools so developers can use them to make games that can easily run across many different platforms. GameMaker has a community of half a million registered users and comes in more than 5,000 schools.

“We are thrilled to be working closely with Microsoft to launch GameMaker: Studio for Windows 8 and Windows Phone 8,” said Duncan. “The beauty with GameMaker: Studio is that it’s extremely easy for developers who have already or are currently developing with our environment to have Windows Style U.I. games ready for publishing on Windows 8 and Windows Phone 8 in a short amount of time.”

“We are excited that YoYo Games is bringing Windows 8 and Windows Phone 8 publishing to the GameMaker: Studio development community,” said John Richards, the senior director of Windows Apps Marketing at Microsoft. “We are looking forward to expanding the Windows 8 development community and the breadth of apps available across Windows 8 and Windows Phone 8.”

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

As the former publisher of Saturday Night Magazine, a traditional print magazine, and currently head of publishing, licensing & distribution at SGN (Social Gaming Network), I have experienced the shift in the publisher-to-content-developer relationship across the board. As such, I can tell you that what we’re seeing in the mobile/social games business today is something that we’ve seen before in other content mediums.

Historically, the publishing model for games, and most industries for that matter, was quite simple: One party makes the content, and another party markets and distributes the content. It’s the common theory taught in business school, the principle of specialization: that groups are better off specializing and “trading” based on one’s comparative advantage.

We have seen shifts in this publisher/content developer relationship in the music, film, book, and magazine industries as digital distribution models opened channels for content holders to reach their respective markets directly. The video game business is no different.

The major change? Distribution, distribution, distribution.

The case for content

The key difference in today’s environment is that the publisher no longer entirely controls digital distribution channels and, even worse, distribution is readily available to content holders. Just look at the music business: Napster and MP3s took distribution out of the hands of the record labels and made music readily available to consumers. Not long after, websites and services such as MySpace, iTunes, and Amazon enabled musicians to speak and market themselves directly to customers, essentially eliminating the traditional record labels and giving rise to popular indie artists.

The same took place in the magazine business, where the publisher historically controlled or owned the distribution channel. Content producers, aka writers, were at the mercy of the publishers who controlled the media and medium. But now, with that crazy thing called the World Wide Web, writers can distribute their content directly to consumers, instantly and for free. The speed at which information is processed makes the morning newspaper old news before the presses even fire up.

Now we’re seeing this affect the games industry. In the past, the major game publishers controlled the consoles or were large enough to fund the manufacturing and distribution of game cartridges, and thus the content maker/publisher relationship made for one happy family. But now Facebook, Apple, Google, and Amazon, among other daily entrants such as the Desura, the digital download service for independent games, have flipped this model upside-down. Any yahoo can develop and distribute their own game, reaching millions of potential customers practically instantly and for free (minus the app store royalties, but there is no real upfront cost). Just as the music and magazine industry experienced, distribution has been ripped from the game publishers’ hands, and content developers now have a direct line to customers. Essentially, the barrier to entry has been removed.

Thus, content is king, and death to the publisher, right? Not so fast.

The case for publishing

Just because it’s now “easier” for developers to release their own titles, both the mobile and social gaming space is incredibly crowded and competitive. Yahoos launch games every day, hundreds daily on Apple’s app store alone. Yet nearly two-thirds of apps on the app store are so-called “Zombie Apps” that generate no downloads, a good number of which are smaller developers who poured their heart and soul into developing the content. I wouldn’t be surprised if there were some diamonds in the rough, but we’ll never find them because of the lack of monetary and/or marketing support.

You can roll the dice and do everything on your own: develop, distribute, market, and promote your own game. Or you can stick with the principle of specialization and focus on what you do best while relying on others to handle the rest. As a game developer, your time is better spent developing games than optimizing marketing plans, leveraging CPIs, and analyzing LTVs. Publishers continue to play a major role in the ecosystem, providing support, best practices, brand value, funding, access to the store operators (for promotional opportunities, tech support, and new feature sets), an existing user base, marketing dollars, and marketing expertise. As this business matures, the publisher’s role will only become more valuable. So how do we all get along?

The answer is that Publishing 2.0 is a greater collaboration between parties of specialization.

No longer does the relationship end when a developer hands their game to the publisher. If anything, this is when the relationship begins. It takes communication and a true partnership. With this new form of distribution, speed-to-market and live information has created new opportunities in the ecosystem. As publishers pivot to fill this void by providing real-time data and analysis, developers need to recognize this shift and thus adapt their development cycles. Publishers should work more closely with developers to provide support with user data, analytics, monetization strategies, game feedback, and coordinated promotional plans, while developers need to create flexible schedules in order to adjust to live consumer feedback and operate as a more service-oriented business.

Neither have a strong case?

The biggest issue here is economics. With distribution platforms taking 30 percent off the top and publishers taking anywhere between 30 percent to 50 percent, that leaves the developer with a remaining 20 percent to 40 percent — if they’re lucky. It doesn’t take a mathematician to understand the share of a $0.99 game for developers and publishers, before any marketing dollars are spent. Simply put, with developers working hard on developing a game and publishers making heavy investments (commonly north of $1 per user), it becomes very clear that even in a Publisher 2.0 world, it’s incredibly hard to turn a profit.

Therefore, goals and expectations need to be more accurately aligned prior to entering into a partnership, and both parties must be prepared for the outcome to change. Will the developer support the game on an ongoing basis? If so, for how long? What does that road map look like? Is the studio prepared to make adjustments based on user and publisher feedback? What does the publisher’s marketing plan look like, and how does it align with the type of game and its target audience? What baseline commitment is the publisher willing to guarantee on all levels of the marketing plan, including existing user engagement, acquisitions, advertising, PR, and so on? Can the publisher scale to take advantage of the market opportunity if the game is a hit? These are just a few of the questions every developer and publisher should consider in a Publisher 2.0 engagement. Ultimately, relationships and specialization still matter, and those that “tie the knot” the best will continue to succeed and rise above the fray.

Michael Ritter is the vice president of licensing and distribution at Social Gaming Network, the developer of popular social and mobile games such as Fluff Friends Rescue, Rescue Reef, Bingo Blingo, Jewels of the Amazon, and Skies of Glory. Follow him on Twitter at @Ritter83 or @SGNGames.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Wooga (pronounced “voo-ga”) came out of nowhere as a major force in social games. Now we’ll see if the company can reproduce some of that magic in mobile games. This crossover strategy is the same kind of move that rivals like Zynga and King.com are making. Those who execute this transition strategy well will be on the top of the game industry, and those who fail…. We won’t say, but Wooga’s chief executive, Jens Begemann (pictured), has plenty to talk about.

He cofounded the Berlin, Germany-based company in 2009 with Philipp Moeser and Patrick Paulisch with the goal of making games for everyone. Now it’s the fourth-largest social game publisher on Facebook, with more than 38.6 million monthly active users according to AppData.

The company has created addictive, simple, and high-quality games, such as Bubble Island, Brain Buddies, Monster World, Happy Hospital, Magic Land, and Diamond Dash. With that portfolio, the developer has grown to more than 200 employees and raised $24 million in venture capital. The company’s mobile version of Diamond Dash alone has had more than 20 million downloads.

We caught up with Begemann at the Casual Connect game conference in Seattle. Here’s an edited transcript of our interview.

GamesBeat: How would you describe the last year and the games you have made?

Jens Begemann: A year ago, we decided that mobile would be a very, very important part of our strategy, and that in addition to the PC games on Facebook, we should also try to make mobile games social. Because I think if you look at the biggest successes on mobile — the biggest mobile games — they all have been single-player, even though these devices are really communication devices. We believe all mobile games should be social. So one year ago, we started investing a lot. Now we’re a bit over 200 employees, and half of them work on mobile games. We made quite a big shift. We continue to invest in our PC games on Facebook, but mobile is extremely important to us now.

GamesBeat: Is the mobile game market catching up with the level of Facebook interaction, in terms of the number of mobile game users or how much they play games? 

Begemann: Facebook is now so huge that virtually everybody uses it on their PC. There are very few people left who don’t. On mobile and smartphones, and especially on tablets, we see a super-strong growth in users. While on Facebook, revenues are still growing, but user numbers not so much. [The number of] Facebook users on mobile is growing insanely. That’s what we try to take advantage of: more and more mobile users using Facebook to be social on mobile.

GamesBeat: Did a lot of your mobile activity also coincide with Facebook growing on mobile?

Begemann: We don’t have exact data on the usage of Facebook’s mobile app. There is some public information, but we don’t know the exact details on that. We feel that the growth we have is because there are more devices. Facebook on mobile is growing. People want social games on mobile. That’s what we do now.

