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Zynga chief executive Mark Pincus said the social game company now has more than 15 million daily active users for its mobile games, compared to 10 million during the fall.

He made the announcement during a conference call with analysts after the company’s first quarterly financial release as a public company.

Driven by the strength of games like Words With Friends, the mobile game growth will help supplement Zynga’s player base of 240 million monthly active users on Facebook. Mobile is a big strategic opportunity for Zynga, as the market for games on mobile could be much bigger in the long run.

“The world is embracing play,” Pincus said in the call. “Social gaming and, more broadly, play is becoming the new TV.”

John Schappert, chief operating officer at San Francisco-based Zynga, said that Zynga’s core strengths are its tech infrastructure, its detailed analytics, and its huge user base.

He said that 80 percent of the company’s daily active users were on Zynga’s own proprietary zCloud, or its Zynga-owned data centers, at the end of the year, compared to just 20 percent a year ago. More traffic will be transferred to the zCloud this year, which means Zynga will not use Amazon.com’s Amazon Web Services data centers as much as it has in the past. The zCloud cuts costs and makes games run reliably and fast.

Zynga’s strategy going forward is to launch new games, enhance existing games, expand into mobile, improve monetization, and expand internationally.

Its Scramble With Friends game, released in January, became a top-five brand in the Apple App Store. Daily, monthly, and monthly unique user numbers all showed growth in the fourth quarter, Schappert said.

CastleVille exceeded expectations when it launched in the fourth quarter, but Mafia Wars 2 was a disappointment. Early results from Hidden Chronicles, launched last week, are positive.

“The team has gotten a lot better at driving new-player conversion with packages and offers,” Pincus said. Dave Wehner, chief financial officer, said that the number mobile of payers is growing as well.

Reach, engagement, and monetization are the key measures of Zynga’s performance. The company’s monthly unique user numbers grew 38 percent to 153 million. Many of those users play multiple games, so the monthly active users is 240 million. FarmVille, Mafia Wars, and Poker accounted for 78 percent of revenues. The number of paying users in 2011 was 12.2 million, or about 5 percent of all players. Player conversion in the fourth quarter was 1.9 percent, up from 1.7 percent in the third quarter.

Zynga’s games are available as free-to-play titles. Users play for free but pay real money for virtual goods. A small number of users actually pay, but they buy enough virtual goods to make the entire game profitable, and Zynga is increasingly monetizing the users who don’t pay via advertising. Most of Zynga’s revenue is from virtual goods purchases, but advertising revenue tripled in the quarter. Both mobile and Facebook ad revenue grew, Wehner said. International revenue grew faster in the quarter than domestic revenue.

The company has games in 17 languages now, compared to five a year ago. Head count was 2,846 up about 92 percent from a year ago and 2 percent from the prior quarter. Zynga is still investing heavily in research and development.

Capital expenses were down in the quarter, but the company still spent money as it built out its private cloud, zCloud. Zynga has a line of credit that allows it to borrow up to $1 billion. Despite the cheery nature of the talk on the call, Zynga’s stock price continued to fall in after-hours trading, with the stock at $13.42 a share, down 6.5 percent from the close. But Zynga’s stock price on Tuesday’s regular session rose 6.95 percent.

Schappert said Zynga is still working on Project Z, which is in closed beta testing. The site is Zynga’s own social network where it will host its own games. It connects with friends on Facebook. Schappert said he hoped that Project Z could launch soon. Zynga spent $110 million on research and development in the quarter, up 139 percent. Most of that went into game development.

“The results were in line, guidance was actually very good, but the comment about it being back-end loaded caused the stock to pull back a bit,” said Michael Pachter, analyst at Wedbush Securities. “I am a little disappointed that they didn’t guide to Q1, so there will probably be continued volatility for a while.”

Wehner said on the call that the back-end-loaded 2012 is a consequence of the pipeline of games and the usual pattern of bookings during the first half of the year. Wehner said that Words With Friends is an ad-driven game with very little virtual goods purchases associated with it.

Atul Bagga, an analyst at Lazard Capital Markets, said the quarter seemed “pretty strong” with revenue and earnings per share coming in above expectations. User numbers and other metrics were also up in the quarter, so he continues to believe Zynga has a large opportunity just by growing monetization, mobile users, international revenue, and expanding to new platforms.

