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Playdom is one of the larger game developers on social networks, and it’s making lots of money from virtual goods. Unlike older, more established gaming companies like EA, its business outlook is looking good. This explains how the company has pulled off a coup and hired EA chief operating officer John Pleasants as its new chief executive.
Pleasants has been busy trying to build out EA’s online business, and the hire makes one wonder how things are going at the publicly-traded game developer. This is another big sign of how much more promising social gaming is than the traditional console games that have been EA’s moneymakers.
Watch for more industry turmoil. When I told my colleague and gaming guru Dean Takahashi about Playdom’s hire, he was shocked: “They hired John Pleasants? Really!?” Dean had just interviewed Pleasants at the E3 conference last week. The former CEO at Ticketmaster, Pleasants joined EA in March of 2008 with the intention to build out its online business.
This excerpt from Dean’s interview shows why Pleasants is likely going to be a great fit with Playdom — he has deep experience in making money from e-commerce:
Three top investment pros open up about what it takes to get your video game funded.
Ticketmaster was a software and infrastructure company that moved to a direct-to-consumer model. For anyone in software, the move is going to be like moving from Blockbuster to Netflix, record label to iTunes, Siebel to Salesforce.com. They all carry elements that are directly parallel to us. If you believe all games will eventually be services — as I do — then the idea of game teams that make a game, ship it, and then do something else goes away. They will now ship and day one begins when the customer gives feedback to the live service. The way you distribute will be different. The way you charge will be different. There will be more permutations in pricing. Merchandising will be much more important. Co-marketing will be much more important. You have to have persistent identification and entitlements for a user, no matter where they are or in what game they’re playing.
Playdom is set to make around $40 million this year from selling virtual goods in its social games on MySpace (where it’s had the most success to date) and Facebook, or so I’ve previously heard. The company is aiming to get bigger and more profitable than more established rivals like Zynga and Playfish. Industry insiders have been mentioning a Playdom CEO hire since last month.
I’ve also heard about its funding efforts. A digital media investor told me the other week that five venture capitalists had asked him for introductions to Playdom within the span of a few days. Sources have also told me the company”s been quite busy talking to investors, and one person says it has signed a term sheet. In order to take on its larger competitors, it apparently wants to expand faster than it can pay for through its profits alone.
Playdom has previously denied hiring a CEO or raising funding, although it has confirmed it has been looking at doing both. Now that it’s announced a CEO, I wouldn’t be surprised if it announces a new round of funding sometime soon.
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