Digital Media

Electronic Arts has closed the door on its game developer unit Pandemic Studios.

EA shut down Pandemic as a separate unit on Tuesday, laying off 200 employees, according to published reports, but moving a small core team to EA's Los Angeles headquarters. Those exiting include Pandemic's two founders, Andrew Goldman and Josh Resnick.

An Electronic Arts spokesperson confirmed the news to CNET, but called it a consolidation rather than a closing, saying that the company merged Pandemic with EA's nearby LA campus. The core team of developers integrated into EA will continue to work on Pandemic properties.

An internal memo by EA Games Label Senior Vice President Nick Earl also confirmed the closing, as reported by the Web site Kotaku.

"I want to make it clear that the Pandemic brand and franchises will live on," wrote Earl in the memo. "In the months ahead, we will announce plans for new games based on Pandemic franchises. This type of change can be difficult. But the situation calls for us to act decisively, to take control of our destiny and to run a stronger, more focused development operation. That's how we will continue to make great games in our LA studios."

The EA spokesperson also confirmed that the Pandemic brand and franchise are still alive and well, and that EA is still very committed to it.

Started in 1998, Pandemic Studios was later bought by Electronic Arts in 2007 as part of a deal for which EA paid $860 million for both Pandemic and Bioware. Pandemic is behind the design of many popular titles, including Star Wars: Battlefront, Mercenaries, and Full Spectrum Warrior. The studio's most recent game for EA, The Saboteur, will hit stores next month.

On the plus side, Bioware seems in little danger of closing. With its slew of blockbuster games, such as Mass Effect and Dragon Age: Origins (which triggered more than a million downloads of premium content in its initial week), Bioware has proved to be one of EA's more successful studio purchases.

Hit by weak game sales, EA has been hurting since last year when it warned that 2009 would be a tough one. The company said at the time that it would need to cut staff, trim product lines, and close studios. EA initially announced job cuts of 10 percent of its workforce, then later revised that to 11 percent. In January, EA also jettisoned Pandemic's studio in Brisbane, Australia.

Electronic Arts has indeed struggled this fiscal year, announcing higher losses and lower sales for its first quarter and again for the second quarter, ended September 30.

The continued downturn forced the company earlier this month to announce additional job cuts of 1,500 employees beyond the initial 11 percent. With the layoffs scheduled to occur by March of next year, the game maker hopes its actions will trim annual expenses by at least $100 million.

"Laying off employees and closing facilities is never pleasant--we have a lot of compassion for those impacted--but these cuts are essential for transforming our company," said EA CEO John Riccitiello in an earnings call following the announcement of the cuts.

While it's waiting to be gobbled up by Google, AdMob isn't sitting still.

The mobile ad company announced Tuesday that it will deliver interactive video ads to the iPhone and iPod Touch devices. The ads, set to run this week, will let iPhone users surf the Web and check out other videos while the video ad is playing. AdMob believes advertisers and developers will take advantage of the video format by serving up interactive ads designed to pull in consumers.

"AdMob's new Interactive Video Ad Unit brings together consumers' love of watching videos on their mobile device with advertisers' goal of providing an interactive, social experience for consumers," said AdMob Founder and CEO Omar Hamoui in a statement. "We are excited to create new ways for advertisers to engage with consumers on their mobile devices and for the developers behind the most popular and engaging iPhone applications to effectively monetize."

The video ads will automatically pop up as iPhone users access certain content and applications. The ads will also offer a video player so that people can control and interact with them. To make sure the ads run at a decent clip, AdMob uses a network of distributed servers to push them out. Each video is saved in different file sizes, with the most appropriate one streamed based on the connection type, such as 3G or Wi-Fi.

AdMob is one of the top advertising providers for the handheld and portable device market, a position that convinced Google to cough up $750 million in stock to buy out the company. With its multimedia capabilities and huge market share, the iPhone has proven a fertile ground for video ads, with the first ones popping up in early 2008 and growing since then.

Woo wee, did Hulu's fortunes flip-flop fast.

Jason Kilar, Hulu CEO

(Credit: Greg Sandoval/CNET Networks)

The Web's deepest stockpile of full-length TV shows and feature films is seeing some very public infighting over its future. The disagreements are over how Hulu should generate revenue and even how to sell ads, according to a report in Mediaweek.

Things were going so well. Since Hulu's October 2007 launch, the Web video site founded by NBC Universal and News Corp., has grown its audience, generated big ad revenue, and been bathed in positive press.

