Yet another name has been added to the growing list of major companies making their way onto Facebook: LucasArts. With it, comes one of its premiere franchises, Indiana Jones. The app is LEGO Indiana Jones 2: The Adventure Continues, but before you get too excited the tomb raiding archeologist doesn‘t quite live up to user expectations. At least not yet.

Ubisoft, PopCap, USA Networks, and Konami have all been busy building for Facebook and Facebook Connect. However, these companies have created titles or game portals that were fun in and of themselves, or at least tried to be. And their integration with Facebook added simple social components, with the exception of Ubisoft who designed TickTock so it specifically required social play — the games were intended to see how social features could work, and they were done well. Unfortunately for Indie, the same can not be said.

Bluntly put, this app feels like nothing more than a quickly thrown together “game” meant to garner a little bit of extra advertising for the LEGO Indiana Jones series. Were it not for the name of the title, it wouldn’t even have the 27,000 monthly active users it currently does.

When the game is first loaded up, it looks fantastic, carrying that LEGO art style the series is known for. Players jump in, and are prompted to create an avatar. Okay, sounds cool thus far — everyone likes customizing avatars. You can change the head, body, and legs to something worn by one of the Indiana Jones characters or even George Lucas himself. It’s simple, yes, but it’s LEGO. How much customization can you do with a LEGO person? Right? Once you finish, you save the avatar, then get prompted with the question about whether you want to post it to your feed. All fairly standard.

This is where the real game starts! Right…? Nope, you get to see your avatar and Indie standing on a bunch of crates that make up the first scene from Indiana Jones and the Kingdom of the Crystal Skull. That’s it! That is all this game is! Sure, you can invite more friends and they stand still in the scene too, and if you invite enough you get a new scene from the movie, but there is nothing else to do.

There have been a lot of bad games on Facebook, this much is true, but never before has one been so… anticlimactic. Change three things! Look, you have a custom avatar! Now tell all your friends about our “awesome” game and advertise for us.

Maybe that’s just the point of the game — and we suppose that’s okay. But it seems like a real social game built with this theme would be a far more compelling advertisement for the franchise.

[Editor's Note: The following is a guest post by Martine Niejadlik, who leads mobile payment company Boku's efforts around fraud, safety and risk. With mobile payments, users purchase digital items, approve a confirmation of the purchase on their phone, and bill their mobile phone accounts. It's a popular alternative to buying virtual currencies and other items in games using credit cards -- which means fraud happens sometimes. Below, Niejadlik shares 5 tips for how developers can help mobile payment customers have a more secure experience in their applications.]

It’s an unfortunate truth of business that where there is money to be made, there are people trying to do bad things to get their hands on it. If you’ve taken payments from customers then chances are you’ve encountered some of these risks. Cash and checks can be counterfeit, checks can bounce due to insufficient funds, credit card numbers can be stolen, etc.

I’ve managed risk and fraud teams at PayPal, eBay and Amazon, and now at Boku; I’ve seen countless fraud attempts from around the world. Mobile payments are a new, rapidly growing form of payments and like all forms of payments they come with risks that need to be understood and managed. Based on my experiences in the industry, here are my top 5 merchant risk and fraud tips for mobile payments. Note that some of these are useful for all types of payments.

Tip #1 – Know the rules

There are two types of rules for mobile payments. The first set of rules are legal requirements (which may vary by jurisdiction), such as ensuring that:

• payments are not being processed for online gambling or otherwise illegal activity or content (such as child pornography)
• payments that indicate potential money laundering are reported to the proper authorities
• any licensing requirements or payment regulations are complied with
• there is proper consent and disclosures under the Children’s Online Privacy Protection Act (COPPA)

These rules should come from a lawyer (I am not one) and will vary by business. For example, whether or not you need to comply with COPPA will depend specifically on the type of primary customers for your business.