Schappert said, “We have a bunch of games in the hopper right now, and we will release them when they are done and when they are great.”

Netflix is in talks to launch a second original series, titled Orange is the New Black, which is a comedy about life in a women’s prison from Weeds creator Jenji Kohan, according to a Bloomberg report.

Lately, streaming services like Netflix are getting their hands dirty with creating shows rather than just streaming them. The original content is necessary to compete with premium cable channels like HBO and Showtime. Netflix dipped its toes into the original series fray last week with the debut of Lilyhammer, a Steven Van Zandt drama about a New York City mobster. Streaming competitor Hulu also recently debuted its first scripted series, called Battleground, about a fictional politician’s run for U.S. Senate.

Orange is the New Black, the second series Netflix has decided to finance, is based on amemoir by Piper Kerman, about the year she spent in a minimum-security women’s prison for drug-related charges. With that in mind, it makes sense that the show is being developed by the creator of Weeds, another comedy TV show about drugs and wily characters.

In the realm of original content, Netflix is also resurrecting the cult-hit comedy Arrested Development by financing new episodes as well as the original drama starring Kevin Spacey called “House of Cards”.

Amazon may have far fewer customers signed up for its Amazon Prime membership than analysts previously estimated.

The Prime membership costs $79 annually for Amazon customers, who in return get free two-day shipping on most items sold through the retail giant. The service is attractive to customers because shipping fees aren’t factored into individual purchases. And while Prime memberships increase the shipping costs for Amazon, research shows that Prime customers are more loyal and make more purchases. (I’ve got a stack of graphic novels that more or less proves that this is true.)

The total number of Prime memberships ranges from 3 million to 5 million since October 2011, according to a Bloomberg report that cites three anonymous sources with knowledge of the matter. If the information is true, that would mean that the company has less than half of the 10 million memberships estimated by some analysts.

Amazon was unavailable for comment about the membership numbers. (However, if the company does respond we’ll be sure to update the post.)

Amazon’s goal over the next 18 months is to increase Prime membership to the 7 – 10 million range, according to the report. One way the company plans to boost membership is though Prime’s commercial-free streaming video service. The company recently signed licensing deals with Fox, NBC, CBS, and Viacom to increase the variety of television shows available, which makes the Prime video service more competitive with Netflix and Hulu. But, Amazon clearly wants to use the streaming video service as a perk to boost Prime membership far more than it wants to compete with other video services — (making astandalone Amazon streaming video service even more unlikely).

Even if Amazon is successful in boosting Prime memberships over the next year, it’s unlikely that it’ll lessen the fears of investors who are concerned about the company’s future revenue growth.

Last month, Amazon reported revenue of $17.4 billion for Q4 2011, which was nearly $1 billion lower than Wall Street’s estimates. Not only that, but the company stayedirritatingly silent about its other big ploy to gain customer loyalty, the $199 Kindle Fire tablet. That could indicate that either sales of the device were lower than expected or purchases through the Kindle Fire didn’t reach estimates (or both).

If you combine the slow Prime membership growth and Kindle Fire data silence with the recent rumors that Amazon is plotting to open up brick-and-mortar retail stores across the country, it’s no wonder investors are worried about the company’s future revenue.

Path got caught red-handed uploading users’ address books to its servers and had to apologize. But the relatively obscure journaling app is not alone. In fact, Path was crucified for a practice that has become an unspoken industry standard.

Facebook, Twitter, Instagram, Foursquare, Foodspotting, Yelp, and Gowalla are among a smattering of iOS applications that have been sending the actual names, email addresses and/or phone numbers from your device’s internal address book to their servers, VentureBeat has learned. Several do so without first asking permission, and Instagram and Foursquare only added permissions prompts after the Path flare-up.

Some of these companies deny storing the personal data, as Path was doing, but the transmission alone makes the private data susceptible to would-be intercepters.

Perhaps most concerning, however, is that these app makers could mask the real names, phone numbers, and email addresses during the transmission process, protecting your privacy in the process, but choose not to.

VentureBeat, employing a traffic-monitoring utility called mitmproxy to observe the data flowing between apps and the internet, discovered that many iOS applications upload personally-identifiable information to their servers.

Path steps on a privacy landmine

Last week, Path iPhone app users were surprised (and quite disgruntled) to learn that the innards of their address books — contacts’ email addresses and phone numbers — had been uploaded to and stored on Path’s servers. After a public outcry, Path immediately amended its practice to request user permission, and deleted its records.

