I agree that she needs to learn phonics. Because you say she likes to play, she might like "An Ant - Learn to Read" better than other phonics programs. "An Ant - Learn to Read" teaches through stories, so it keeps kids attention better than Phonics Pathways.
Don't get me wrong, Phonics Pathways is a great book, but it mainly teaches through lists of words and isolated sentences, and requires a certain amount of discipline.
"An Ant -Learn to Read" teaches almost exclusively through color illustrated stories. She will probably breeze through the first pages, then slow down to a comfortable pace when she gets to the material that is new to her.
Studies show that kids who start with phonics retain it as a skill for life, but kids who start with memorization keep that strategy for life. This is why we have medical doctors who can't sound out the plethora of new medical words that are invented every year! They are smart enough to get through med school, but no one ever taught them phonics, and now they are too old to learn.
The ideal time to learn phonics is between the ages of 4-6.