The second set of rules come from the carriers and include things such as:

• Spend limits – each carrier has varying restrictions on how much a user can spend on a particular mobile service. These limits may be applied to transaction amounts or spend amounts over a given timeframe. Additionally, spend limit notifications are also sometimes needed.
• Terms and Conditions – specifics on what needs to be disclosed, how it needs to appear in the payment flow, etc.
• Payment flow experience – where the pricing should be displayed, what size fonts should be used, proximity of information (e.g., price near phone number entry field)
• Customer support – what hours need to be supported, what methods of support must the service have (email, phone, etc.), local language requirements, voice mail requirements, etc.
• Compliance – what kinds of businesses and content are allowed and the caveats for specific services (for example, disclosures that state when a service will have ongoing messages delivered)
• Dispute/Refund rates – process for handling and associated fees and penalties

These rules can vary not only by country, but also by the carrier within a country and the list of rules goes on and on. If you’re interested in learning more about mobile compliance, a great place to start is with the MMA Best Practice Guidelines, which can be found in this PDF.

Since the rules are very specific and they change over time, you should not assume that what’s okay for one web site or service is okay for another; make sure you check with your payment provider before offering mobile payments on new features or businesses.

Tip #2 – Set user expectations and provide good customer service

One of the common complaints from customers is that they don’t receive the product or service they were offered or that it was not as expected when it was received. When either happens, like credit cards, it can result in a “chargeback” (reversal of the proceeds from the transaction, possibly with some fees added on, too!). To avoid chargebacks, make sure that you set clear expectations on what is to be delivered and when, and ensure that you provide timely customer service to resolve complaints quickly.

• Be clear about timeframes on fulfillment. If it normally takes several hours before a user might see a credit in their account, let them know that up front
• Specify any restrictions on the product being purchased. For example, if credits are being purchased that can’t be used on all products or be transferred if a user “upgrades” their account

You can also avoid issues by educating your customers on how to prevent fraud. If you need help with this, you can reference this blog post (link) with some helpful tips for customers.

Chances are that no matter what you do, though, you’ll still have some number of issues that arise over time. When you do encounter them, particularly chargebacks, make sure you carefully track them in as much detail as possible. Which customers charged back? How many times? What percentage of their activity resulted in a chargeback? Why did they issue a chargeback? You’ll see why in a bit.

Tip #3 – Know who has the liability (and if you do, then make sure you mitigate it)

Whenever anyone asks me about risk, one of the first questions I ask in response is “who has the liability?” In the payment space liability often lives with the merchant; in mobile payments this can vary significantly depending on the market and the carrier. For example, in most European countries refunds are not often issued and when they are, the carrier is not passing these back as chargebacks; in most Asian markets, chargebacks come in the form of “discrepancies” which include bad debt, refunds and billing system issues and no details are provided; in the United States, refunds from almost all carriers are charged back and the details behind them (MSISDN, amount, date, etc.) are typically provided.

Make sure you know if you have liability and how it’s structured and do this at the point you’re setting up a mobile payments service, not when the liaiblity hits you. Are there chargebacks? When should I expect to see them? What information is provided? Are there any penalties or fees in addition?

Once you know about the liability, you now need to know about mitigation. Your mobile payment provider may have fraud systems in place to help you reduce risk and if they do, that’s great. But, if the liability lives with you then it’s probably a good investment of time to create your own systems and rules (and don’t wait for your first chargeback to do it).

Developing a complex risk engine isn’t simple, but one basic thing you can do is to utilize negative files. If accounts have too many chargebacks, if there is evidence of fraud or any other abuse (such as abuse of a promotion), don’t just close the customer’s account – instead, add all the information you have on that customer (name, email, account information, etc.) to a negative file and look for matches to that file when new activity occurs. Be careful, though…you don’t want to blacklist an entire IP address just because one customer who used it was bad. You also don’t want to decline John Smith just because another John Smith abused a promotion. Instead, use this data as a strong indicator of potential risk. Also, if you can, look for similarities among negative files and not just exact matches, particularly with string variables; wouldn’t it be nice if the computer could find a match between “123 Main St #1” vs. “123 Main street, apt 1”, for example?

Tip #4 – Secure your systems and your password

Okay, so we’ve all done it before but using a password of “password” or using the same password on many web sites simply isn’t secure, especially if you are the merchant. Imagine that someone was able to break into your merchant account, change the bank account to his bank account and start receiving your funds!

