NEW YORK ( TheStreet) -- Walt Disney ( DIS) has announced plans to buy Playdom, a popular social gaming website, for $563.2 million. If Playdom meets performance goals, Disney will pay up to $200 million more.

"We see strong growth potential in bringing together Playdom's talented team and capabilities with our great creative properties, people and world-renowned brands like Disney, ABC, ESPN and Marvel." said Robert Iger, president and CEO of Walt Disney.

Playdom is known for its popular games such as Social City, Sorority Life, Market Street and Bola. The gaming site has an estimated 42 million active players each month, and Disney hopes that Playdom will give it another way to engage consumers on social networks like Facebook and MySpace.

"We are at the start of a once-in-a-generation opportunity to transform the way people of all ages play games with their friends across devices, platforms and geographical boundaries," said John Pleasants, CEO of Playdom. Through the acquisition, Pleasants will become an executive vice president of the Disney Interactive Media Group.

Disney isn't the only company reaching out to the social gaming scene. Reports have recently emerged that Google ( GOOG) is trying to create its own social networking and gaming service similar to Facebook. The Wall Street Journal reported that Google has recently been in talks with some online game manufacturers such as Playdom, Electronic Arts's Playfish and Zynga Game Network.

Disney shares were down around 1% to around $34 at close and Google shares were down more than 1.5% to around $484.

-- Reported by Theresa McCabe in Boston.

Follow Theresa McCabe on Twitter and become a fan on Facebook.
Copyright 2010 Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.