But the larger issue of how iOS application makers access, transmit, and store address book data from iOS devices is one that refuses to be swept under the rug. And rightfully so. This is your address book we’re talking about, arguably the most private of all entities. It’s the digital repository of the personal and professional relationships you’ve amassed in your lifetime, and a simple click of a button could expose those relationships to strangers with malicious intents. Also, as many have pointed out, much of the data in your address book belongs to other people (their cell phone numbers, for instance), and has been entrusted to you with the understanding that you will keep it private.

These same relationships are the building blocks for any successful social application. For years, developers have understood that if they give you an easy way to find your friends already using their applications, then you won’t have such a lonely experience and you might continue to use their apps. So, many of the applications you know, love, and use on a daily basis have a “find friends” feature that scans your address book to find your contacts already using their services.

That act in and of itself is a boon to your overall experience, but many developers are employing a shortcut that puts your private contact data at risk.

In order to find connections, app makers are going into your address book, gathering up either phone numbers or email addresses (or both) and uploading that data in its original state. In the best cases, they use an encrypted HTTPS connection to upload the data to their servers, but that’s not a given. Their servers then use the address book data to determine contact matches. In many cases, the data is discarded immediately thereafter.

Facebook, Twitter, Foursquare, Instagram Foodspotting, Yelp, and Gowalla all upload either your contacts’ phone numbers or email addresses to their servers for matching purposes. Some of these applications perform this action without first requesting permission or informing you how they long they plan to store this data. Foodspotting is the worst of the bunch, as it appears to transmit your data over an unencrypted HTTP connection (in plain text), making it even easier for mischievous parties to intercept.

A Foodspotting spokesperson said the company does not store the data it collects. “With the many concerns we’ve read about in recent press blogs, we’ve added additional security measures that will be out with our next update,” the rep said.

Unencrypted address book data. Data blurred out at the bottom is a list of email addresses in plain text.

Facebook does upload your address book and stores your contacts, but it is also forthcoming about its process. The company has always employed a permissions flow for the “Find Friends” feature that prompts the application user with this message: “Facebook will store imported contacts on your behalf and may use them to generate friend suggestions for you and others.”

Twitter’s position is a bit more ambiguous. “We do not automatically upload contacts,” a Twitter representative explained to VentureBeat. But the “Find Friends” feature, located in the Discover tab of the iOS application, does not require explicit permission for access to the address book, even though it does upload address book data. On the web, Twitter informs its members that it stores contacts for up to 18 months, and may use contact information to make “Who To Follow” suggestions.

Popular photo-sharing app Instagram uploads contact data as well (first names, last names, email addresses, and phone numbers when available, as depicted in the mitmproxy screenshot above), but the app makers recently introduced a permission screen that now reads, “In order to find your friends, we need to send address book information to Instagram’s servers using a secure connection,” and now requires the user to click “allow” to continue.

Foursquare has just followed suit with an update to its iOS app Tuesday (pictured right). Foursquare’s permissions dialog is uniquely up-front about what it’s actually doing.

“We’ve always been doing things the secure way — we only access the user’s address book when the user taps on the ‘Find via address book.’ That is, we only access the address book with an explicit user action,” Instagram co-founder Kevin Systrom said. “The extra dialogue is simply good practice so users are 100 percent sure they understand what’s going on — it’s a step to ensure transparency that we imposed on ourselves.”

Yelp also claims that it does not store the data and requests user permission when accessing the address book. “When a repeat user launches the Yelp application, we provide a prompt for them to give their explicit permission to Find Friends via their Contact list,” a Yelp rep said. However, when VentureBeat tested this feature, we didn’t get a prompt.

When we pointed this out, the Yelp representative said that the prompt only appears the first time you launch the application. They then added,  ”To provide redundant disclosure, our latest app update, which is pending approval by Apple, provides a persistent permission request each time you seek to utilize the Find Friends feature beyond just the first time it is introduced.”

The representative also said, “No emails are sent to anyone in their address book without explicit authorization, we don’t expose this data to marketers, and we do not store your contacts. If the user denies permission, the feature is bypassed and their Contacts are not accessed.”

Are app makers taking unnecessary risks?