Select your password carefully. Don’t use a word from the dictionary, your company name, your birthday, your kids’ names or anything that could be easily guessed. Instead, choose one that’s relatively long (at least 8 characters) and that contains numbers or special characters

Keep your password safe. You might have multiple people in your business that need access to the account, but share it only on a need-to-know basis and change it often. You don’t want a disgruntled or former employee accessing or changing sensitive information for your business.

In addition, make sure you understand what security is in place when communicating with payment providers and be sure to follow their guidelines carefully. Also, make sure you keep your anti-virus software up to date and that you run regular scans of your systems. Of course, depending on your size you may not have a security expert on staff, so consider hiring a security consultant to assess your systems’ vulnerabilities of being attacked.

Tip #5 – Watch out for social engineering

Look out for (and train your employees to look out for) unusual requests, as these might be attempts to “socially engineer” you to provide information that you wouldn’t normally give out. A few examples: requests for customer data, any information related to your account or login or any sensitive information about your company (e.g., “I’m looking for the CFO”). If someone calls you and claims to be from a partner or authoritative agency then get evidence of that before you release anything sensitive.

Also, it’s important to note that these requests can come in any form. You may be familiar with spam that points you to spoof web sites but what about calls to your customer service department, SMS messages to your employees or chat applications? Bad guys are using a variety of techniques these days and some of them are quite convincing!

Summary

Keep in mind that risk management is not about having 0% fraud rates; it’s about being aware of what the risks are, tracking them regularly and carefully and taking the necessary steps to mitigate them on an ongoing basis. Don’t let your first chargeback scare you and cause you to take drastic actions such as shutting out an entire country; instead, use the scalpel approach. Also, make sure you look at all aspects of cost when evaluating your business and choosing providers to work with; don’t just look at the surface cost and payout rates but also take customer service, risk management, tools, refund rates and other “back office” functions into consideration as they could have a big impact to your bottom line.

The customer base for mobile payments is huge, really huge… over 1 billion people already, around the world. Following these tips can help you take advantage of this market for your own business.

Martine brings over fifteen years of experience creating and leading risk management, fraud prevention, and analytics for payments leaders across the web. Prior to Boku, she spent over five years at PayPal and eBay, where she managed the team responsible for proactive detection of fraud, credit risk and policy compliance. She joined Amazon.com in 1999 as part of the Accept.com acquisition and thereafter was an instrumental player in the design and development of Amazon’s risk detection engine, covering payments for both the company’s retail site and its payments platform.

It looks like Blizzard Entertainment, one half of the gargantuan Activision-Blizzard, has officially taken the plunge into the virtual goods market. Despite having well over 11 million users worldwide for its epidemically contagious MMO, World of Warcraft, this big fish is hardly unaware of the booming virtual goods market. As such, the overseers of Azeroth have officially opened the World of Warcraft Pet Store.

For five years now, players have grinded experience to reach the maximum levels of power, but no matter how many times level caps are raised, no matter how many bosses fall, and no matter how many times lunch gets skipped, millions fall in love with the collection of the simplest of features: the collection of non-combat vanity pets. That’s right, whether you prefer epic dungeons or bloodthirsty player vs. player combat, virtually every user has at least some of these, and thus the Pet Store has come to be.

Currently, there are only two pets available (with more likely to come soon), the “Pandaren Monk” and “Lil’ K.T.”The Monk is, very literally, a “Kung-Fu Panda,” touting Chinese garments, a gourd of brew, some very fancy kung-fu moves, and ab excellent sense of courtesy, bowing to anyone that bows to him first. K.T., on the other hand, is a miniaturized, and significantly cuter, version of the most recent expansion’s (Wrath of the Lich King) first major bosses: The lich, Kel’Thuzad. In league with its lich powers, this pet randomly freezes those nasty level one squirrels and mice all while belting a diabolical laugh.

Each mini-pet costs $10 and is actually bound to a player’s World of Warcraft license. Players are given an in-game pet key, and it will apply to all characters on that account regardless of faction (Horde or Alliance), server, or even existence, meaning that any character you create in the future will also have access to this pet.

