PF Magic was a video game developer founded in 1991 and located in San Francisco, California. Though it developed other types of video games, it was best known for its virtual pet games, such as Dogz and Catz. The company was able to make extra revenue by selling plush toys under the Petz trademark.  It was bought out in 1998 by Mindscape, Inc.. After changing hands a few more times Ubisoft now owns the copyright on its Petz, Oddballz and Babyz titles.
One of PF Magic's earliest efforts was the 1994 video game Ballz published by Accolade. The innovative game featured main characters composed completely of spheres. This early game, however, failed in the marketplace, though it would inspire many of their following games, such as Petz.
The company also produced Max Magic, the world’s first electronic magic kit, which represented a breakthrough in interactive 3D character design. Max Magic received numerous prestigious awards for its uniquely intuitive way of entertaining and teaching children and adults about magic.
PF Magic's designer and programmer, Andrew Stern, went on and created an experimental project with Michael Mateas along with others for five years. The project became Façade, a freeware game where you can interact with a couple whose 10-year marriage is in trouble.
PF Magic was born out of a failed hardware venture with AT&T and Sega to build a Sega Genesis accessory called "The Edge", which was to allow for online multiplayer over telephone lines. AT&T pulled out of the venture due to the cost of the device, leaving the company with half their initial funding.
With their hardware project cancelled, the company needed a new product to work on. Co-founder Rob Fulop saw the controversy generated by Night Trap, a game he worked on and wanted to make something that was the complete opposite of it. Fulop talked with a mall Santa who told him that the number one thing children asked for Christmas was still a puppy. After this conversation, the idea of doing a title about animals came about, resulting in Petz, which was based on the graphics technology they previously used in Ballz. Petz was an enormous success, became one of the company's flagship products and has been credited with popularizing virtual pets.
The 'PF Magic' Name
Quote from Oddballz Neo 
While people speculated on what the "PF" in the company's title stood for, this was the answer PF Magic gave:
Pure F--ing Magic.
Such was an old saying from my days at Atari. That ultimately our customers cared not for our slick technical skills. They really didn't give a hoot about how clever our engineers are. What they REALLY cared about was the overall EXPERIENCE they were having with our products.
Like who CARES how the software that is running inside your PC works, all that matters is that it makes you believe that a living DOG is running around your desktop?
From the perspective of a customer it's simply pure f---ing MAGIC. That’s all they need to know. So such reminded us that all we care about is that our customers are ENCHANTED and not to get overly in love with our own technology, which is a real problem in some companies.
But we told people different things over the years depending on who was asking
- Positive Future (told to Venture capitalists)
- People Find (told to strategic partners, such as AT&T)
- Partially Funded (told to people we owed money to)
- Perpetually Fighting (told to employees, when they asked why everything seemed so difficult at times, and why did so many smart people have so many different opinions)
- Pizza Friends (told just for fun)
Hope that helps.
Co-Founder and Creative Director of PF.Magic
- Plush Toy Petz -PF.Magic.com Archive
- Dogz and Catz Dash Past 1.5 Million Mark;PF.Magic's Virtual Petz Brand Established as Leader... - BusinessWire 1998
- About PF.Magic -Petz.com Archive of 1999
- Donovan, Tristan (March 23, 2011). "The Replay Interviews: Rob Fulop". Gamasutra. UBM.
- Oddballz Neo - PF.Magic FAQ