GamesBeat: There were some interesting comments recently. At E3, Naoki Aoyagi from Gree International said that this whole mobile game dominance would be settled in the next 18 months or so. That’s why they’ve decided they want to spend so much money now. Mark Pincus responded to that and said, “I don’t think the market is quite ready because there’s so much more scale on Facebook.” You launch something, and pretty regularly they can make it to 10 million users in 90 days. If you invest, say, 10 million bucks, you can expect to get 50 million dollars in return. He says that they’re still waiting for that return rate to enable that on mobile. You may invest in mobile now, but you’re not going to get that return rate. It’s an interesting contrast.

Begemann: We’re extremely happy. Diamond Dash, which we launched in December for iPhone and iPad, went way beyond our expectations. We had 20 million downloads without spending money on advertising. That was all organic, but still millions of downloads every month and way beyond our expectations. I think what helped there was that the game is really cross-platform, right? In the morning you can play on the iPhone. At your lunch break you can play on your PC, and in the evening on your iPad. It takes your account from device to device. And you compete with your friends. That’s also extremely important. It’s a social game. On these devices — on the Android, like the Galaxy S3 and the Nexus 7 — it’s coming…in a few months. We’re still in development. But we’re excited to be on more platforms.

GamesBeat: Where do you think the line is right now for you as far as investing in mobile versus not trying to go too far ahead of the market?

Begemann: For us today, the importance is equal. We continue to hire super-fast; we grow by at least two employees every week. Half of them work on games for Facebook and Flash games for Facebook on the PC, and half on mobile. So for us it’s really 50/50. I can’t speak for others, but for us they have equal importance. I think that will also be reflected in user numbers and revenues very soon.

Pages: 1 2

Zynga blamed the shortfall in earnings and its lowered outlook on several factors: general softness for existing titles, delay of The Ville people simulation game, changes that Facebook that seriously hurt engagement of older games, and a disappointing performance for the Draw Something mobile game. The consequences of the miss could be far-reaching.

Arvind Bhatia, analyst at Sterne Agee, said the Zynga problems bode ill for Facebook, which reports earnings today. Zynga’s market value, with its stock price at $3.15, is now $2.3 billion, well below its December initial public offering price of $10 a share and market value of $9 billion. Zynga’s stock price is a little embarrassing, considering it has $1.6 billion in cash.

At the Casual Connect game conference in Seattle, lots of people were stunned at the weak earnings and sharp stock drop. The woes of the biggest casual game company were the topic of conversation at the conference parties on Wednesday night. Zynga still has 220 million monthly active users, but that figure is down from the past.

“I was very surprised,” said Lon Otremba, chief executive of Tylted and one of the 2,700 attendees at Casual Connect, in an interview with GamesBeat. “This isn’t good for the rest of the industry.”

Indeed, Electronic Arts’ stock price is down 3 percent today and Glu Mobile’s has dropped 12 percent.

Michael Pachter, analyst at Wedbush Securities, noted that investors had been banking on a good second half of the year for Zynga, but the guidance Zynga offered changed that view. The company guidance — that revenues would be 50 percent lower than previously expected — implies that the second half “will not be the stronger half, in direct contrast to management’s comments earlier this year,” Pachter said. He lowered his prediction for Zynga’s stock price over the next year from $17 a share to just $7.

Ben Schachter, an analyst at Macquarie Research, said the results were “shocking” and guidance of revenues raised “our worst fears about the stability of the business model and competitive positioning.” He lowered his price target from $7 to $3.50 a share. Zynga said its revenues are expected to be $1.15 billion to $1.225 billion for the year, compared with Wall Street’s previous expectations of $1.44 billion.

He wrote in a research note, “Our key long-term concern remains this: What is Zynga’s sustainable competitive advantage? On Facebook, it executed well against its first-mover status, but with changes from Facebook, this advantage is wearing thin and users seem less willing to pay.”

He added, “On mobile, thus far, Zynga looks little different to us than a myriad of other casual game companies. It has acquired some hit mobile titles that monetize reasonably well through advertising, but without first-mover advantage and a platform on which to scale, it has not yet been able to leverage mobile hits into significant successes for its other games.”

With the uncertainty, Schachter said, “We have little faith in our, or the company’s ability, to model revenue in either the near or long term. Additionally, while real-money gaming remains a potential positive catalyst, it is extremely difficult to quantify at this early stage and we prefer to see management at least begin to execute against the opportunity before giving them any credit. The bottom line is that Zynga over promised and significantly under delivered.”

Atul Bagga, analyst at Lazard Capital, also was disappointed. He said in a note that the “magnitude of the miss and the outlook revision make us concerned about users’ long-term value and Zynga’s ability to profitably re-engage with users.” He downgraded his recommendation on the stock from “buy” to “neutral.”

“The results were a surprise, and contradicted what we have picked up speaking with a few companies in the space,” Bagga said. “We believe that the miss could have partially stemmed from the loss of some of the super-high-paying users or “whales.” He said he was surprised by the “sudden change in fundamentals.”

Colin Sebastian, an analyst at R.W. Baird, also said the results were worse than anticipated. Users appear to be tired of “management style” simulation games, but the outlook in the long-run for mobile games is good, he said. Average daily bookings per daily active user, or the money coming from each paying user, declined 10 percent from the previous quarter. That means that existing games aren’t monetizing as they once were.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

WildTangent is announcing today that it is moving back into internally produced games with the creation of a new mobile-focused studio in downtown Seattle’s Pioneer Square. The move suggests that many companies are still staking their claims in hopes of getting rich in the gold rush of the mobile space.

Their first release in the fall will be an update from an old franchise, Polar Bowler, said Matt Shea, executive vice president of product development at the company.

“We’re firing up a game studio to build mobile games first,” Shea said.

Around since 1998, WildTangent is one of the industry’s oldest startups. So it isn’t a surprise that the company’s latest move brings a little sense of déjà vu. The Redmond, Wash.-based company once made its own games, and it has as a staple of moribund franchises such as Polar Bowler, Fate (an action role-playing game designed by Travis Baldree, who’s now working on Runic Games’ upcoming Torchlight II), and Penguins! But the company shut down its development studio in 2008, shifting focus to distribution and advertising.

Polar Bowler is more than a decade old and still has a following. WildTangent will update it as an asynchronous, multiplayer, free-to-play smartphone and tablet app with touchscreen gameplay.

“We’ve got a vault of intellectual property,” Shea said. “[Mobile is] a crowded space, but we have access to a great talent pool.”

Shea said that the company was losing money at the time and had to take actions during the downturn to help it recover. Now making healthy profits, WildTangent can invest in the development of mobile games.

Former PopCap Games art director Rick Schmitz has joined WildTangent to work with a team of 10 to 12 developers on the initial multiplatform mobile games.

This dozen or so will receive a lot of support from the rest of WildTangent’s staff, which will help the games take off through user acquisition, monetization, and retention techniques. The team will focus on iOS (Apple iPad, iPhone, and iPod Touch), Android, and possibly Windows 8 games as well. While Polar Bowler is the team’s initial focus, more games are also in the works.

It won’t be easy to recruit talent for mobile game development as WildTangent will have to compete with the likes of PopCap (owned by Electronic Arts), Zynga, GameHouse (owned by RealNetworks), and other Seattle-area startups. And WildTangent is very late to the mobile games boom started by Apple’s success with smartphones and tablets.

But Shea said that fans have been asking for updates of WildTangent’s existing brands for a long time. ”This is the right time for us to do this,” he said.

WildTangent has more than 170 employees for its main business of operating a service that allows consumers to access games through a single program called Games App. Users can buy digital currency, or WildCoins, and they can play premium games for free by viewing ads via the company’s proprietary marketing platform, BrandBoost. WildTangent distributes more than 2,000 games made by third-party developers with an audience of more than 175 million monthly consumers.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

This sponsored post is brought to you by King.com.

King.com has made a big transition in the past year, shifting from casual tournament games on the web to offering social games on Facebook.

In less than a year, King.com became the No. 2 game company on Facebook with more than 52 million monthly active users, according to AppData. Riccardo Zacconi, chief executive of King.com, says the company credits its rise to the popularity of arcade-like casual games (like Bubble Witch, pictured above) on the popular social network, which was previously dominated by Zynga’s “simulation” games.

Rather than go head-to-head against Zynga, Zacconi said the company went for the “blue ocean” of the arcade-like, tournament-style games that were fresh territory on Facebook. The strategy is working, with 3 billion King.com games being played a month.

Here’s a video interview between Zacconi and Dan “Shoe” Hsu, editor-in-chief of GamesBeat, at our recent GamesBeat 2012 conference. Zacconi also did an on-stage interview at the event with A.J. Glasser, editor of Inside Social Games.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Oberon Media is no more. Say hello to Iplay.

The new brand identity reflects an expansion of the company’s game offerings, products and services. The company has rolled out a new technology platform, has added a new executive team, and expanded its game offerings.