Curiously enough, it looks like the pet sales will be going to a good cause as well. Between now and December 31, 2009, half of all proceeds made through Pandaren Monk purchases will be donated to the Make-a-Wish Foundation. According to the copy, this is to “further [demonstrate] his benevolent nature.”

Likely, this is only the first step for Blizzard (and not merely in regards to adding more pets). For a long time now, the company has skirted around whether or not its upcoming rendition of Battle.net would support virtual goods, saying that they were not going to “rule anything out.” Furthermore, the company has suggested it would emulate, at least to some degree, Xbox Live’s Avatar Marketplace. We’ll see what comes next.

Gravity Bear, the latest social gaming startup, is not shy about its objective: To take on the big three developers, Playfish, Zynga, and Playdom and carve out a piece of the social space that is projected to be worth over $1 billion for 2009.

The California-based company is founded by Phil Shenk, the co-founder and Art Director of the former Flagship Studios. However, he is perhaps best known as one of the lead artists for the ever popular Diablo 2 from Blizzard Entertainment. After Blizzard, he was Studio Director for Wild Tangent where he is also credited with helping big name companies such as Microsoft and Sony with the creation of online casual games.

Considering his experience, Gravity Bear is looking to focus on the latest in graphical technologies as it is applied to social networks. Nonetheless, Shenk does point out, in a brief interview with Games.com that his experience at Flagship moved him far more into a management and design realm and that it will be a combination of these two areas – top notch visuals along with with innovative and engaging design – that will give the new company an edge.

Most successful social games have simple graphics, compared to most console titles. Part of the reason for this, however, is that your average casual or social player is intimidated or uninterested by visuals seen in mainstream games. Remember, that most of these users do not consider themselves gamers, thus something that looks like a “game” may not see as much use as it deserves.

Nonetheless, that stigma feels to be slowly dissolving. Shenk, in fact, seems to be aware of this as greater numbers of Facebook titles become more sophisticated (simply compare the older Mafia Wars to newer FarmVille). To that end, Gravity Bear is looking to “push the bar higher, and provide a more compelling, more immersive experience,” Shenk tells Games.com.

Currently, the startup only has six employees and has yet to state the amount of angel funding it holds. However, Gravity Bear has already formed its first alliance, partnering with analytics company SQLstream, allowing it to bring “real-time analytics to games for social networks.”

What makes the partnership more significant, is that SQLstream is the first to actually provide this service using the ISO (International Organization for Standardization) standard SQL language. What this means, simply put, is that information transfer between products and their providers is significantly faster, and virtually real-time.

Unfortunately, beyond the SQLstream announcement, no further light has been shed on the going-ons at Gravity Bear. All the same, Shenk seems quite confident in this undertaking: “We’re just at the beginning of this industry,” he says, as players will expect better and better game quality.

Offerpal, one of the largest offer providers and virtual currency payment aggregators for social gaming companies, is announcing a new chief executive. George Garrick, a direct-response advertising veteran, is taking over from founder Anu Shukla, the Fremont-Calif. company announced today in a press release.

Offerpal lets social games, as well as other applications and sites, provide users with payment walls that let them either buy or earn virtual goods. It runs offers from a wide range of advertisers and advertising networks.

Like many of its competitors, Offerpal has been heavily criticized in recent days for running deceptive mobile quiz advertisements, and other types of offers that trick users into signing up for services they didn’t know they were signing up for. Offerpal and its competitors have recently been booting at least some perpetrator offers from its service. The severity of the ad-scam problem is not yet clear, and it is something we’re looking into.

“I have known George for a long time,” says Shukla in the press release, and “[a]fter many months of searching, I believe that George is the best CEO to scale the company to new heights. I am looking forward to working with him closely.” Shukla will retain the title of “Founder,” the company says.

The company has seen rapid growth in its two years of existence. Last week, it announced that it has reached more than 160 million users, including payments to users in 190 countries and offers in more than 80 countries. The company is likely bringing in many tens of millions of dollars in revenue, although we do not have an official public number from the company.

