One of the hottest trends in gaming right now isn’t mobile, social, or massively multiplayer games, but online casinos. This may seem somewhat surprising considering that it was only a year ago that the Justice Department seized the domain names of some of the country’s largest online poker platforms, like PokerStars, Full Tilt Poker, UB.com, and Absolute Poker, charging their founders with bank fraud, money laundering, illegal gambling, among other offenses. And five years prior, the Unlawful Gambling Act effectively putting a stop to online gambling in the U.S. and sending the market into a tailspin.

However, in December, the Justice Department reversed its stance on many forms of online gambling, paving the way for what is becoming a revitalization of the social gambling market. Naturally, with activity in the space increasing, a number of startups have popped up to take advantage, like the rebranded Titan Gaming, for example.

Today brings another entrant into the social gambling space with RocketFrog, which is setting out to bring casino entertainment to Facebook with the launch of a free-to-play online casino that offers players the chance to win real prizes. Traditionally, online casino players participate in the casino gaming experience recreationally, with the rewards being the opportunity to socialize with friends or earn a few virtual badges.

So, RocketFrog wants to change this by leveraging the Facebook platform — where all of your friends are already — to create social tournaments, where players can interact and compete against their friends to win real prizes, not just accumulate points on leaderboards or vie for status increases.

Each day, the startup will run poker, blackjack, and slot tournaments in small-ish fields of 80 to 300 players, with levels lasting two to five minutes. In a somewhat unusual business model, RocketFrog plans to recruit a different advertiser each day to sponsor a variety of prizes, including movie tickets, music, and good, with prizes obviously being related to whatever company happens to be paying for the ads. If it’s Pizza Hut, prizes will likely include coupons, meal offers, and probably some free pepperoni.

The platform intends to accomodate gamers of all abilities, so that if a user is new to a game, for example, they can peruse through the startup’s suite of learning tutorials, game strategy articles, and expert tips. Its games also allow players to choose their stakes and limits in an effort to customize the overall gaming experience, while challenging friends, tracking their bank roll, sharing achievements, earning loyalty rewards, and comparing game stats and rankings.

RocketFrog was founded in 2010 by Brett Calapp, Matthew Osborn, and Uri Kozai. Calapp is the former CEO and co-founder of Centaurus Games, a subscription-based gaming network that sold to PartyGaming in 2010.

The startup’s leadership, along with the potential market opportunity, has attracted a familiar face in social networking. Tom Anderson, also known as the co-founder and former president of Myspace, has joined RocketFrog’s advisory board alongside reality TV star and celebrity poker player Brody Jenner.

When asked what he sees as RocketFrog’s core value proposition, the former Myspace president said that few have “really pushed incentive-based gaming on the Facebook platform.” It’s as simple as the fact that millions of people play online poker for free, he says, so if they’re given an engaging platform and gaming experience, why wouldn’t they want to play for realworld prizes? What’s more, “RocketFrog is also giving advertisers what they always want but can’t seem to get — an immersive and deep experience that actually features their brand — banners alone aren’t enough.”

CEO Brett Calapp says that, while legislation and regulations will take time to iron themselves out (legislation may not be put in place until next year, or 2014) and casino platforms are popping up by the minute, RocketFrog’s core strategy is to avoid making players feel inferior about their bankroll in order to drive sales of virtual currency, but instead to reward its players by offering them the ability to compete in tournaments for quality, realworld prizes.

Rather than relying on a small, obsessive segment of addicted players, Calapp says that RocketFrog wants to expand its community to include new players, those not typically classified as gamblers, but who don’t want to just play for meaningless virtual rewards.

RocketFrog has a steep uphill climb to track down the bigs in the space, like DoubleDown Casinos and Zynga’s Texas Hold ‘em, but with some influential advisors and a mission to bring social, tournament-style gamble-gaming to the masses, the startup may just be onto something.

For more, check out RocketFrog at home here.

A Wiimote turned on its side makes for a perfectly serviceable controller when plowing through retro games from the Wii Shop Channel, and the Classic Controller isn’t bad either, but I wouldn’t call either of them an ideal solution.

