High above the streets of London in a gleaming white studio that feels like an outer- space creche, Kristian Segerstråle is working on new ways to bring out humanity’s inner child. “I remember the first Pong machine that my dad brought home when I was two or three,” says the absurdly youthful-looking 33-year-old, practically fizzing withenthusiasm. “I used to play ferociously with my older brother, and my mum told me that if I didn’t stop I’d never get a proper job.” He smiles wistfully. “How right she was.”

Today Segerstråle is vice president and general manager of Playfish, a developer of hugely popular games on Facebook, and those childhood dreams have turned out to be rather lucrative. Exactly a year ago, the company was acquired by the American games giant Electronic Arts (EA), which valued it at $400m. Atul Bagga, a digital media and online gaming analyst for research company ThinkEquity, estimated then that Playfish could contribute revenues of $150m (₣107m) in 2010.

Now the talk is of growing franchises, adapting games for the iPhone and convincing non-gamers that they’re missing out on all the fun. This goes way beyond the current fad for games such as Restaurant City, a massive hit for Playfish, in which players design eateries and then invite their friends around. If Segerstråle is right, the next wave of innovation will sweep us all along. “I don’t believe we’ve seen the Super Mario or the Halo of this platform yet,” he says. “We’ve barely scratched the surface of what’s possible.”

Before 2007, of course, this whole industry seemed unthinkable. In those technologically backward times, anyone wanting to play a game online had to buy it boxed and seek out like-minded strangers. But as Justin Smith – founder of Inside Network, a research firm covering the Facebook ecosystem – explains: “Unlike traditional games, which you might play for an hour or two, social games allow you to play for two minutes or five minutes and have some kind of interaction with your real friends.” He estimates social games will be worth $835m (₣600m) in 2010, a third of what the film Avatar has grossed in 12 months – not bad for a market that didn’t exist just over three years ago.

Segerstråle, who has dual Finnish-British nationality, won’t be drawn when it comes to revenues and future performance but, to judge from his life so far, it’s clear that he was driven to succeed. At the age of six, for instance, he was programming games on to a Commodore 64. By his early 20s, he had an economics degree from Cambridge and a masters from the London School of Economics. After that, he says: “I returned to my first love and worked for a mobile technology company for a year. Then I set up my own company with a bunch of friends and the rest is history.”

That enterprise, Macrospace, set out to put a game on to everyone’s mobile phone – a tall order in 2001, when phones that could download hadn’t reached the market. But following a merger with a US firm, a rebranding as Glu Mobile and a public listing on the Nasdaq, in 2007 Segerstråle was ready for a fresh challenge.

The catalyst for Playfish, set up with pretty much the same friends, was Facebook. “We always expected the game world to become far more social purely because of this new layer of plumbing,” he says. “Many of the things that you see as standard in Facebook games originated in our first game, Who Has the Biggest Brain?: things like seeing pictures of your friends. Very few companies thought of it as a games platform and we were arguably the first to be totally focused on it.”

Funding was no problem since they’d just come out of an IPO. “Also some of the angels who were involved in our previous venture wanted to back the same team, so we raised about $3m effectively off the back of a business plan. We then a year later raised an additional $18m.” The outcome, he adds, was always going to be fairly binary. “You take a very big bet on the world turning in a certain direction. Either nobody’s interested or everybody is. Fortunately we were more towards the latter end of that scale because we were able to grow both our users and our revenue very quickly.”

It’s worth pausing at this point to consider how social games companies make money. “Largely it’s through micro-transactions, which is where players purchase bonus items or extra perks,” says Steve Bailey, a games analyst at Screen Digest. “Normally the game is given away for nothing and the users are incentivised to buy when they play. There’s also advertising, which is more peripheral, and then there’s lead generation or promotional offers which allow the user to earn some virtual currency in return for viewing an ad or taking advantage of a promotion.”

Given that several developers have built audiences well in excess of 10 million users a month, the potential for making profits is enormous. As Inside Network’s Smith points out: “If only a small percentage of people spend a few dollars per month, it still represents a big opportunity.”

According to Segerstråle, Playfish has 50 million monthly active players and its most popular games, Pet Society and Restaurant City, attract 16 and 12 million. (Figures vary, depending on who you ask.) “To date we’ve had our games installed more than 300 million times, but if somebody has clicked on your game once and played it for two seconds, it doesn’t really mean anything,” he says. “What means something is whether you’re able to become an indispensable part of someone’s everyday life because they enjoy socialising with their friends through your product. Those are the kind of things we’re trying to track more.