Without access to their servers, we can’t determine if some of these applications are storing contacts without disclosing the practice, as Path was doing. That would be the most egregious of offenses because it makes your contacts the property of an unapproved third-party. It’s also a security risk: Should the company’s database ever get hacked, that information would become the hackers’ property as well. Most companies claim not to do this.

“We don’t store address book information and never have,” a Foursquare representative told VentureBeat. “When a person searches for friends on Foursquare, we transmit the address book information over a secure connection and do not store it beyond that point.”

All the applications named, however, are choosing to take a shortcut that could put your data at risk. In an interview with VentureBeat, application maker Martin May, co-founder of food-focused startup Forkly and previously with location-based app Brightkite, explained that developers should avoid sending the private data at all costs. Sending encrypted data, he said, only protects the user’s data until it gets to the company’s server, where it is decrypted. At that point, May explained, we have to trust that each company is only using this sensitive data in honorable ways, but they could theoretically do with it as they please.

More than three years ago, May and fellow co-founder Brady Becker faced the “Find Friends” issue but found a better way to make matches without transmitting actual address book data.

“When we were discussing the implementation, the first iteration inevitably lead to the same strategy that Path is using: upload the user’s address book information to our servers so we can do the matching. But it didn’t feel right,” May wrote in a recent blog post. “It didn’t take very long before we realized that we didn’t actually need the actual phone numbers and email addresses of people to match them; we just needed their hashes.”

The hash system, explained in May’s post, allowed the company to compare hashes, rather than the full text of phone numbers and email addresses. That way, it could make matches without needing to “see” the actual names, numbers, or email address of members’ contacts. “This enabled us to implement the same ‘Find Friends’ functionality that so many apps nowadays use without compromising the privacy of the address book,” May wrote.

“It’s pretty easy to replicate,” May told Venturebeat of the system. “It’s not very complicated.”

iOS developer Matt Gemmell sides with May on the topic of hashing. “Why are you uploading the actual address book data, rather than (say) generating hashes of the user’s email addresses locally, then uploading just those hashes?,” Gemmell asked Path founder Dave Morin in a comment posted to the original blog post that exposed the company’s prior bad acts. “You’d be able to do friend-finding that way, and similarly if you uploaded hashes of all email addresses in the user’s address book, you’d be able to do your notifications of when a friend joins. At no point would your servers ever need to see the actual email addresses or phone numbers from our contacts.”

Gemmell followed up a few days later with his own post detailing the hashing method and explained that applications users should not have to sacrifice privacy for cool social features.

Apple provides no protection

Why aren’t more app makers employing the hash-matching approach or similar techniques? The answer, some say, is that Apple allows the practice of uploading full address books to continue. Apple does not require app makers to request permission before accessing a user’s address book, nor does the company regulate contact data transmission and storage.

User interface designer Dustin Curtis puts the blame squarely on Apple’s shoulders. “I fully believe this issue is a failure of Apple and a breach of trust by Apple, not by app developers,” Curtis wrote last week in a widely circulated blog post entitled “Stealing Your Address Book.”

“There is a huge section of the Settings app dedicated to giving people fine control over which apps have access to location information,” Curtis detailed. “That Apple provides no protections on the Address Book is, at best, perplexing.”

Instapaper creator Marco Arment concurs. “I felt like iOS had given me far too much access to Address Book without forcing a user prompt. It felt a bit dirty,” Arment wrote in a post detailing how Instapaper uses address book data. (Instapaper sends encrypted email addresses to its servers, with permission, but does not store them.) “Apple can, and should, assure users that no app can read their contact data without their knowledge and explicit permission.”

Apple, Arment argued, should change its API to require permission. Apple did not respond to a request for a comment.

For now though, the more pressing questions seem to be: How vulnerable is our private data and how concerned should we be?

May believes that most of the applications that access your address book have good intentions. Still, there have been instances of bad egg applications, solely designed to steal your contacts, making it into the App Store, only to be removed after someone cries foul.

Considering that the practice of uploading address book data is so widespread, the answers to those questions are unknown, and the uncertainty is enough to make even the most trusting of people paranoid.

Defenders of Yelp’s $600 CPM rate for small business advertising often justify the rate by saying Yelp’s narrow focus means consumers are highly likely to convert.

After researching some ads on Yelp, I question the claim that Yelp is delivering a highly targeted audience.

