Under Mauro, Langhorne’s Entertainment Games looks to social and mobile and away from retail channel

This summer, Langhorne’s Entertainment Games, Inc., a publicly traded company, announced that it had acquired Heyday Games, a social networking-focused gaming company.

Since June, we’ve watched as Entertainment Games has managed to quickly change its focus from the retail sales channel — essentially, getting gaming titles in the big box chains — to social networking focuses made famous by companies like Zynga, known for its FarmVille Facebook title.

This fall, the company launched Retro World, a series of Facebook games that hopes to tap into the increasing demographic of baby boomers landing on the social network. By acquiring rights to media that feature famous stars of the past, like Marilyn Monroe and Dick Clark, the company is hoping to create through Retro World a gaming experience that is a trip of nostalgia for the demographic.

So far, it seems to have been a success. In media alone, the company enjoyed a round of coverage from publications like VentureBeat, Inquirer, NBC10, CBS3, Games.com, Reuters, and The Hollywood Reporter, among others.

In the acquisition, Entertainment Games brought on much of Heyday’s management team, including Gene Mauro, who joined on as the company’s new President and Chief Operating Officer.

Mauro, who works from Connecticut, but bounces between that location and Entertainment Games’ locations in Los Angeles and its headquarters in Philadelphia, has been in the game business for close to two decades.

He says he had history with Entertainment Games as an outside director, a friend of the board since 2005. But because the retail sales channel has been in decline, he says, his task coming onboard to the company was to think about strategy and growth and how Entertainment Games could make an aggressive play in the emerging channels of social gaming and mobile.

Mauro says that adoption of Retro World has been strong, with over 30,000 active monthly users.

After the jump, we caught up with Mauro to hear about the acquisition, its new Facebook title Retro World, and the company’s new direction.

What have you been up to through the years?

In 2004, I founded Myelin Media out of Manhattan with Carl Icahn, a gaming company that worked on PC, console and handheld games. We had good successes. I was really curious and really following trends around social networks. MySpace was doing well and in 2006, I joined a small startup on the West Coast called Bunchball. We created web tools licensed by media companies to make their web sites more sticky, to almost feel like they play like games. In 2006, I ran marketing and business development for GamerDNA Inc., which we sold to Crispy Gamer.

Tell us about Heyday. What was the company’s interest in being acquired?

I also worked on PopTropica, which was engaged in story-driven experiences for kids ages six to 12. I saw that there was an amazing marketing blowing up in the 40+ demographic and thought, ‘if we apply popular game mechanics to an older demographic, how might that come together?’ That was the genesis of Heyday. We spent the first six months working on game designs and rather than fund Heyday with venture capital, we liked that Entertainment Games was a small public company, heavily discounted. We knew that we could launch a public product and create a lot of shareholder value.

Tell us about Retro World—

Retro World seeks to take two-dimensional images from the 50s, 60s, 70s, and 80s, and bring them to life in an animated approach that looks a lot like multi-planing, where two dimensional images can move behind each other to create sense of fluidity. We write stories that play like interactive TV episodes.

We’re trying to take on the popularity of social games. Right now we’re playing games that feel like Saturday morning cartoon [like Farmville, others]. Instead, what if we show [boomers] a style that’s designed to appeal to their sense of sophistication or past experiences. We’re trying to weave the fabric of these past decades in a way that rings familiar to the consumer.

How have you measured success since launch?

We’re seeing our monthly active users continue to come up and to the right everyday. We haven’t had a non-growth day yet. Right now, we’re coming up on over 30,000 monthly active users. That’s a number we’re excited about because we havent marketed or advertised at all, and we don’t plan to do that until we get more features and content in the product.

We’re measuring success based on returning daily active users. That’s number one that’s important to us. Our core concentration is making sure that of that population, we have returning users with same level of frequency. We’re adding more episodes and opening “arcades,” where users can go in and play not just point-and-click-games, but also play standalone arcade games.

What is the revenue model?

Our revenue primarily comes through the sale of virtual items. You can earn ‘Retrobucks,’ but if you run out you can use a credit card to purchase more. Virtual items are avatars, functionality within the game, furniture for your room, items to build up your car. That’s the majority of revenue. That’s not unique to us: $3.5 billion in U.S. dollars was generated through the sale of virtual items this year alone and is projected to grow to $5 billion.

We also draw revenue from premium sponsorships and as audience scales up, we’ll monetize through subscriptions.

How many people work for the company and where are they?

We’re now up to around 23 people, and we’re hiring. It requires engineering talent to keep that pipeline. Engineering is coming out of Boston where there is a very strong engineering culture. We’re able to recruit out of schools like MIT and Northeastern. So much of what we do is very specialized in animation and writing. We also have a series of contractors, designers, artists in Los Angeles. Langhorne [where Entertainment Games was founded] is our admin and HR office that keep the machine running.

What’s next for the company?

Social and mobile really is the future. You’re seeing that reflected in sales of console and PC titles: it’s not growing at the rate that social and mobile are. Far more people are playing mobile than ever have been in the traditional PC and console world, who would never have considered themselves gamers.

The economics of the traditional game market doesn’t make as much sense. It’s much more compelling to have direct access to consumer, as opposed to working with a value chain that distances you from consumer. Walmart, Best Buy: this is where market started, but you have to print a disk, get it in the box, work with distribution. There are lots of pieces that erode margin and increase risk.

We still have legacy business. We’re still selling games at Target and Walmart, because they are still throwing off revenues . But my expectation is that numbers will continue to decline and we will continue to transition our focus and attention on growth verticals.

Do you think you’re bringing that social and mobile disruption to Entertainment Games?

I wouldn’t say it’s a function of disruption. We had enough discussion to know who each other was. I know how the business was being run and where opportunities are. It was an optimization adjustment rather than disruption. Helping the company to acknowledge the change and shifts away from retail and more aggressively toward social and mobile.