“To give you an example, when we launched Who Has the Biggest Brain?, we had no idea how it was going to work but that’s now been played by about 20 million people. What’s even more interesting is that it’s been played more than half a billion times. So even including everybody who hated the game, people have played it on average 25 times. You initially play because it’s a bit of fun but then you get a notification that your wife or girlfriend got a higher score than you did. They now have the brain of a caveman whereas you have one of a Neanderthal. So then you’ve got to play the game because all of your friends will know.”

Playfish has nearly 300 employees spread across studios in London, San Francisco, Beijing and Tromso in Norway, although the acquisition by EA in November 2009 (for $300m, plus $100m of earn-out payments linked to profit targets) makes it hard to quote exact numbers. Since that time the name of the game has been to convert EA’s franchises into social spin- offs such as FIFA Superstars (pictured), Madden NflSuperstars and – when it’s ready – a Facebook version of Monopoly. ThinkEquity’s Bagga has suggested that the FIFA and Nflgames could each bring in revenues of $25m-$30m within 12 months.

It’s a fact of life, says Segerstråle, that large franchises always win out. “If on the one hand you have Harry Potter and on the other you have ‘The Wizard Adventure’, consumers will choose the one they recognise,” he says. With this is mind, the issue that preoccupied Playfish last year was how to avoid being sidelined. “The other thing that was clear was that social games won’t just be an online phenomenon, they will be on mobiles, they will be everywhere else. So we knew we needed to grow very fast and we needed access to the capability to publish on different platforms.”

Which brings us to the social games hierarchy. In terms of daily active users, Playfish is ranked second behind US rival Zynga. Another American competitor, Playdom, has been acquired by The Walt Disney Company. Last month EA bought the UK mobile game publisher Chillingo, a week after Japanese social platform maker DeNA took over San Francisco-based game maker Ngmoco, and there have been rumblings in the press that Playfish is gunning for Zynga. “I’d refute that,” says Segerstråle. He will say, however, that: “Companies without franchises will be in an increasingly precarious position.”

Screen Digest’s Bailey thinks leapfrogging Zynga may not even be on Playfish’s agenda. “Now that they’re part of EA they may just want to leverage social gaming as a very powerful part of the portfolio – but not to become the dominant Facebook player, as the investment for that would perhaps be disproportionate.”

In any case, Facebook has plateaued, says Bailey. “It’s gone from gold rush to poisoned chalice because it’s a crowded, competitive space and the degree to which people can leverage virality has now been limited, meaning they have to invest more in things such as advertising. So you’d have to be looking elsewhere to publish your social game.” In February, Facebook clamped down on developers after players of some games, such as Zynga’s FarmVille, found their activity streams constantly turned into status updates. “This became so profuse that it was essentially spam.”

Segerstråle agrees with some of this – “It’s more than plateaued, I think it’s declined a little bit,” he says – but asserts that Facebook has actively “poured petrol on the process” of computer games changing from physical products to digital services. “They’ve gone from nothing to 200 million active players in two-and-a-half years. The fact that they’re dampening it down a little bit is neither here nor there.

“Perhaps the immediate effect of Facebook curbing some of these channels is to see the aggregate number of clicks going down a little bit but at the same time it forces much better quality product and in my mind it’s a far more sustainable way of growing the market.

“The era when Facebook provided the opportunity to grow enormously is over,” he adds. “The winner overall – the company that’s going to be remembered for forging this market – will be the one that creates a truly inspirational product for social interaction, competition, cooperation and exchange across a lot of platforms. It’s a green field, and creating that company that’s the most loved and respected by players is really what we’re after.”

The focus now is on getting Joe Public interested in games. “They’re a ton of fun to play, especially with friends, and so far they’ve had a bit of a stigma attached to them,” says Segerstråle. “Being a gamer is associated with being slightly sad on a Saturday night, locked in a cellar in your underwear and blowing up monsters. I think we’re able to bring games far closer to what is normal human play with friends and your mobile will be an important part of that.”

So what, then, is the secret of a successful game? “The day in, day out creation of features and the consumer experience. As much as I’d love to take credit for much of our work, I actually can’t. Some of the core decisions perhaps, some of the financing perhaps, but at the end of the day really the credit goes to our creatives, who are frankly amazing at what they do.”

By rights, a flashing day-glo graphic declaring: “Kristian has the brain of a top online entrepreneur” should appear above his head at this instant. But our time is up, and with a shake of the hand he’s off to work and play. With his friends. His real friends.