Oberon had been around since 2003, providing casual games to millions of players. New York–based Iplay powers the game centers for big companies such as Microsoft, Yahoo, and AT&T. The mission is now delivering games anytime, anywhere, to consumes around the globe.

Bob Hayes began as chief operating officer at the end of 2010 and was later appointed president. He has recruited executives from companies including ABC News, Aol, CNN, HBO, McGraw Hill, Pearson Education, and Sony Computer Entertainment of America.

“Oberon Media has been a recognized leader in the distribution of interactive games since its inception,” Hayes said. “Through this rebranding, we want to send a message to the marketplace that signals the fundamental and positive changes that have taken place in our company, further improving on the already exceptional services.”

He added, “The new leadership team has taken the company to the next level by improving on our technology and expanding both our game content and product offerings in order to deliver the most robust, highly targeted interactive game entertainment experience to consumers.”

The new tech platform enables a better experience for customers, including faster setup of new game center sites and improvements in customer service. The service will be personalized for the end consumer, and it will use a new data analytics engine to maximize consumer engagement by presenting the right game to the right user at the right time. The company has expanded its game catalog by 50 percent and added game genres for card, casino, sports, action/arcade, sim, and indie games.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Let us make you an offer you can't refuse

Good news for all you mobile game developers out there: Zynga, now a public company, has a big chunk of available cash on hand and says it’s aggressively looking for the next big thing to spend part of its $1.8 billion on.

Zynga chief executive Mark Pincus, along with mergers and acquisitions chief Barry Cottle, told Bloomberg News that they are on the hunt for the next OMGPOP and plan to do several deals of that size in the coming years.

“We love finding great, accomplished teams that share our mission and vision,” Pincus told Bloomberg. “If we ever see breakout opportunities that massively accelerate social gaming at Zynga, we’ll aggressively pursue those, too.”

Cottle was the first sign of that relentless hunger. He was poached away from Electronic Arts, where he helped expand EA’s mobile gaming with the acquisition of Playfish, by a very generous $25 million package from Zynga.

Zynga has an on-the-ground fixer who works with newly purchased teams to bring them up to speed on seemingly everything, including game testing and changing over their health insurance. The fact that Zynga can offer liquid stock in a public company doesn’t hurt either.

CEO Mark Pincus is apparently dispatched personally when a startup needs to be convinced that Zynga is a friendly place to work. As our own Dean Takahashi has reported, Zynga has had a hard time shaking its “evil” image. Then again, most everyone has a price.

Zynga’s bear, Sterne Agee analyst Arvind Bhatia, wrote in a report, “If the media speculation of the acquisition price ($150M-$250M) is anywhere close to being accurate, the deal may look expensive. Recall, Zynga previously acquired Words with Friends creator Newtoy for $53M in late 2010. Reiterating Underperform; $7 target.”

Investors evidently disagree, as Zynga’s stock price is up 1.68 percent today, at $13.95 a share. That values Zynga at $9.76 billion. OMGPOP was valuable in Zynga’s eyes because Draw Something has been downloaded more than 35 million times since its launch.

Atul Bagga, an analyst for Lazard Capital, was more bullish. He said in his report that he estimates Draw Something is generating about $200,000 to $250,000 in revenues a day. At that rate, then the $200 million valuation would be about three times the current revenue run rate.

“We believe that he acquisition makes a lot of sense for Zynga,” Bagga wrote. “With more than 13.3 million daily active uses (versus 15 million DAU for all of Zynga’s mobile games), Draw Something could help Zynga meaningfully grow its footprint in the mobile space.”

Bagga said that mobile games are the fastest-growing segment of the video game market with a 39 percent compound annual growth rate over the next five years. A larger footprint in mobile will help Zynga cross promote its mobile games. Bagga expects Zynga to continue to be aggressive in mobile with internal launches and acquisitions. He has a $16 price target for Zynga’s stock.

Michael Pachter, an analyst at Wedbush Securities, is an even bigger bull. He has a 12-month price target on Zynga of $17. He said that the deal would give Zynga a better mobile presence and the company is well-positioned for long-term growth.

Zynga has not yet confirmed the purchase price of the deal. But Ben Schacter, an analyst for Macquarie Capital, said that he believes a bidding war for OMGPOP led to “too high of a price.”

“We remain concerned that Zynga is a single-platform company and is much less dominant on its own platforms,” he wrote. He thinks Zynga will be challenged to continually establish hits. And he raised the question of whether the new Angry Birds Space game will siphon away mobile users from Zynga and OMGPOP.

He has a neutral rating on the stock and a $10 price target.

Bhatia has been a bear on Zynga since before its IPO. While sinking at first, Zynga’s stock began rising this year as a result of speculation that its Poker and casino games could benefit from a legalization of online gambling in the U.S.

“While this may be a coincidence, it is interesting that Words with Friends seems to have seen a bit of decline in recent weeks following the launch of Draw Something. In fact, Words with Friends recently lost its position as the top App on iPhone to Draw Something. Another article has speculated that Draw Something has been generating on average $250K in daily revenue in recent days,” Bhatia wrote. “We suspect that most of this revenue, at least currently, is being generated from the one-time purchase of the paid version of the App. In other words, it would be incorrect, in our opinion, to assume the $250K daily revenue run rate (if that’s accurate) is sustainable.”

Source: AppData

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

OMGPOP knew it had to try something drastic with DrawSomething, as it was getting beaten handily by the likes of Zynga and Rovio. Now it has the biggest game on Facebook and a reported $200 million offer from the likes of Zynga and Gree. CEO Dan Porter isn’t ashamed to admit his company was on death’s door.

“It’s a weird business, it’s more similar to being a VC; it’s very hits-based business. You can flatline, but still be always one game away from releasing that title that changes your life,” he told PandoDaily. “It’s oddly different than being a startup, where you release something and it succeeds, fails or pivots. You’re releasing mini-startups every three to six months, and at some point you get big enough that the odds increase one will get a lot of traction.”

The question now is whether OMGPOP should hold out, hoping to grow DrawSomething even bigger, or perhaps strike gold with a second game, or if it should sell while it’s got the #1 game in the space and can command a hefty price. Founded back in 2007, the company has raised $16.6 million to date, so would need at least $150 million to satisfy the early investors.

Does it make sense for Zynga to go around snapping up every company that has a hit? It worked out well in the case of NewToy, the maker of Words With Friends, which Zynga bought for $53.5 million at the end of 2010. That title has gone on to be a massive hit with mainstream cultural awareness. All told, the NewToy staple helped grow Zynga’s mobile footprint, key for the social gaming giant, which is desperate to lessen its reliance on Facebook. As our own Dean Takahashi points out, mobile is by far the fastest growing market for social games. 

We’ll be keeping tabs on the rumors as the week progresses. Remember, Zynga was said to be eyeing OMGPOP once before, back in January of 2011. Instead they raised a big VC round and set out to grow the company. As CEO Dan Porter said at the time: “The goal in the long term is to be the size of Zynga. The space is going to be so big that I think we can build a massive, massive game company on the East Coast.”

OMGPOP hasn’t gotten bigger than Zynga yet, but they have shown they can go toe to toe with them on the Facebook platform while keeping their core strength in mobile gaming on Android and iOS.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Toronto-based TransGaming said the deal would bring it a recurring multimillion-dollar annual revenue stream generated from Oberon’s distribution agreements with a number of makers of “smart TVs,” or televisions that are connected to the internet and are capable of playing casual games.

New York-based Oberon Media is divesting itself of its Interactive TV and Connected TV division, which worked with TV manufacturers and a network of cable, satellite TV, and interactive TV service providers. Those service providers included Dish Network and DirecTV in North America and Reliance Digital TV and AirTel Digital TV in the Asian markets. The deals give TransGaming access to more than 50 million households with connected TVs, giving the company one of the largest connected TV markets in the world. That’s in addition to many millions of other households that TransGaming already reaches.

The deal adds a catalog of 100 games to TransGaming’s GameTree TV portfolio. The titles include Tetris, World Poker Tour, and Deal or No Deal. Under the GameTree TV brand, TransGaming lets users play simple titles that can be played with a remote control.

TransGaming, founded in 2000, is publicly traded on the Toronto Stock Exchange under the symbol TNG. The transaction, subject to the approval of the TSX Venture Exchange, is expected to close on Jan. 6. Intel invested in TransGaming, but it also recently decided to shut down its smart TV division after Google TV turned out to be a flop.

The $7 million includes $3 million payable upon closing, $2 million in earn-outs based on revenue targets, and the issuance of 4 million shares of TransGaming.