More on Garrick, from the press release. Most recently, he served a brief stint at the chief executive of Flash gaming service Mochi Media:

Garrick was part of the management team that took Information Resources, Inc. from $2 million to $300 million in revenue.   Garrick served in London as President-IRI Europe, launching IRI services in France, Germany, Italy, Netherlands and Turkey, and later became CEO-North America.

As CEO of Flycast Communications, Garrick repositioned the startup into the Internet’s first major direct-response advertising network leading it to a $500 million IPO and a subsequent sale for $2.3 billion. As Chairman and CEO of PlaceWare Inc., Garrick guided the company to an acquisition by Microsoft for $200 million.   More recently, Garrick has served as CEO of Wine.com, Jingle Networks and Mochi Media.

[The following is a guest post by Eric von Coelln, a social game consultant who occasionally contributes articles for Inside Social Games. Last week, he looked at how the number of daily active users correlate with the amount of money that a social game can make. This week, he looks at some ways that big social games try to keep their daily active user rates up.]

One of the more interesting applications of the social game “sticky factor” that I introduced last week is the ability to look at the life cycle of some of the most popular games and identify some of the key feature roll-outs that greatly increased engagement. The sticky factor is simply the daily active users (DAUs) of an application divided by monthly active users (MAUs).

Let’s take a look at two of the largest games on Facebook, by DAUs, that have been around over three months and also have a pretty accessible view of product feature launches: FarmVille and Mafia Wars, both from Zynga.

First, it’s critical when looking at the data to not really pay too much attention to the first thirty days of data, especially when trying to compare different games: By definition the MAU requires a month’s worth of data. Also note that because of the growth in Facebook, an application launched in September of 2009 is going to be exposed to a lot more users more quickly than an application launched a year, or even six months earlier. So you can see after launch that the sticky factor had dropped down to around 32% one month after launch (July 21st). Over the following month, you can also see that FarmVille increased its sticky factor to somewhere between 37-38%. Let’s take a look at some of the main features launched in the game that might have impacted engagement:

• On July 24th, Zynga launched its 2nd expansion of the farm (the amount of land you can plow, harvest and decorate) but this seemed to have little impact.
• On August 7th, Zynga launched in-game achievements, with the ability to send a notice to your friends once you had earned the white, red, blue or yellow ribbon.
• On August 18th, The sticky factor was at 37% and Zynga then launched tractors to help make game play a little less tedious on those larger farms

Of these three game feature releases, it would seem that achievements had the biggest impact. And of course achievements generally increase how viral a game is, helping to bring in new users into the fold.

For Mafia Wars, I don’t have reliable launch data prior to March of 2009, so I can’t pinpoint what helped increase the sticky factor from late December 2008’s low point, but we can pinpoint a couple other key feature launches:

• March 26th: Gifting of items is launched, allowing users to send useful in-game items to their “mafia” of friends, greatly increasing re-engagement and driving new users. FarmVille launched with gifting from the beginning, so we couldn’t see it in that comparison
• April 30th: Achievements are launched, again seeing an increase much like we did with the earlier FarmVille example
• The broad releases of the Cuba expansion (June 11), new Cuba achievements (June 18) and a daily lottery ticket (June 25) may have helped contribute a bit to the increase in the sticky factor to nearly 30% over the Fourth of July weekend, but that also may be due to the fact that during that weekend Zynga launched special loot that could only be earned by engaging with the game over that holiday weekend. This looks like it was a huge boost to re-engaging users and has been repeated nearly monthly (the next red dot was Labor Day weekend’s Loot event)
• The launch of the Moscow expansion pack (September 25th) doesn’t appear to have had as much impact, and that may be because these expansion packs are focused as drains on some of the highest level users who are already extremely active.

There is no question that achievements and “gifting” have been enormous engines driving viral growth and re-engagement – the sticky factor analysis lets you visualize the actual impact on engagement those tactics bring and can be used as a benchmark for measuring the impact of future initiatives.

Does a More Viral Game Mask the True Sticky Factor?

One criticism of the sticky factor is that it can be greatly influenced based on how viral a game is – that the influx of new users skew the DAU number. That’s definitely true during the first 30 days (as mentioned in the FarmVille example above) or where there is a large promotion (huge ad buy or a cross promotion from another large game that drives a spike in new users), but after that I think this is somewhat mitigated by the fact that with a rolling 30 day MAU you are not going to see huge swings.