Here are examples of ads I found running on Yelp. It didn’t take me much time to find them; it’s not as if I did 10,000 searches and focused on the few that were bad.

In this first example, I searched for a car wash in Newark, Calif., and got an ad for a body shop in Mountain View (for folks unfamiliar with the area, those two cities are on opposite sides of the San Francisco Bay).

Here, I searched for Indian restaurants in San Francisco. I did get a relevant ad, but it’s not very compelling for a consumer. Should I go to a 3-star restaurant just because they’re an advertiser, or go to the 4-star ones that aren’t advertisers? (Yelp does allow advertisers to remove their rating from the ad. If you see an ad without rating, you can assume it’s a low-rated business.)

Here, the advertiser is much farther from the origin of my search in San Jose. How many people are going to drive farther when there are businesses closer and higher-rated?

Here I did a search for siding and got a contractor. But based on their details page, it doesn’t seem that they do siding.

I searched for mesothelioma, which is Internet advertising gold. (It’s an asbestos-related disease.) I got an ad for a bankruptcy attorney. Those are very different problems.

A search for Costco returned an ad for a community art gallery.

And my favorite: a search for flowers returned an ad for mattresses.

These are all terrible ad impressions. For a local business, I wouldn’t even pay a 6 cent CPM for these impressions, much less the $600 CPM that Yelp charges in certain verticals.

These ads just shouldn’t come up. Yelp did not respond to a request for comment on this story; the company is currently in the SEC-mandated quiet period before its initial public offering.

To be sure, Yelp does deliver ads that make sense. Here, I did a search for stationery in San Francisco:

It’s a fine ad. (I wouldn’t pay $600 CPM for it, but it’s not a wasted impression.) But when I did a search for flowers, the exact same business came up. Flowers and stationery are related, but aren’t the same. I called Lola to see if they sell flowers. They don’t.

This points to two problems: a poor algorithm on Yelp’s part and the fragmented nature of the local advertising market. There just aren’t that many people searching on Yelp for services in each market. And, Yelp has committed to a number of impressions each month, so they deliver them — even when they make no sense and drive no value for the advertiser.

Zynga has teamed up with cross-media gaming firm Slingo Inc. to create a new version of the casual game Slingo on Facebook. Slingo is a 15-year-old amazingly popular game on the web and it is even on slot machines in casinos. But it’s never been on Facebook until now.

Zynga has licensed the rights to make Zynga Slingo to bring the game to Facebook and it is launching the game today. Slingo is a combination of traditional Bingo and a slot machine. As pictured above, you click on the “spin” wheel and five numbers appear like the spinning numbers on a slot machine. If you have a match, you can start clearing numbers on your Bingo card. The goal is to clear as many possible numbers on the card as you can. You win an assortment of coins if you succeed.

It seems like a perfect marriage but an incomplete one so far. Zynga Slingo isn’t yet integrated into Zynga Casino, which creates a common chat system between friends who play both Zynga Poker and Zynga Bingo. And it seems like Slingo is a perfect way for Zynga to move into the online gambling market, since Slingo is already available in various forms as an online gambling game. But neither company is talking about that yet.

Short of those two possibilities, Zynga Slingo seems like it still has a lot of opportunity. Consumers have spent more than $1 billion on it during its history. Players have downloaded more than 50 million Slingo games and played those games over 5 billion times. Slingo.com has more than 4 million registered users, 80 percent of whom are women. They spend an average of 34 minutes per visit. Those users view more than 14 million video ads per month. But Slingo is down from its peak of 15 million monthly unique players, and it has to do something to follow its users into the modern age.

Rich Sawel, product manager for Zynga Slingo, said in an interview that the company isn’t commenting about the prospect of moving into online gambling. (Zynga has already said it is considering partnerships to move into the online gambling market).

“We’re excited to bring this to Facebook with our own unique spin on it,” Sawel said. “Users who have played it in the past will feel right at home with it.”

Zynga and Slingo Inc. partnered a year ago and the game has been in the works for a while, said Slingo chief executive Rich Roberts. (Slingo was established in 1995 and is owned by Sal Falciglia.) About a year and a half ago, Roberts’ team did a reboot. They knew they needed to rebuild the brand with new partnerships. They got the slot machine version of the game in more than 400 casinos in partnership with IGT Casino. They also did deals that licensed Slingo to various state lotteries.