With the Oberon deal, “TransGaming cements its position as the clear leader in the delivery of video games to the connected living room,” said Vikas Gupta, chief executive and president of TransGaming. “We now have the ability to reach the hundreds of millions of set-top boxes currently deployed in living rooms globally.” Bob Hayes, president and chief operating officer of Oberon, said that the deal will make Oberon into a more focused and streamlined company.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Mobile device users play the game for more than 300 million minutes each day collectively, Stalbow said. But on top of being a popular game, it’s also becoming a massive entertainment franchise that spans multiple media forms. The company’s short films on YouTube, for example, have picked up more than 170 million views.

Stalbow, a former Fox Entertainment executive, joined the company to expand Angry Birds from a game to a multimedia franchise. That included deals like the one Rovio secured with 20th Century Fox, the producer of animated film Rio. Rovio released a “Rio” version of its game alongside the movie to piggyback on the buzz surrounding the movie.

“People in Hollywood are really surprised with the quick acceleration in the way consumers engage with entertainment on their mobile phones,” he said. ”There will be some interesting entertainment partnerships that will hopefully take what we had from [Angry Birds Rio] to a totally different level.”

Stalbow said that the company would be focusing on Angry Birds as a franchise for the foreseeable future. He didn’t specify whether Rovio would create a new franchise that runs alongside Angry Birds. Rovio is currently raising a round of funding that might value the company at more than $1.2 billion.

“There’s a very strong focus on Angry Birds because it’s turning into a big entertainment franchise,” Stalbow said.

In the Angry Birds game, players fling birds at structures to try to destroy pigs. It started on smartphones like the iPhone and on tablets like the iPad and then expanded to a large number of other platforms like web browsers and TV boxes that are powered by operating systems like Android.

The company finished raising its last round of money — $42 million –  in March this year. Rovio has been expanding through 2010 and 2011 and currently has 50 employees in Finland.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The company will join the unnamed fund as a limited partner to invest in technology, media and telecommunications companies. That could include companies similar to social game developer Zynga, which has built a reportedly robust business from virtual goods sales and casual games and is preparing for an initial public offering to raise up to $1 billion. Those games use a “freemium” model, which let users play games free and charge for premium features.

Perfect World began releasing freemium games powered by virtual goods sales after its first game launch, the eponymous Perfect World massively multiplayer online role-playing game (MMORPG) in 2006. The company expanded to other Asian countries, Europe, Russia, Brazil and eventually the United States — though that market is largely dominated by Blizzard Entertainment’s World of Warcraft, a subscription-based game with 11.1 million users.

Perfect World’s games, which are closer to World of Warcraft than Farmville, have booster packs that help players become more powerful faster for sale.

Perfect World has launched 12 games altogether, with most carrying at least one “expansion pack” that the company retails as a new game with additional content. Several games in Perfect World’s portfolio containing more than three such packages. The company’s eleventh MMORPG, Empire of the Immortals, came out in March this year. The company’s games are typically based on traditional Chinese mythology.

The company brought in $326 million in revenue last year with $9.4 million of that coming from in-game currency purchased but not used by players of various games. Perfect World made $125 million in profit from that revenue.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

Zynga‘s quest is to get the whole world to play social games. To make that happen, the company has to set up payment mechanisms in countries where credit cards aren’t the norm. So the company is announcing today that it has cut deals to distribute its prepaid Zynga Game Cards in Europe and Turkey.

In Europe, the epay division of Euronet Worldwide will distribute the Zynga prepaid cards in 18 countries across Europe. Zynga’s games are free-to-play, where users can play for free and pay real money to buy virtual goods. The Zynga game card allows users to buy a prepaid card that they can use in electronic transactions. The users can buy the cards through epay’s cash load network (a network of 276,000 retail and 588,000 kiosk locations). Zynga has more than 265 million monthly active users on Facebook.

The epay retailers across Europe can offer consumers an in-store bonus of a free virtual item with the game card redemption. The cards will be available in the United Kingdom, France, Spain, Germany, Luxembourg, Belgium, Portugal, Italy, Austria, Switzerland, Sweden, Norway, Denmark, Greece, Poland, Hungary, Czech Republic and Croatia.

Meanwhile, Zynga is also offering prepaid cards in Turkey through the leading mobile payment provider in Turkey, Mikro Ödeme. That deal marks the first time that Zynga Game Cards will be available in Turkey, which is one of the fastest-growing game markets. Users can pay Turkish Lira for the cards in small currency amounts. Consumers can also bill their mobile phones via the services of TurkCell and Turk Telekom.

Mikro Odeme was founded in 2008 as a mobile payment aggregator. Last month, Zynga also struck a deal with Gate2Play to distribute game cards in the Middle East and North Africa, and Zynga is using Mentez to distribute cards in Latin America. Zynga Game Cards are now available across 12 games in 50 countries through distribution deals with nine partners.

Clearly, at some point, Zynga is going to be the world’s universal currency.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

That would make the casual games company worth more than Plants vs. Zombies creator PopCap, which games publisher Electronic Arts bought for $750 million. Rovio is still well short of social games maker Zynga, which is valued somewhere between $10 billion and $20 billion and is looking to raise up to $1 billion in its upcoming initial public offering.

Wibe Wagemans, Rovio’s head of global brand advertising, hinted that the company was raising money at VentureBeat’s GamesBeat 2011 conference in San Francisco last month.

“We’re in fast growth mode, so we’re always on the lookout for good money,” Wagemans said. “We’re always interested.”

Angry Birds is a popular game on mobile devices in which players fling birds at structures to try to destroy pigs. It started on smartphones like the iPhone and on tablets like the iPad. It has since expanded to a large number of other platforms like web browsers and TV boxes that are powered by operating systems like Android.

The company finished raising its last round of money — $42 million –  in March this year. Rovio has been expanding through 2010 and 2011 and currently has 50 employees in Finland.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The King of Code contest is sponsored by Windows Phone and is open to developers on any mobile platform.

Game developer P.J. Snavely got his start at age 9 hacking into published games on his Commodore 64. Today, he has 15 games of his own under his belt, including a No. 1 title in the iPhone Kids category.

After graduating with a degree in computer engineering from the University of South Carolina, Snavely cut his teeth at Stormfront Studios working on high-profile console franchises like Tony La Russa Baseball and Andretti Racing. After that he took his sports game skills to Acclaim Games (acquired by Playdom), where he worked on the top-selling All-Star Baseball series, and Sony, where he broke new ground developing an NBA series for PlayStation Portable.

Now he’s immersing himself in mobile, with a dozen iPhone creations already in the field, and a Windows Phone application in preproduction.

His current iPhone apps fall into family-friendly genres like puzzle games and time management helpers. His two favorite projects include Solution Zero, a unique take on Sudoku, and Kidz Kitchen, a kid-friendly memory game that saw a substantial number of downloads.

Kidz Kitchen Screen Shot

“I started out on the iPhone because I was very interested in dealing with a standardized platform like I’d been used to working with on the console side,” Snavely told VentureBeat. “I wanted my initial mobile development to be less about compatability and more about design.”

Now that he’s established himself in the space, he’s looking forward to branching out to Windows Phone. So far, he says he hasn’t encountered any development or compatibility issues and expects his first WP platform app to “be a genre-smasher.”

“This current development takes the best elements of seveal platforms — mobile, social and console — to make a uniquely addicting experience,” Snavely said. “It builds on the most interestign pieces of those platforms: user generated content, geolocation gameplay and the viral mechanics of social gameplay.”

Working on the PlayStation portable provided Snavely with the perfect segué to get more involved in mobile, which is where he believes “the future growth of the [gaming] industry is going.” He loved developing for PSP, he says, but felt restricted.

“The beauty of mobile is the fact that you’re constantly carrying your gaming platform with you,” he said. “The idea of the so-called ‘hardcore gamer’ is falling by the wayside. Games that are good enough and interesting enough are turning everyone into gamers.”

While he thinks that consoles will still be a major pillar of the gaming industry, Snavely said that he expects mobile to grow explosively, especially given Microsoft’s projected growth in the sector.

For now, he is bootstrapping his development efforts, pushing his own products and helping out on others’ games to generate revenue. But he’s definitely on the lookout for funding, confident that with even minimal backing he’d be able to build a vibrant social mobile business.

“As a 15-year game industry veteran, I know what it takes to make a game fun and successful,” Snavely said. “Throw in my love of the social and mobile spaces and I think what I’m putting together will continue to evolve user experiences and gameplay for both of those sectors.”

Every week, with the sponsorship of Windows Phone, VentureBeat is crowning the very best mobile developers as “King of Code.” We’re looking for innovative developers who are really pushing the envelope in the mobile space, regardless of the platforms they’re developing on. Enter here for a chance to win a profile on VentureBeat.com, a $1,000 AMEX Gift Card, an Xbox & Kinect Package, and/or a Windows Phone 7 device.