Ultimately, the sticky factor is an approximation of churn – the secret sauce that helps you understand your customer lifetime value and maximize revenues. As a developer, you’d have access to much more granular churn rates with an understanding of the differences of newbies you are acquiring virally and those that have been with you a number of months. Plus DAU really looks at JUST daily usage, where you may find quite a profitable experience with users that play every other day – to that point Playfish’s vice president of product, John Earner, mentioned at the Virtual Goods Conference on Friday that 50% of the users who ever played Pet Society are active each month, and that’s 65% for Restaurant City.

Still, I wanted to look at the impact of a game’s viral rate to drive new users, to see how much that can impact the sticky factor.

As an example, last week I mentioned that it looked like a 15% sticky factor was the breaking point for a game’s success. I took a pretty straight forward model assuming steady viral growth rates (e.g. of the users you have on the service x% will post something or invite a friend that induces another user to join the game) and a steady churn rate (you lose y% of your total users every day through attrition). These are the sticky factor curves based on a core churn rate and a viral rate.

When you have a churn rate of 10%, you easily reach that break-away velocity (the 15% sticky factor), regardless of the viral ability of the game. But as your churn rate increases, you need increasingly more viral pull to reach that 15% sticky factor:

• With a 12% churn, you need a 5.9% viral rate (1 in every 17 users bringing in someone new)
• With a 15% churn, you need a 13.4% viral rate (1 in every 7.5 users)
• With a 20% churn, you need a 23.9% viral rate (1 in every 4.2 users)

Generally, for every 1% increase in churn above 10%, you need a 2.3% increase in the game’s viral rate.

Again, this is a very simplistic analysis but I think it shows that while a game that is more viral can help mitigate churn, when that churn rate gets above 12%, it will take a great deal more viral growth to make it sticky enough to sustain that level of Stickiness.

Is the Facebook News Feed Change Impacting the Sticky Factor and Exposing Churn?

As I noted above, some of the big gains in the sticky factor for Mafia Wars came from gifting and achievements – two tactics that post to a user’s wall and would get replicated across their friend’s news feed prior to the recent changes to the Facebook news feed. Now that the changes have been in force for two weeks (and developers are exploring tactics to get these valuable cross-promotion and re-engagement tools back), what are we seeing?

It’s only been ten days since the change and there is a lot of noise in the data, but roughly:

• FarmVille and Mafia Wars actually look like they are up since the change, but there were a great deal of Halloween promotions (specifically limited item drops and Halloween design contests in Mafia Wars and FarmVille respectively) during the last week that may have temporarily re-engaged users.
• Newer games (Café World and Roller Coaster Kingdom) are still coming off their launch highs and hadn’t found a stable sticky factor prior to the news feed change, so it’s hard to attribute the declines solely to the news feed at this point.
• YoVille had been on a decline in its sticky factor prior to the news feed change and appears to have stayed on a similar trend since the change, so again, hard to attribute it solely to the news feed changes.
• Texas Hold ‘Em had a fairly consistent sticky factor prior to the change and appears to definitely be feeling the impact of the change, trailing off in the last week.

At this point, the sample size is too small to really tell if the news feed changes have had an impact. Because viral tactics do support re-engagement, I would expect that higher churning games will see their sticky factors decline at a slightly faster rate over the weeks ahead. Until then, we can continue to look at the sticky factor as a strong indicator of user engagement and as a metric to measure the impact of initiatives on moving the engagement rate.

Eric von Coelln was the vice president of marketing at Oberon Media, a leading multi-platform casual games company, and most recently the vice president of Marketing at PowerSoccer.com. He is now a New York based freelance consultant to games, e-commerce and social media companies — including some of the largest social gaming companies on Facebook. While Mr. von Coelln does write about some companies for which he has done paid consulting from time to time, this post is based on publicly available information and in our view is an unbiased analysis of the industry. You can find his blog here.