Hulu has mounted the only serious challenge to YouTube. The site also enables its TV network backers to offer viewers an alternative to pirate sites. But the indications are Hollywood is dismayed over Hulu's earnings. On the issue of Web revenue, the studios seem to be saying: "Is that all there is?"

The first signs that Hulu may not be the cash cow that everyone involved had hoped for came earlier this year. Instead of ballyhooing the selling out of ad inventory like it had done a year earlier, Hulu's managers hushed up.

Then, NBC Universal CEO Jeff Zucker and News Corp. Chairman Rupert Murdoch said publicly that Hulu may charge for some content. In an interview with Dow Jones last week, News Corp. COO Chase Carey said it's important that Hulu have "a real subscription aspect," but added some content will always be free.

Want to bet that the content you'll have to buy will be the latest and most popular TV shows and films?

Hulu's management is wrestling with these issues at a time when the public increasingly develops an appetite for high-quality Web video.

The number of U.S. households with broadband access that watched full-length movies and TV shows online doubled in the past year, according to research firm, Parks Associates. According to the firm, 45 million households regularly watch either TV shows or films via the Internet.

Jayant Dasari, a research analyst at Parks, said people like the control that sites like Hulu give them. If they miss a favorite TV show, they can get caught up on Hulu.

"If they're on the road or don't have access to a (Digital Video Recorder) they are more than willing to consider the option of broadband video," Dasari said. "This is a trend that can no longer be ignored."

(Credit: Greg Sandoval/CNET Networks )

Dasari said Web video's growth is being stifled by the lack of content available at Hulu and other sites. For example, there are only a handful of feature films available at Hulu. Crackle.com, Sony Pictures' Web service, only posts a fraction of its vast library of films on the Internet, but there's not another studio even offering that.

So what? What does it mean if the studios hobble Hulu? Consumers have watched TV for over half a century. They can still go back there. Right?

Big Champagne CEO Eric Garland, whose company tracks traffic on peer-to-peer sites--where most illegal file sharing occurs--told me recently that consumers are heading online for video entertainment and he doesn't expect them to return to their traditional viewing habits ever again. Garland's data shows that Hulu is the first legal Web service to snatch market share away from the pirate sites.

He also said that the lords of video, with their rejection of Internet businesses, are behaving much the same way the music industry did when confronted by the digital age. If network and film studio executives are dissatisfied with the returns they see from Hulu and similar sites, they should consider the possibility that this is all the new media landscape will yield, Garland said.

Cisco Systems has bumped up its buyout offer to $3.41 billion for video conferencing company Tandberg.

The network giant's initial bid received a thumbs down from most of Tandberg's shareholders, who felt the initial $3 billion offer undervalued the company.

So far, more than 40 percent of Tandberg's stockholders, which includes investment firm OppenheimerFunds and Norwegian government pension fund Folketrygdfondet, have pre-accepted the new offer.

Cisco announced on October 1 that it was pursuing a $3 billion cash takeover of Tandberg, a major global supplier of video conferencing equipment with dual headquarters in Oslo, Norway, and New York City.

Increasingly important to companies looking to cut travel costs, teleconferencing is considered a growth industry. Cisco wants a bigger piece of that pie, and analysts didn't expect it to give up on Tandberg too easily.

The new bid expires December 1. Cisco said that if the bid isn't accepted by that deadline, it will withdraw the bid and look at other ways to expand its reach in the video conferencing market.

Cisco has been on a tear lately buying smaller niche companies, taking over a few firms earlier in the year and recently announcing plans to gobble up security software firm ScanSafe and wireless equipment maker Starent Networks.

Microsoft said on Tuesday that it is merging its video search efforts with its MSN Video site into a new page that will bear the Bing moniker.

Bing Video, Microsoft said, will serve as a site for watching everything from viral videos to full-length TV shows and video, drawing on content deals with sites such as Hulu, CBS, MySpace, DailyMotion, and YouTube.

The new Bing Video page replaces MSN Video and includes both video search as well as content from sites such as Hulu and CBS.

(Credit: Microsoft)

Microsoft notes that video is now a mainstay of the redesigned MSN home page and says MSN will continue to create original programming, such as its "Last Night on TV" effort.

The branding remains a challenge though, as evidenced by a video from Microsoft's Rob Bennett talking about the changes. The video, embedded below, features a "view more on MSN Video" link that, when clicked on, takes a user to the new Bing Video site.

The new Bing Video page is part of a series of changes Microsoft is making as part of a fall refresh of its search site. Earlier on Tuesday, Microsoft made some enhancements to Bing Maps, including the ability to use the mouse to alter a suggested route and have one's directions re-calculated.