PopCap is an appealing target for almost any game company because it has several extremely popular games that can be turned into franchises. The company also has a large number of regular users who purchase games from the company, and it is expanding into social gaming with games like Bejeweled Blitz. It’s a rare company that draws all kinds of gamers — social, casual, mobile and hardcore.

PopCap cofounder John Vechey said in an interview with VentureBeat that Electronic Arts felt like a great match because John Riccitiello, CEO of Electronic Arts, is very knowledgeable about games and understands what PopCap is good at. Barry Cottle, head of EAi, the company’s mobile and casual game studio, said the deal is a smart one and that EA did not pay an excessive amount for PopCap.

Cottle said PopCap is one of the dominant companies in casual games with fast growth on both Facebook and mobile games. The company makes more than $100 million in revenues a year and is growing at a 30 percent rate. Sales of Bejeweled made up about 40 percent of its revenues, and about 20 percent came from Plants vs Zombies, PopCap chief executive Dave Roberts told VentureBeat. But the company was born in 2000, long before the era of social gaming.

Casual gamers have downloaded PopCap’s games — like Plants vs. Zombies and Peggle — more than 150 million games. Around 80 percent of PopCap’s revenue was on mobile devices like the iPhone and on websites like Facebook.

PopCap is the second acquisition for Electronic Arts this month. The company is buying social gaming company Ohai — the company’s second social gaming purchase (it bought Playfish for $400 million after earn outs) — sources told VentureBeat’s Dean Takahashi yesterday.

Vechey said PopCap considered going public and started talking to a lot of potential partners at the same time. The company recently acquired San Francisco-based social game developer ZipZapPlay and said it was planning to go public later this year. It was one of PopCap’s more aggressive moves as the company aimed to be more competitive in social games on Facebook, where social gaming company Zynga dominates.

PopCap felt that Electronic Arts was a good fit because it was publishing on the same devices that PopCap was releasing games for and was also making similar casual games, Vechey said.

PopCap has been adapting to the rapid rise of Facebook games and has more than 16 million monthly active users on the site. It has 4.1 million daily active users, or those who come back once a day, and it ranks as the No. 5 U.S.-based social gaming company behind Zynga, Wooga (spelled wooga by the company), Playdom (acquired by Disney) and Electronic Arts, according to AppData.

The Seattle, Wash.-based company was founded in 2000 raised $22.5 million in October 2009.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The new program is another way Blizzard Entertainment is trying to rope in new players for its popular online game. New players will be able to play the first 20 levels free but will have to buy all three expansions in addition to the original game if they want to continue playing past the 20th level. Blizzard Entertainment recently dropped the price for an original copy of the game and the first expansion to $20, but the other expansions are still priced at around $35.

World of Warcraft players can reach level 85, so the amount of content Blizzard Entertainment is making available for free is only a fraction of what’s available in the game. There is also an enormous amount of “end-game” content that is designed for players looking for additional challenges and better rewards once they reach level 85.

The company tried a number of “free trial” programs in the past, including a 48-hour trial and a one-week trial. By removing the time limit, Blizzard Entertainment gets a better chance at roping in casual players who need to play on their own schedules rather than a schedule defined by the game.

Blizzard Entertainment’s World of Warcraft is already a huge commercial success. The game boasts around 11.4 million monthly subscribers who pay around $12 a month to access the world of Azeroth. And the company makes a lot of money selling additional expansion packs and initial copies of the game. It has become one of Activision-Blizzard’s most reliable sources of revenue.

Activision-Blizzard sold more than 4.7 million units of World of Warcraft: Cataclysm in the first month after it was released. On the first day, Cataclysm’s sales topped 3.3 million sold. By comparison, World of Warcraft’s previous expansion pack, Wrath of the Lich King, sold 2.8 million units on its first day in 2008, and The Burning Crusade sold 2.4 million units on its first day in 2007. World of Warcraft’s third expansion generated an estimated $188 million in retail sales in its first month.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The company has released “Mini Café,” a social game built for the iPhone, iPad and iPhone Touch. The game basically revolves around running a restaurant and keeping customers satisfied to increase the restaurant’s reputation. Mini Café players can invite their Facebook friends to their restaurants and “treat them like celebrities” to earn a better reputation. That reputation helps them advance in the game faster by bringing in more customers.

MindJolt acquired the Social Gaming Network (SGN) game studio as part of DeWolfe’s strategy to do a “roll-up” in social game. DeWolfe resurfaced in March last year after selling MySpace to News Corp and acquiring San Francisco-based MindJolt with backing from Austin Ventures. The company acquired both SGN and Hallpass Media in April. It’s a strategy frequently employed by social gaming company Zynga, which bought 12 companies in 12 months thanks to its huge user base of more than 250 million people.

DeWolfe said he wants to expand the company’s 20-million user audience through acquisitions. His team includes Colin Digiaro, chief operating officer and former head of monetization at Myspace; Aber Whitcomb, chief technology officer and former CTO of MySpace; Josh Yguado, senior vice president of business and corporate development and former vice president of business development at Fox Networks Group.

There are already big rivals such as Electronic Arts’ Playfish division, Playdom, and Zynga. That’s why DeWolfe started with the acquisition of a company that had already amassed a large audience, he said. DeWolfe has said he wants to develop MindJolt as a social game company that caters to indie game developers.

SGN had around 30 million downloads on iPhone and Android mobile devices as of April. SGN was founded in 2008 and has raised $18 million from backers including Eric Schmidt of Google and Amazon CEO Jeff Bezos. Hallpass Media has about 4 million monthly users and 1,500 web games.

MindJolt is a profitable company with more than $20 million in revenue and 20 million monthly users, according to a report by the New York Times. With the acquisitions, it has 80 employees.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

As usual, the sources are remaining anonymous, so take the rumors with a grain of salt. The purchase price is also somewhere between 10 and 20 times PopCap’s yearly revenue, which is a pretty steep price even for bold suitors. The company recently acquired the San Francisco-based social game developer ZipZapPlay and said it was planning to go public later this year as well.

PopCap is an appealing target for almost any game company because it has several extremely popular games that can be turned into franchises. The company also has a large number of regular users who purchase games, and it is expanding into social gaming with games like Bejeweled Blitz. It’s a rare company that draws gamers from all audiences — social, casual, mobile and hardcore gamers.

Game publishers Electronic Arts and Activision Blizzard are unlikely suitors, ThinkEquity research analyst Atul Bagga said. EA already tried buying a social gaming company, and Activision Blizzard is focused mainly on hardcore gamers. There’s a chance a Chinese company might come in and try to buy PopCap, but those companies are usually pretty stingy when they make acquisitions, Bagga said.

Zynga, which has wildly popular social games like Farmville and CityVille, is also an unlikely candidate. Zynga has also been on a spending spree — its huge user base has allowed it to buy 12 companies in 12 months. But Zynga already has 259 million monthly active users and is known for rapidly turning out new intellectual property.

“That leaves Japanese guys like DeNA and maybe a few media companies,” Bagga said. “It won’t be Disney, obviously, though there’s a chance a company like Fox might be involved.”

Japan-based DeNA, which focuses on social games and has taken aim at Zynga, has been growing at a blistering pace and could be on track to unseat Zynga as the top developer of social games for mobile devices.

Whether you believe the EA rumor or not, it has led investors to cash out of the massive publisher. Shares of Electronic Arts were down 3.5 percent to $21.76, down from a closing price of $22.54 on Wednesday. Shares of Electronic Arts fell around 2 percent in extended trading on Wednesday when rumors about a potential buyout for PopCap surfaced.

PopCap’s soon-to-be customer engagement leader Jennifer Kye said the rumor was unfounded on her Twitter account. Kye said her boss confirmed to her that the company was not planning to sell to any other company for $1 billion. When contacted directly by VentureBeat, PopCap did not give any comment as to whether the rumor about the buyout was true or not.

The casual game maker reported more than $100 million in revenues last year and is one of the most successful independent game companies. Sales of Bejeweled made up about 40 percent of its revenues, and about 20 percent came from Plants vs Zombies, PopCap chief executive Dave Roberts told VentureBeat. But the company was born in 2000, long before the era of social gaming.

PopCap has 16.3 million monthly active users on Facebook. The company has 4.3 million daily active users, or those who come back once a day. It ranks No. 3 behind Zynga and Electronic Arts, according to AppData.

The Seattle, Wash.-based company was founded in 2000 raised $22.5 million in October 2009.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

PopCap

PopCap is an appealing target for almost any game company because it has several extremely popular games that can be turned into franchises. The company also has a large number of regular users who purchase games from the company, and it is expanding into social gaming with games like Bejeweled Blitz. It’s a rare company that draws gamers from all audiences — social, casual, mobile and hardcore gamers.