“But we were missing what we had with AOL in the past to get the brand out there,” Roberts said. “We are on 10 platforms, and now we’ll be on Facebook.”

Zynga Slingo requires some skill to play, particularly when you choose a strategy about how to use your extra power-ups. That may factor in how states eventually decide whether to allow games such as Zynga Slingo under online gambling laws. Games of chance face tougher hurdles, while games of skill, such as poker, face easier approvals.

As for online gambling, John Schappert, chief operating officer of Zynga, said on the company’s analyst call yesterday, “It’s a very interesting opportunity because we are uniquely positioned. We have the world’s largest online poker game and have been running it for the last four years and it posted record results last quarter.” But he didn’t say more about how Zynga might dive into that market.

“We have an audience that is very familiar with the brand and the kind of gameplay it offers,” Roberts said. “It lends itself to an environment where people chat and play for hours.”

Zynga, meanwhile, has amassed more than 246 million monthly active users on Facebook. Most of those are casual gamers who are likely to play games like Slingo. In Zynga’s version, players can play Slingo games until they run out of energy. They can get that energy from friends or purchase it.

Part of the fun of Slingo is that you can have rewards cascade on top of each other as you score more points. You can wager some of your virtual currency in hopes of winning more of it. Zynga has also tried to make it fun with cute graphics and happy carnival-like sounds. The Zynga Slingo game also has a variety of characters, such as the Slingo Joker, which grants a player a free match when it shows up in the spinning reels.

On the social side, players can track the scores of friends in real-time. You can collect medals and brag about them. And you’ll eventually be able to challenge friends and compete to see who can get the highest score in three rounds.

The potential for Slingo to be used with online gambling is clear. In a survey of 25,000 Slingo users, Hackensack, N.J.-based Slingo Inc. found that 21 percent of those who discovered it online went to a land-based casino to play Slingo. Zynga Slingo will be available in 14 languages.

Sawel said that the company will consider whether to add Zynga Slingo to the suite of Zynga Casino games and integrate the friends list with Zynga Bingo and Zynga Poker friend lists.

“We will listen to the consumers,” he said.

Hulu is staying silent about the initial viewership of its first scripted original seriesBattleground, which premiered its pilot episode on the streaming video service Monday.

Battleground is a half-hour dramedy (drama/comedy minus the annoying laugh track) about a campaign staff that’s trying to win a Wisconsin senatorial election for an underdog candidate. The show has some top-notch talent behind it like creator/actor JD Walsh and producer/director Marc Webb, whose film credits include 500 Days of Summer and The Amazing Spider-Man movie. It’s also one of the first high-profile series that’s focused entirely on web viewership.

Normally, the premiere episode of a show with this level of hype would be followed by Nielsen TV ratings along with a breakdown of the audience demographics. But becauseBattleground is distributed as streaming video instead of television sets, it doesn’t have a standard rating system. And while Hulu definitely collected plenty of data about the show, the company isn’t planning to reveal the details — as is its policy for all shows that stream on its service.

Unlike traditional TV programs, Battleground’s success isn’t determine by evaluating the viewership during a predetermined time slot. When people watch a show isn’t nearly as important as the show simply getting watched, a Hulu spokesperson told VentureBeat.

Hulu said it plans on measuring the success of its original programs by the level of activity surrounding it, which includes total viewing audience, comments and discussion, social media interactions, and more. This is good for a number of reasons…

A more honest and accurate form of “rating”

The current rating system for TV programming is inadequate because it’s based off of a sample of the population measured by a single company. And while ratings in most casts serve as a determination of quality, TV ratings are little more than an indication of programs that get the most number of eyeballs. Whether those people actually like the show isn’t as easily gauged. Hulu, however, only needs to look at the activity of a particular show over a much longer time frame. It’s pretty simple if you think about it. If people are watching and talking about a show, it’s likely to get more episodes. The audience can also see a more honest representation of what people actually want to watch because others are constantly buzzing about it. If a show doesn’t have any buzz (after a reasonable amount of time), then its likely that no one will care if it’s gone.