The company said to expect more announcements later this week.

Disclaimer: CNET News is published by CBS Interactive, a unit of CBS.

Video game developer Electronic Arts announced on Monday that it has acquired social-gaming company Playfish, paying $275 million in cash and $25 million in "equity-retention arrangements." Playfish also is entitled to up to $100 million if it meets performance milestones by December 31, 2011.

EA also announced later Monday that it planned to eliminate 1,500 jobs, or about 17 percent of its workforce, as part of a plan to reduce annual costs by about $100 million.

The acquisition of Playfish falls in line with EA's desire to be more than just a developer for traditional gaming platforms, like consoles and the PC. The company said in a statement that the acquisition "strengthens its focus on the transition to digital and social gaming."

Thanks to the explosive growth of social networks and games made for those platforms, Playfish is enjoying strong performance in the social-gaming space. The company has more than 150 million games installed on several platforms, including Facebook, MySpace, the iPhone, and Android-based devices. According to Playfish, more than 60 million active players per month are playing titles. Its Facebook titles include Pet Society, Restaurant City, and Country Story--all three are among the most-popular games on the social network.

The EA Interactive division, which Playfish will join, has done a fine job of capitalizing on the trend of online and mobile gaming. That division includes Pogo, one of the top casual-gaming sites on the Web. The Mobile side of EA Interactive has captured 34 percent market share in the U.S. with the help of Madden NFL 10, The Sims, and Tetris.

Updated at 10:20 p.m. with details of job cuts.

Although several artists have been depicted in music games like Guitar Hero in the past, Gwen Stefani's No Doubt is having some trouble with its own likeness in the newly released Band Hero game from Activision.

According to a court filing obtained by the Los Angeles Times, the band sued Activision over a feature in the title that provides gamers with the opportunity to have band members perform another artist's songs.

The lawsuit specifically takes issue with the ability for gamers to have No Doubt lead singer Gwen Stefani perform the Rolling Stones' Honky Tonk Women. The suit claims that it "results in an unauthorized performance by the Gwen Stefani avatar in a male voice boasting about having sex with prostitutes," the LA Times is reporting, citing documents filed in the Los Angeles Superior Court on Wednesday. The suit also claims that No Doubt objected to the "Character Manipulation Feature," but Activision refused to remove it.

For its part, Activision says that it's not at fault. The company wrote in a statement cited in several publications, that it has a "written agreement" with No Doubt that justifies the use of its likeness in various features in the game.

"Activision has a written agreement to use No Doubt in Band Hero--an agreement signed by No Doubt after extensive negotiations with its representatives, who collectively have decades of experience in the entertainment industry," the company said in a statement. "Pursuant to that agreement, Activision worked with No Doubt and the band's management in developing Band Hero. As a result, Activision believes it is within its legal rights with respect to the use and portrayal of the band members in the game and that this lawsuit is without merit.

"Activision is exploring its own legal options with respect to No Doubt's obligations under the agreement."

No Doubt is asking for unspecified damages, as well as "a preliminary injunction and a permanent injunction against distribution of the game and for Activision to recall existing copies," the Times is reporting.

The always-impressive Boy Genius Report has gotten its hands on a copy of Verizon and Google's newest commercial for the Droid. The commercial's called Stealth, and it's rather amazing, even though it doesn't tell us much about the Motorola handset that's set to drop Friday.

Mysterious and well-shot, the commercial should start running on TV this week, according to BGR. We're guessing you'll see it first during Tuesday night's premiere of "V" on ABC, or maybe during the World Series. With something this high budget you'd expect Verizon to put it in front of as many eyes as possible. We'll be watching the skies on 11/6.

Hulu has debuted a long-requested feature--the ability to find out when new episodes of TV shows will be available to stream.

The video site, which is a joint venture of NBC, ABC, and Fox, calls the new feature Coming Soon. It went live Monday.

Hulu's new Coming Soon feature.

(Credit: Screenshot by Harrison Hoffman)

The schedule of when TV shows will be released online has been unclear up until this point, leaving people guessing when an episode will be posted. This new feature solves that problem.

The update includes a few additional features. First, people can choose to get an e-mail reminding them when an episode gets posted. This is definitely helpful for those of us who are forgetful and don't use Hulu's excellent Queue feature. Also, Hulu now lets you place the embed code for an unreleased episode on your blog or Web site. I embedded this week's upcoming episode of "The Office" below to show how this feature looks.

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