Since 1993, global games publisher and developer Merscom has created a myriad of casual games such as Blood Ties, Lost City of Z, and Righteous Kill, but announced Tuesday that they are looking for more. In light of the successes of social games in the past months, the company is looking to expand its development portfolio and break into the social gaming scene.

“With tens of millions of monthly users of social networking games like FarmVille, Mafia Wars, and Sorority Life, it is evident that social users are ready for and receptive to game content,” said Lloyd Melnick, the chief customer officer of Merscom.

In order to make their way into these uncharted waters, Merscom has named entrepreneur Greg Pool as its Executive Vice President (EVP) of Social Media. With his most recent experience involved with the Piedmont Angel Network, Pool is also said to have self published “one of the first commercial Facebook games and built, published, and sold an MMO with over four hundred thousand players.” Unfortunately, due to existing non-disclosure agreements, any further details could not be shared.

Beyond Pool, Merscom is well equipped to make this move. Not only does the company claim to have quality game analytics tools, but it also holds a number past experiences building games for CBS, Starz, Showtime, Lifetime, and other media companies. In addition to this vast repertoire of past partners and clients, Merscom also says that it was the first companies to incorporate existing intellectual properties from some of these networks into casual games. In fact, some of these IPs have all ready been approved for use within the company’s social endeavors, including a National Geographic RPG, a title based on The Tudors, and four other non-disclosed properties.

Currently, the casual creator has eight Facebook/social media games in development with release dates scheduled for the end of 2009 and early 2010. Furthermore, Merscom has stated that it has established relationships with five of the largest offer providers in North America and two in Europe. Apparently, they have also lined up two direct pay companies, U.S. and European mobile payment providers, and a “leading” analytics firm. However, this is all based on the company’s word, as the details and names have yet to be released.

Last week, European social network Netlog announced a new design intended to appeal to a younger audience. However, this online community site of well over 56 million total members felt there was more to be done than simply sporting a new look. To this end, the company also said it plans to launch a gaming sub-site by the name of Gatcha!, which, officially, is “dedicated to bringing social gaming to a massive audience, across languages, social networks, and devices.”

Since many are likely to be unfamiliar with Netlog, it is best described, by co-founder and CEO, Lorenze Bogaert, as an “open, profile-centric community.” Emphasis is also placed on the fact that Netlog is not a “standard ‘friends network.’” Truth be told, the site, especially after its redesign (which is currently in closed beta), feels a lot like MySpace. The audience is young, mostly between the ages of 13 and 24.

Despite the emulated feel, the new redesign puts great stress on the appearance of relevant content within the site’s new Homepage. This includes movies, pictures, games, and so on; all of which are localized for the user. Furthermore, the network’s chat system has also been revamped, allowing users to chat with not only those from within their friend’s list, but also those with the same age, location, or interests.

The new profile pages now offer analytics, of sorts, to their owners, allowing them to see to see just how many people visit them and how they arrived. Furthermore, all the tools for profile customization and its management are now located directly on the profile itself.

What about games?

“By socializing games, we find a new way for our members to communicate.” Says Toon Coppens, co-founder and CTO of Netlog. “Introducing new games, and encouraging users to start challenging each other in the community offers a common ground for a new dialogue.”

Beyond the visible success of networks like Facebook, Netlog itself discovered this potential first-hand as it boasts an average of 2 million game plays per day. Frankly, it is one of their fastest growing application types.

Gatcha! is actually a distribution platform that is a game in and of itself.  Described by the company as a “large MMO” (massively multiplayer online), it’s made up of smaller, 3rd party titles (hence the distribution concept). In Gatcha!, players will both earn levels and compete through global rankings by winning in the various apps peppered throughout the platform/MMO. This core feature is further enhanced  by the fact that Gatcha! can and will be integrated into other social networks such as Facebook, MySpace, and hi5.

Currently, the new Netlog is in closed beta, but can be accessed here.

MySpace is the most significant platform for social gaming besides Facebook, and the News Corp. company has just announced that it will add new language to its terms of use later this week that specifically prohibit “promotions that include hidden renewals without specific opt-in” features.