The company recently acquired the San Francisco-based social game developer ZipZapPlay and said it was planning to go public later this year. It was one of PopCap’s more aggressive moves as the company aimed to be more competitive in social games on Facebook, where social gaming company Zynga dominates.

But PopCap’s soon-to-be customer engagement leader Jennifer Kye said the rumor was unfounded. Kye said her boss confirmed to her that the company was not planning to sell to any other company for $1 billion.

“@MrPope Sorry, I might not have been clear. I was simply stating that @TechCrunch‘s article is not true,” Kye said on her Twitter account. “I’ll be working there next week! My boss confirmed it for me.”

When contacted directly by VentureBeat, PopCap did not give any comment as to whether the rumor about the buyout was true or not.

“Per company policy we do not comment on rumor and speculation of this type,” PopCap spokesperson Garth Chouteau said over the phone.

An unlikely candidate for the purchase is Zynga, which has wildly popular social games like Farmville and CityVille. The company has also been on a spending spree — its huge user base has allowed it to buy 12 companies in 12 months. The company already has 259 million monthly active users. Other possible suitors could be Japan-based DeNA, which focuses on social games and has taken aim at Zynga. DeNA has been growing at a blistering pace and could be on track to unseat Zynga as the top developer of social games for mobile devices.

“Zynga, I’m not too sure they want to spend a billion dollars, and by acquiring this, what are they getting out of it?” said ThinkEquity research analyst Atul Bagga, who focuses on digital media and online gaming. “They’re getting 2 IPs — don’t get me wrong, IPs are very valuable, but they’re more on developing their own IPs, not buying their IPs.”

Game makers Electronic Arts and Activision Blizzard are unlikely suitors. EA already tried buying a social gaming company, and Activision Blizzard is focused mainly on hardcore gamers. There’s a chance a Chinese company might come in and try to buy PopCap, but those companies are usually pretty stingy when they make acquisitions, Bagga said.

“That leaves Japanese guys like DeNA and maybe a few media companies,” he said. “It won’t be Disney, obviously, though there’s a chance a company like Fox might be involved.”

PopCap reported more than $100 million in revenues last year and is one of the most successful independent game companies. Sales of Bejeweled made up about 40 percent of its revenues, and about 20 percent came from Plants vs Zombies, PopCap chief executive Dave Roberts told VentureBeat. But the company was born in 2000, long before the era of social gaming.

PopCap has been adapting to the rapid rise of Facebook games and has 16.3 million monthly active users on the site. PopCap has 4.3 million daily active users, or those who come back once a day, and it ranks No. 3 behind Zynga and Electronic Arts, according to AppData.

The Seattle, Wash.-based company was founded in 2000 raised $22.5 million in October 2009.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The company says it will offer all three current Angry Birds games (the original, Rio and Seasons) on a new product this summer, launch an Angry Birds video channel, and sell merchandise for the series via its store channel. Roku is also looking at the partnership as the first step towards offering other popular casual games on its devices.

Roku is still being cagey about the casual gaming plans for its current and older generation players — the big problem there being that Roku’s current remote control isn’t suited to game playing at all. There also aren’t any details about the company’s next-generation player plans, but you can expect at least one model to come with some sort of gaming controller.

Rovio previously announced that it will be bringing Angry Birds to game consoles, and it’s already available on the PSP (in a version that’s also playable on the PS3). But Roku is promoting the fact that it’s delivering the first true Angry Birds TV experience.

We’ll be exploring the most disruptive game technologies and business models at our third annual GamesBeat 2011 conference, on July 12-13 at the Palace Hotel in San Francisco. It will focus on the disruptive trends in the mobile games market. GamesBeat is co-located with our MobileBeat 2011 conference this year. To register, click on this link. Sponsors can message us at sponsors@venturebeat.com. To participate in our Who’s Got Game? contest for the best game startup, click on this link.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The beauty of PopCap’s titles is that they can be launched across a wide variety of platforms. PopCap’s Plants vs Zombies debuted on the PC and has been ported to the iPhone, iPad, and other platforms that are popular with gamers. Bejeweled Blitz, which lets you challenge a friend to a short game, has been a major hit on Facebook. PopCap has leadership positions in desktop, online, mobile and console games. As a result, it generated more than $100 million in sales last year and now has plans to go public in the second half of the year.

Usually, game development companies don’t go public. They tend to stay small, focus on making one or two games at a time, and work with much larger publicly traded game publishers. But PopCap hopes to change that, and it still aims to focus on making “the most popular video game franchises in the world.”

As the traditional game industry gets disrupted by social network and mobile games, PopCap believes it can take advantage of the disruption, which is causing the consumption of games to go more mass market and more global. PopCap is quite comfortable monetizing its games via newfangled models such as free-to-play, micro-transactions, and freemium. And it is expanding rapidly to overseas markets such as China. Overall, the company has more than 400 employees.

We sat down recently with PopCap chief executive Dave Roberts and co-founder John Vechey. Here’s an edited transcript of the conversation.

VB: Give us an overview on PopCap.

DR: We have six big franchises that sort of define us. We are all about games first and foremost. We are starting to release some revenue numbers now. So we did more than $100 million in revenues last year. We have more than 400 people. Our mission is to sort of create the most popular game franchises in the world. We deliberately chose not to put the word “video” in front of “game.” There has been a kind of stigma around video games and we want to make that go away. It’s gotten better over the years, and people now think of video games as more accessible than they used to be. We are certainly not done yet. One example is the stock market. Video game stocks were steadily rising until the recession hit in 2008. They have been slow to recover. But as online games rose in Asia, the value of the Asian game companies has risen dramatically. The same thing has not happened here. Here, people seem to classify games as part of a larger entertainment and media business. That doesn’t take into account that the core audience is shifting from hardcore gamers, who are maybe 14 percent of the population, to everybody.

VB: Do you view the rise of the Chinese game companies and their rising stock prices as rational?

DR: Some of it is probably irrational. It’s hard to say not really knowing enough about it, but certainly it is well hyped.

VB: It makes sense that the Chinese game companies embraced free-to-play games earlier and that means they have more potential going forward. Is that right?

DR: I think the business model makes more sense. I get the message that the free-to-play business model looks very promising compared to the slow growth business models of media companies and Western console game makers. I think the market is very hungry for a good way to invest in games. That is why some are flocking to the Chinese game companies. I don’t know if there are better alternative game investments in the U.S. Over here, the demographic is changing. You can see that the population is aging and the demographic of people playing our games is aging as well.

It’s no longer about somebody going to the game store and buying a game from the retailer and not directly dealing with the publisher. We are starting to want to have a relationship with our customers. That’s obviously a big trend. You can see we have gone from subscriptions, purchases and try-before-you-buy to new models. We have free-to-play, micro-transactions and freemium games. It’s not about picking one business model and sticking to it, but trying multiple strategies. The same game can now have many different price points across different platforms.

We have more platforms whereas we used to be very PC-centric. Now of course the world is more connected, people are playing across platforms, mobile is getting more popular. The game universe is shifting, all in a way that looks a lot more like Asia than it does the West. So if you look at this I think our equity numbers are reflecting the fact that the outlook for the Western companies has been flat, with slowing growth in PC and console games. Social and mobile are growing. At the Game Developers Conference, all we heard about was social and mobile everywhere we went.

So first what that means is the way you succeed now is starting with great game mechanics. That is still critical. Think about four years ago. How many business plans did you hear about where they were going to do iPhone before Facebook? Not very many. Now you are just tripping over them. It’s hard to predict which platform will be hot next. But if you start with great games, you can have the opportunity to take your games where you need them to be. Multi-platform strategies mean mobile, online, and social. We also think Asia is finally going to become part of the global market. It will no longer be fragmented or separated from the rest of the game market.

VB: What do your revenues look like?

DR: We are releasing more details now, with more than $100 million in 2010. We have Bejeweled accounting for about 40 percent and about 20 percent was Plants vs Zombies.

VB: What trends are helping you? In this business, my pearl of business wisdom is that you have to be smart, lucky and good. If you miss two of those, you’re in trouble. Hopefully we’ve got all three now and then at PopCap. We are focused on great games. The smart and lucky part has been our investment in new game devices such as the iPhone. There are now tens of millions of people playing games on devices that didn’t exist three years ago. It has singularly changed what we have done. The iTunes Store makes the iPhone so much more successful as an app distribution mechanism. Google Android is still too fragmented and is not yet a good buying experience. Hopefully they will fix that. The big trend is social gaming. Zynga has done a great job with that. We are happy they have brought hundreds of millions of people in to gaming on Facebook. That makes us a lot happier because we can sell them a copy of Bejeweled.

VB: What platforms do you favor?

