We present the design, implementation and evaluation of WaaZam, a video mediated communication system designed to support creative play in personalized environments. Users can interact together in sets composed of digital assets layered in 3D space. The goal of the project is to support creative play and increase social engagement during video sessions of geographically separated families. We focus particularly on understanding the value of customization for families with children ages 6-12. We present interviews with creativity experts, a pilot study and a formal evaluation of families playing together in four conditions: separate windows, merged windows, digital play sets, and personalized digital environments. We found that playing in the same video space enables new activities and increases social engagement for families. Personalization allows families to customize environments for their needs and supports more creative play activities that embody the imagination of the child.