New shows are less likely to get killed off prematurely

Based on traditional TV ratings, plenty of good shows were canceled by networks prematurely because they couldn’t draw a large enough audience to bring in advertising revenue during a designated time slot. Even in situations where the network wants to take more of a chance on a show that’s off to a weak start, it’s far more difficult to justify programs that don’t bring in enough ad revenue. For instance, Firefly was taken off the air by Fox for this reason, despite becoming a cult classic post-cancellation. With Hulu, original shows are likely to get at least a full season to prove itself because the company is far more strategic about their strategy. Hulu isn’t trying to find decent shows that will fill its prime time schedule alongside some really great shows. It’s also worth noting that Hulu’s streaming service allows it to take advantage of shows that are more valuable as an entire season.

More creative and unique shows

When I flip on the television, my cable service rarely provides me with anything new or interesting. Again, this is due to the current TV rating system, which rewards shows that appeal to the highest number of people across all demographics and time slots. The selection of content is mostly stuff everyone is OK with watching when choosing between lots of bad programming. This is why there’s an abundance of CSI Spinoffs and reality TV shows. When there is a decently entertaining/interesting prime time show on, network executives are behind the scenes imposing changes to boost ratings. I’m not saying these shows still aren’t able to produce quality content from talented people, but I am saying that the creativity is usually hindered on the basis of business.

Since traditional ratings aren’t crucial to the survival of the program, Hulu executive producers are likely to interfere on the basis of quality rather than ratings. In a Hulu blog post published Tuesday, Battleground creator JD Walsh explained his own experiences of “getting ‘network notes’ or revisions or other things that usually doom or plague great shows,” saying that:

“We did get notes, but they were always an attempt — not to satisfy a demographic or a fad or a meme — but instead the notes were to make the show smarter or funnier or more interesting with its storytelling. The show is better because of the relationship we have with (Hulu’s) Charlotte (Koh) and Andy (Forssell). The show will live or die on my point of view on TV or what the tone of the show is. That’s a testament to the trust that Hulu gives its creators to make the show that they believe in.”

Final word

Hulu is breaking new ground in the way of premium original programming, which it obviously realizes. Ultimately, the company’s success will be based on whether it’s able to produce quality content that’s on par with top TV Network programming. Since Hulu is owned by three of the largest broadcast TV networks (NBC, ABC and Fox), it’s even likely that this model could create a new standard for how shows are produced and monetized.

People nearly doubled the amount of streaming videos played on mobile devices and smart TVs in fall than it did in the summer, according to Ooyala’s fourth quarter 2011 video index report.

Ooyala offers a video platform for content owners to upload their video, analyze audience engagement, and easily monetize video content. The company claims that nearly a third of all streaming video viewer in the U.S. is done using a Ooyala player.

“While people are still watching much more traditional TV than streaming video, our data shows we’re on a clear and irreversible course toward an IP-delivered future,” said Ooyala Co-founder and President of Products Bismarck Lepe in the report.

The report, which tracks viewing habits of over 100 million monthly users, indicates that the boost in streaming video consumption over connected devices was aided by the October launch of Apple’s iPhone 4S, continued growth from Google’s Android OS platform, and the December holiday season. Video viewing on Google TV was also up by 91 percent from the third quarter, although that’s not exactly saying much if Google TV app install data is any indication.

People watching videos on tablets are also far more engaged than those watching on a desktop, according to the report. On average, tablet viewers were 45 percent more likely to complete 75 percent of video played on the device.

Also interesting was data about social media engagement behavior related to streaming video. Despite Twitter’s attention to tracking real-time viewing habits through tweets, Ooyala’s report found that Facebook users on average share ten times more video than Twitter users.

Check out a condensed sample of the full Q4 2011 video index report in Ooyala’s infographic embedded below.

Cloud file management startup FileTrek has exited stealth mode with good news: it has raised $10 million in second-round funding and is ready to show businesses that it’s the best option for securely sharing and tracking files in the cloud.

FileTrek will compete heavily with Box and Egnyte, two other file sharing and hosting solutions strongly targeting business users. But FileTrek stresses that it adds something to the mix of cloud storage that no one else is: detailed file tracking so you always know where a file is located and who made modifications. (When the company demoed the service to me, I told them it looked like Microsoft Office track changes on steroids.)

“We’re not saying we’re better than Box, but we do offer more,” FileTrek CEO Dale Quayle told VentureBeat. “There is nothing currently available from Box that we don’t provide and there’s a ton available from us that Box doesn’t provide.”

On top of always letting you know where cloud-based files are, the company also offers solutions for project collaboration and a way for managers to track data with audit reporting. Thankfully, the solution is also easy to scale across desktops and mobile devices so every employee can take part.