DR: We have four major platforms. The desktop, which is basically any unconnected game such as for a PC or Mac game. We have the online web games, which is now driven by Facebook but includes other web games. The mobile business is transitioning to smartphones and tablets. And then the console business is split between online games like pure online plays like Xbox Live Arcade and retail games such as the Nintendo DS. About 80 percent of what we do is digital distribution and the rest is retail. Five years ago, a third of our business was mobile, but on feature phones. The makeup has changed a lot now. Desktop has gone from 60 percent of our business to 38 percent. Facebook is most of our online business now, as we started monetizing Bejeweled Blitz last year. More surprising is that we used to be 1 percent to 2 percent of the PC game market. With Plants vs Zombies, we became the eighth-largest PC gaming publisher in North America. We are now ahead of Microsoft in PC gaming.

If you look at Facebook, Zynga is huge. We are the third-largest game company on Facebook on a daily basis. We have that with two games. CrowdStar is No. 2 with 18 games. On the iPhone, Apple tells you who is the biggest revenue producer of the year. On their top ten list, we had two games. No one else had two games on that list. So we are in a leadership position with all of these categories with the same brands.

Geographically, we have 400 people including about 90 in Asia. About 25 percent of our revenue is outside North America and we are trying to see that go to 50 percent. Social and mobile are leading the way for us in Asia. The social business has been going crazy, and we have huge expectations for what we are doing in Asia. Our Java/Brew business peaked in 2009 as iOS revenues rose.

With social, we think great games finally matter on Facebook. That wasn’t the case two years ago. Our revenue has gone from zero a year ago to a million dollars a month in August to $2.5 million in March. Bejeweled Blitz is played 2.5 billion times a month. More than three-quarters of the orders we get are people who have bought from us before on social. We are not tricking them to buy once. They are actually coming back to buy stuff. That’s exciting for us.

If you profile the top ten games on Facebook this year and compare that to last year, those games lost 36 percent of their daily active users. Bejeweled Blitz gained 33 percent. Bejeweled Blitz is No. 11 on monthly unique users on Facebook and on a daily basis it is No. 5. That ratio tells you how many of your users come back every day. Bejeweled basically got a third of its users to come back every day. That is the best measure of engagement. It’s really remarkable when you think about how the game mechanic of FarmVille is to get users to come back every day. Our game mechanic is just plain fun.

VB: What are you doing in Asia?

DR: We have been in China for four years. We have scores of employees there. It isn’t just about getting cheap labor. We let the local studio control what they do there. Almost no one else has succeeded in the Chinese market, as a Western company. Plants vs Zombies is a runaway hit there. There’s a sitcom around it. It’s crazy. There is an opportunity there to turn popular games into popular brands. We were told that zombies wouldn’t fly in China. But it did. We have four tent pole projects in Asia. We are in the PC online space, working with NCSoft in Korea on PopCap World. That will launch this year in Korea and if it works we will take it to other territories. We have two social networking games, a Plants vs Zombies game with an unannouncd partner and then a Zuma Blitz game with another unannounced partner. Those will come out this year. The fourth is a mobile social game with Taito and Gree in Japan.

VB: It looks like you are still going at a slower pace in Asia. If you were Zynga, you might do six games a year with 90 people there.

JV: We are the tortoise wherever we compete.

DR: No one ever accused us of being fast.

VB: That strategy will work for you in Asia?

DR: There are different beliefs about the pace of introduction of games. Over there, they tend to pump the games out faster. Or they are refugees of Western game companies, which have done a terrible job dealing with Chinese developers and stripped them of their creativity. Some of the work is unlearning bad habits. We are patient. We tell them this is their game. You control the quality of it. We don’t want them to listen to a drone in Seattle. They want to do a good job. We’ll have more multiplayer gaming with PopCap World. NCSoft has been great to work with. In Japan, we will connect our Java/Brew games with social features on Gree’s network on feature phones, which are the dominant platform in Japan now. We are pretty excited about that. Zuma Blitz is a much more direct translation of what we have on Facebook.

VB: So the 4th and Battery label got a lot of attention. What was the thinking behind it?

JV: 4th and Battery is just a creative outlet for our studio. If you think about it from the studio perspective, we have a problem. If you say in order to release a game, it must be as good as Plants vs Zombies, we’re kind of f*****. When you look at the success of one of the great companies of our time, Pixar, they have short films. They can make short films as a creative outlet. They may release them with the movies. That is their proving ground. We don’t have anything like that at PopCap. That is what 4th and Battery (named after an intersection in Seattle) will be. There is no business plan. I don’t know why we did a press release on it. We blew it up into too much. Our team needs a way to have a creative outlet and release games to customers, even if it’s just a cool idea and not a full-featured game.

VB: Is that a part of PopCap that could issue a lot more games?

JV: We could. It’s a creative solution to one of our creative problems of trying to do prototypes for experimental game play. So three or four times a year, the studio can do projects and then shut down for a bit and do these experimental things. They can try to get prototypes out.

VB: And if you are like Disney and you own the Miramax label, you have (or had, as Disney sold off Miramax) a way to get R-rated movies to the public?

JV: Exactly. That’s a really good analogy. It’s not like we’re going to do a lot of violent games. Maybe we’ll do niche games for a particular audience. We are just releasing games that we feel are cool and fun and don’t quite fit into our major label.

VB: So 4th & Battery isn’t releasing major new intellectual properties for PopCap?

JV: We are literally just releasing games on platforms like iOS because we feel they are cool and fun. They won’t fit into more of our traditional game styles. It’s not really more complicated than that. We don’t want it to have the same expectations as PopCap does.

VB: Apple didn’t approve the [Unpleasant Horse] game. You won’t have that problem if you went to Android.

JV: We submitted it and they didn’t approve it. Your horse or another horse goes into the meat grinder. They didn’t like that. It was really just a 24-hour game jam idea that was turned into a game.

VB: It’s cute.

JV: Up until the meat grinder. Cute but a little violent.

VB: Don’t you want to take it across a bunch of platforms?

JV: No. It’s just to get a creative outlet. It’s not going to be a business. For that, iOS was fine.

DR: If it were the next Angry Birds, we would treat it differently. We only announced it because we figured if people found out about it, they would think we’re trying to hide something because it was mature-rated.

VB: What is your plan for going public?

DR: We want to go out before the window closes in 2010. It’s like in December, no one goes public because the markets shut down. If you are not out by November, you don’t want to go out. There are strategies for going public.

VB: Do you want to have a regular cadence of releases?

DR: No, we are never going to do that. When I talk to investors, I tell them that our revenues are not fueled by new releases. They look at us like a manufacturing organization with a pipeline of new products We don’t look at our business that way at all. We are ten-year-old company with six franchises. We have been very good at predicting our quarterly revenues for five years. We are not about blockbuster projects. We have a lot of games in the works at once. The studio is 220 people working on 30 projects. All of them will move around in the schedule. No single project changes the whole company. Plants vs. Zombies was one of our most successful franchises ever. But in its first year, it was a small part of our business. Over time, it is not about hitting a ship date on a big title. It is about building out a franchise over time. That is the thing that takes the longest to explain to investors. They get it, but it takes time.

VB: Why is it a good time to go public?

DR: One of the good reasons to go out right now is that investors are dying for something around Facebook, something around mobile. They cant find the vehicles to put, if you want to invest in those sectors, money to work. There is really nothing. Everything is private. We are an outlet for big public funds that want to be in those markets.

VB: How do you reduce the risks for investors?

DR: We have portfolio diversification. You take your games across a matrix of platforms, products, and geographies. You then find that no single product accounts for a huge part of your revenues. It’s like a balanced stock portfolio. Sometimes we invest in winners and sometimes in losers. But over time, we are good at beating the market. We start with great games. The iPhone and Facebook were not part of the business plan four years ago. We were in early on the iPhone and later on Facebook.

VB: Do you need to own your distribution?

DR: It’s less about owning distribution for us than it is about managing the publishing relationship, managing relationship with the customers. We used to be just a studio. Now we have added a publishing, or sales and marketing group, which can work with the studios to run the business based on the unpredictability of our games. If you know a game is going to ship in six months, it gets a lot easier to market that game. Software has never been predictable. Games are even more unpredictable. The business people are used to that. We don’t blame a game studio when a game slips behind schedule because we know games slip. If we control sales and marketing, then we can do a lot better job with the products. We still use partners for distribution. Wal-Mart is a great distribution partner of ours. Facebook is another. Apple is another. We are more than happy to give them their cut of the business.

VB: What do you think of the relative valuation of companies in the market. Zynga is reportedly valued at $10 billion and EA is $6 billion. Why does that make sense?

JV: We don’t get hung up on that. We are very competitive. We focus on ourselves and how to become better. Do we spend a lot of energy coming up with a calculation on what we are worth relative to Zynga? It doesn’t seem like a good exercise.