From the company’s statement today:

Principles and policies are nothing without action and we will continue to enforce our Terms of Use to put our users first.  If we find or are notified of violations of our Terms of Use we will contact the application developer and require that they modify their practices and adhere to our Terms.  If we do not receive a prompt and appropriate response we will, as we have in the past, remove the offending application from the MySpace platform.

What MySpace appears to be specifically targeting are the mobile quiz ads that have been included by many offer companies within offer walls inside of social games. As we reviewed months ago, these sorts of ads have kept popping up in within third-party advertising networks in social games on Facebook and MySpace (in fact, you’ll also sometimes see them in ad networks run by companies like Yahoo and Google).

Whether through an offer or another form of advertising, these ads eventually take users to an off-site landing page, where terms of the a mobile subscription are hidden by such mechanisms as making the terms the same color as the background page, or by slightly alternating the interface within a series of windows (see screenshots to observe the latter).

The user may think they’re entering their cell phone number to get the results of an IQ quiz or something, but in fact they’re signing up for an expensive subscription that will be billed to their phone account until they realize it and cancel it.

MySpace, like Facebook, already has policies against this sort of deceitful practice. But it is clarifying that no ad offers can run within social games or other apps that require a user to opt out of such a subscription, instead of explicitly asking them to opt in.

While these companies have been policing deceptive ads for months, enforcement efforts have picked up as evidence of these scams has been more heavily covered in the media in recent days. We still don’t know for certain the extent to which these scams have been running, but there have clearly been problems. Facebook, for example, issued some new policies in July, but increased enforcement last week, issuing social gaming companies and offer companies even sterner reminders of policies against deceptive ad practices. Since last week, these companies have been removing many of the mobile quiz ads, and other offenders. If social gaming and offer companies on MySpace haven’t already taken similar action already, then MySpace itself soon will.

[Images via VentureBeat]

EBay’s leading payment company, PayPal, is hosting a multi-day developer conference in San Francisco, called “PayPal X.” Direct payments for virtual currencies are the main ways that most social games make money, and PayPal is the single largest payment provider — eBay knows this, and it has been improving PayPal’s features to make it more relevant to today’s online payments environments.

The goal is to “to disrupt ourselves before others disrupted,” as eBay chief executive John Donahoe said on stage today, referencing the many other types of direct payments services currently competing, from Amazon’s Payments service to mobile payment services like B0ku and Zong. Specifically, PayPal is making it possible for developers to let users create accounts and buy virtual items from within applications, instead of having to go through a multi-screen checkout process.

Called the Adaptive Payments API (Application Programming Interface), some details have already been out for month. Here are the new ones, from the company:

Currency conversion: Automatically converts currencies using current exchange rates.

Pay Anyone: Banks and other financial institutions can let customers send money, if they are already logged in to their bank accounts. These customers won’t need a PayPal account to use the service.

Pre-approvals: Enables developers to create reusable payments agreements between buyers and sellers. While payment approval happens online, the actual money movement can occur offline at different intervals, and through multiple devices that are not necessarily Internet-connected at the time.

The following Adaptive Payments API features have already been in live testing, but now they’re fully available:

Send Money: Developers can build person-to-person (P2P) solutions or business-to-business (B2B) payment applications on their platform of choice – whether it’s the mobile phone or a social networking site.

Chained Payments: Developers can take a cut or distribute funds from PayPal payments as they happen.

Parallel payments: Developers can enable buyers to send money to several people in one payment, which is ideal for purchasing multiple items from different sellers, or even for payroll applications.

Some other new features are now available, that may be of interest to social game creators. Developers can let customers create PayPal accounts from within their applications. The company’s “micropayments” pricing, intended for transactions under $10, is “5 percent plus 5 cents” and Paypal “will soon extend its free P2P pricing to developer applications.”

Also planned — for the first half of next year — is a form of mobile payment where a developer can add PayPal code to create a checkout button, without collecting financial information from the user.

PayPal told the Financial Times that the additional activity from applications on Facebook, the iPhone, Twitter and other new developer platforms, could double its current $60 billion in payments volume and $2.4 billion in revenue, possibly reaching $120bn in volume and $5bn in revenue by 2011.

You can watch more sessions from the conference, here.