FileTrek’s new funding was led by Anthem Venture Partners, Telesystem, and Ontario Emerging Technologies Funds.

“We believe FileTrek will define a new category by delivering an innovative solution that combines file sharing and tracking of critical data,” said William Woodward, Managing Director of Anthem Venture Partners, in a statement. “FileTrek gives accessibility to the content that is currently scattered throughout an organization and elsewhere, bringing a new sense of security to companies both large and small.”

Ottawa, Canada-based FileTrek previously raised $5 million in funding, so its total raised is now at $15 million. The company also has a regional office in Los Angeles. The company will the new funding to hire new engineering talent and to beef up its sales and delivery capabilities, Quayle said.

As chief executive of Gears of War developer Epic Games, Tim Sweeney has been on the forefront of video game graphics for a couple of decades. So the DICE Summit, which is giving him a high honor today, turned to him to explain how graphics technology for games will evolve over the next 20 years.

Sweeney, a shy but brilliant programmer who helped create the backbone graphics engine for Epic’s blockbusters, predicted in his talk that games will look better and better, and upcoming advances will be so good, that console makers will be able to introduce next-generation machines that will blow us away with their visual quality. That point is up for discussion. Nintendo proved with the Wii that gamers may care more about innovations with the user interface—such as the motion-sensing Wii remote—than they do with graphical quality.

“How good is good enough, and how close are we to that now?” Sweeney asked.

Our eyes are equivalent to the quality of a 30-megapixel camera. You don’t perceive improvements in frame rate beyond 72 frames per second. Many games already run at a rate of 60 frames per second. The best resolution for humans, then, is 8000 x 4000 pixels, or several times better than today’s best displays. That is about 20 billion to 40 billion triangles per second in terms of graphics rendering.

“The limit really is within sight,” Sweeney said.

Graphics technology tries to calculate approximate renditions of reality. In Doom, the id Software first-person shooter from 1993, the developers were able to create a first-order approximation of reality. Now we’re getting enough computing power to get a third order of approximation of reality, as seen in Epic’s Samaritan demo (shown below). Doom’s rendering required 10 megaflops; Unreal in 1998 required 1 gigaflop; and now the Samaritan demo requires 2.5 teraflops, an order of magnitude higher.

Doing a human face with movie-level accuracy is still very hard to do, Sweeney said. He believes that chip makers could double computing power every two years (as predicted with Moore’s Law), and that could continue for quite some time (perhaps even a couple of centuries) with the vertical stacking of chip circuitry and other advances in leading-edge physics.

That’s a bold claim, but predictions about how fast technology will advance in the long term always tend to fall short of reality.

“Within our lifetimes, we will be able to push out enough computational power to simulate reality,” Sweeney said.

Sweeney said he is equally inspired by non-graphical pushes in game technology. He is inspired by advances in 4G ubiquitous wireless networks, sensors, navigation systems, Kinect motion-sensing, and Apple’s Siri voice recognition.

“Kinect carried the technology for sensors to its amazing completion,” Sweeney said. “We are going to see some of the possibilities of what will happen over the next decade or two.”

He is also fascinated by cloud computing, which supplies the intelligent answers to Apple’s Siri via the Internet. He said that OnLive and Gaikai hold a lot of promise in creating cloud-based services where you can play high-end games without needing high-end hardware.

“Only question is whether a game runs in your living room or in a server,” he said. “It’s not going to change everything, but it will make things more convenient for gamers.”

In a wild prediction, Sweeney said that physical resources will become scarce, but virtual resources are unlimited, and we may see more of our economy shift from real-world to virtual goods. The worldwide real estate industry is worth $25 trillion, but a virtual economy could be a lot bigger than that.

Sweeney said he thought that Samsung’s transparent displays (shown at the recent Consumer Electronics Show) and augmented reality smart eyeglasses could be cool as well.

While the world is creating new game platforms now, such as smartphones and tablets, Sweeney thinks that will change, and we will see the industry converge on a smaller number of platforms. He is fascinated that tablet computers are stealing a march on the PC.

“We’ve just barely scratched the surface of the consumer applications of new technologies,” said Sweeney. “It’s going to lead to an entirely new world. I see a bright future for the future of computing and its implications for games. Our industry’s brightest days are yet to come.”