DR: One has to be careful about believing valuations based on the secondary market. I am not saying Zynga is not valuable. I think it is a very valuable company. Nobody believes that that really is an appropriate market evaluation. And likewise you have to be careful when small pieces of equity are raised by companies. If Microsoft invests $50 million in something, they don’t care about the valuation because it’s a small amount of money to them. That doesn’t mean the rest of that company is worth a lot. I don’t think we’ll ever know Zynga’s true value until it is public. The same is true for PopCap. That’s when you know what a company is worth.

VB: Why go public, given the options?

JV: Preparing to go public gives you a lot of options. You don’t have to go public. You can be acquired by someone else. There are costs. But 80 percent of those costs are beneficial, like the requirement that you have outside board members. Getting a chief financial officer is very valuable.

VB: You want your employees to be happy.

DR: That’s a consideration. We are a ten-year-old company and a lot of employees have been around for a while. You want to have some form of liquidity for them. Otherwise, it’s not fair to them. It backfires if that is the reason that employees come to work for you. If they think you will go public, they come to work for you. If you don’t, they wind up quitting.

JV: Zynga has a lot of work to do. For the valuation they are getting now, they have to grow into it as a company. From a culture standpoint and a product standpoint. They have a great runway of market and profit. They have a lot of market advantages. But they have to overcome a lot of hurdles. They have to make it a great place to work.

DR: Free food isn’t enough sometimes. Cold and rain helps.

VB: Are you as excited about mobile as many of the venture capitalists are now?

DR: We’ve always been excited about mobile. It’s a third of our business and has been that way for a long time. Not many companies can say that. We are very excited about where we are. We understand the pitfalls of it. We learned that we don’t like the word “port.” It’s a bad word. If you just port a game to a new platform, like a new phone, you end up with a suboptimal experience. That is what happened with some games that were successful on Facebook. They were ported to the iPhone and didn’t succeed. It took us a lot of years to figure out the balance between the crafting you do to preserve the original game mechanic and the notion that you want to make the best use of the platform like the Nintendo DS or the iPhone.

VB: The tablet market is also exciting?

DR: We love the tablet market. The Android market may actually work out better on that front. A lot of the new hardware is getting slammed for having high prices. There may be issues there. But we like it when multiple companies succeed and launch something that has a really capable game platform.

VB: What did you think of the IGDA’s beef with Amazon.com on pricing contracts for games?

JV: I completely agree with the IGDA. They’re not making things up. They had the option of dropping the price whenever they wanted to. That’s different from Apple, where you can set your own price.

DR: I haven’t seen the original contracts. But it’s the same problem the casual game developers had with the casual game portals in 2004. The portals wanted to use the games as loss leaders to get people to visit the portals. It was bad in the long-term for the ecosystems of the portals if developers can’t make money on the portals.

VB: Your summary message is that it is good business to be a good game maker?

DR: I think it has always been. It’s funny. There are always a lot of people chasing pots of gold. They want that easy and free path to wealth and riches. That drives a lot of people. But there is a huge chunk of people who do it out of passion and the love of games. Both of those things can happen.

We’ll be exploring the most disruptive game technologies and business models at our third annual GamesBeat 2011 conference, on July 12-13 at the Palace Hotel in San Francisco. It will focus on the disruptive trends in the mobile games market. GamesBeat is co-located with our MobileBeat 2011 conference this year. To register, click on this link. Sponsors can message us at sponsors@venturebeat.com. To participate in our Who’s Got Game? contest for the best game startup, click on this link.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

The move could be one of the first for a more aggressive PopCap, the Seattle-based maker of hit games from Bejeweled to Plants vs Zombies, as it tries to be more competitive in social games on Facebook, where Zynga dominates. San Francisco-based Zynga opened an office to recruit game developers in Seattle recently, and now PopCap is acquiring a game studio on Zynga’s home turf. It’s kind of like a tit for tat move in a very high stakes battle for the future of social games.

PopCap is increasing its efforts in part because it plans to file to go public in the second half of the year. John Vechey, co-founder of PopCap and head of its merger and acquisition efforts, said in an interview that the deal is a strategic one, not so much because ZipZapPlay has lots of users. On Facebook, ZipZapPlay’s Baking Life game has 3.2 million monthly active users. That’s small compared to Zynga’s 259 million monthly active users. Zynga’s huge user base has allowed it to buy 12 companies in 12 months.

“What was important to us was their willingness to experiment,” Vechey said. “They get how social gaming will evolve so that it will become actually social, with authentic social interactions. This is a strategic move with a lot of potential.”

In other words, a lot of so-called social games on Facebook tap your friends to do stuff for you, but they don’t require you to work together closely with your friends inside the game itself. Vechey acknowledged that PopCap competes with Zynga and that it had previously thought of opening its own office. With this acquisition, PopCap adds 17 new employees and a base to expand in San Francisco, which is the center of the social gaming industry. Curt Bererton and Mathilde Pignol, the top executives of ZipZapPlay, will continue to run the studio.

PopCap reported more than $100 million in revenues last year and it is one of the most successful independent game companies. But it was born in 2000, long before the era of social gaming. PopCap pioneered snack-like casual games with Bejeweled, which has sold more than 50 million units.

PopCap has been adapting to the rapid rise of Facebook games and has 16.3 million monthly active users. In that respect, it is playing catch-up with No. 1-ranked Zynga. PopCap has 4.3 million daily active users, or those who come back once a day, and it ranks No. 3 behind Zynga and Electronic Arts in that respect, according to AppData.

Vechey said he has been scouring through potential acquisitions for the past 18 months and found that ZipZapPlay is a nice cultural fit, since it focuses on design excellence in the same way that PopCap does. ZipZapPlay is at work on a new game that could be a big leap forward in social games, Vechey said. That game could come out this year. By the end of 2011, PopCap expects to have four or five games available on Facebook.

Overall, PopCap chief executive Dave Roberts said in a recent interview that PopCap’s aim is to diversify across the important platforms, including social, mobile, and the web. And it will also spread its focus across different geographies and types of games so that it can produce more predictable financial results.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

St. John has been trying to shake Hi5′s legacy as an international social network since he joined the San Francisco firm in November, 2009. Back then, Hi5 had 60 million unique monthly users, but it didn’t really have a great way to make money from them. Hi5′s users have slipped to 30 million, but St. John has relentlessly steered the company into more lucrative social games.

In worldwide online gaming unique visitors, Hi5 now ranks sixth as an online game site, with 21.7 million unique monthly visitors. It is ahead of some established online game portals such as Nickelodeon Casual Games (20.8 million), Yahoo Games (20.7 million), and MSN Games (18.6 million). Hi5 has more than 110 social games and more than 400 more coming soon.

The top-ranked online game companies: Spil Games (49.8 million), GSN Games Networks and CPMStar (35.7 million), EA Online (32.9 million), WildTangent Media (29.6 million), and Xiamen Youjia Network (22.2 million).

Bill Gossman, chief executive of Hi5, says the new ranking is a milestone in the company’s pivot from a social network to a social game destination. Of course, this is kind of like jumping from one big rival to another. Unable to beat Facebook, Hi5 is now going up against the likes of Zynga.

The key to climbing higher in the ranks will be getting more exclusive games. Hi5′s new games include titles that have also been on Facebook, such as Millionaire City, Backyard Monsters, Barn Buddy, Resort World, and Bush Whacker.

Hi5 has attracted game developers by being friendly to them and giving them ways to get noticed via its SocioPath online game platform. Hi5 was founded in 2003 and has raised $34 million to date. It has 70 employees.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---

London-based PlayJam has been distributing casual games to digital TVs for more than a decade, with more than 6 billion downloads to date across TV platforms such as Sky, Dish Network, and Canal Sat. The deal shows the company is making a transition from an earlier age of interactive TV to the current age of web-connected televisions. In this age, there’s no need for a separate set-top box.

PlayJam’s Netcast platform will be accessible via remote control on the menu for LG’s smart TVs, which can be connected to the internet. The games sit alongside TV shows, movie services, news, weather and music. PlayJam is working with game developers to bring their titles to web-connected TVs. Through its earlier interactive TV services, PlayJam has 500 games of its own and thousands of games from other developers and publishers. It also operates a worldwide customer billing system and worked with customers in tens of millions of homes.

The service competes with rivals such as Accedo, Oberon and OnLive. The question is, will consumers really want to play casual games on their TV via remote controls, or would rather play more sophisticated games on game consoles? The company was founded by Jasper Smith (pictured) in 1999, sold to Open TV in 2001, and reacquired by Smith in 2008. The company has 30 employees.

---

GamesBeat 2013 is our fifth annual conference on disruption in the video game market. You'll get 360-degree perspectives from top gaming executives, developers, and analysts on what’s to come in the industry. Our theme this year is “The Battle Royal.” Check out full event details here, and grab your early-bird tickets here!

---