On the other hand, ThinkGeek’s new Super Famicom controller for the Wii manages to come pretty damned close, especially if you’re a gamer who spends your time steeped in the past.

Thankfully, unlike the controller this thing was modeled on, there’s no need to plug it directly into the Wii. Instead, the $20 add-on plugs into the bottom of a Wiimote so it’s simple enough lean back in a beanbag across the room and blow through some Actraiser.

It probably goes without saying that not everyone will appreciate this thing’s sheer lack of ergonomics, but remember — the original Super Famicom/Nintendo controller was crafted back in the early 90s, and still manages to put its boxy predecessor to shame. Nevertheless, you had best look elsewhere if you’re looking to play some more recent games, as using a D-Pad to control movement in three dimensions rarely ends well.

My only regret? That ThinkGeek doesn’t have a version emblazoned with the purple and lavender hues of the Super Nintendo. Now that Nintendo fanatics have another bit of hardware to add to their collections, maybe ThinkGeek will finally get around to building that NES-esque Bluetooth mobile gaming controller they promised us earlier this year.

Zynga and American Express are back together again in a new deal that will give prepaid card carriers ways to earn extra Farm Cash.

American Express, which has long been known for catering to high-end consumers, is moving downmarket. They’ve got a new platform called Serve, which is kind of a catchall service that supports many payment methods from traditional plastic cards with magnetic stripes to NFC to QR codes to basic online payments. The partnership with Zynga is meant to onboard new Amex customers and could give the credit card company the so-called FarmVille demographic.

“Zynga has a very large customer base,” said David Messenger, American Express’ executive vice president of enterprise growth. “This partnership isn’t for existing credit and charge card customers. It’s about trying to appeal to a new segment. These customers may be Millennials. They may be somewhat underserved in terms of banking. They may only use debit, cash and check.”

FarmVille players will be able to plant an American Express-branded tree in their farms. If they plant the virtual tree, they’ll be nudged to register for a prepaid card and American Express’ Serve program. Then after that, they can add money to their Serve account and activate the card.

The first five purchases of $25 or more with the card will earn users extra Farm Cash. Other rewards will probably be added later on and the program will probably eventually include more games too.

Zynga’s chief marketing and revenue officer Jeff Karp says whatever revenues the American Express deal brings will fall in under advertising. He didn’t say how much revenue the Amex deal might represent. About 8.7 percent of Zynga’s $321 million in revenue last quarter came from advertising. The rest came from virtual goods.

“This deal highlights how we can bring brands to life,” he said. “We’re blurring the lines between real world and virtual world.”

This isn’t the first time the two companies have worked together. Two years ago, Amex allowed Zynga players to earn exclusive virtual goods through their rewards program like purple cows, manx cats and virtual outdoor fountains. 

King.com, the European-casual-gaming-company-that-could, is cementing its ascendance on the Facebook platform by poaching one of the key producers responsible for EA’s Sims Social and opening a new game development studio in London. The company just hired Catharina Mallet away from EA to lead the new studio, which should have 40 people by year-end.

King.com, which started in Sweden and hasn’t taken outside funding since raising $43 million seven years ago, is one of two European gaming companies that have made a serious run on the Facebook platform in the last year. While Zynga has seen its revenue growth slow and other longtime Facebook developers like Crowdstar and Funzio have mostly moved onto mobile games, both King.com and Germany’s Wooga have both climbed up the developer leaderboards.

King.com has beat out EA and more recently, Wooga, for the #2 spot among game developers in terms of daily active users on Facebook, according to AppData. The number of game sessions has also blown up by tenfold to 3 billion per month, from 300 million a year ago.

The company has a long, long history. It’s almost a decade old and started out building casual games for a destination site at King.com (naturally). That made for a decent business that’s been profitable for seven years. But King.com got turbo-charged when it started building Facebook games too. The company’s long history of building for an independent destination site has given it a few competitive advantages. Launching games outside of Facebook ensures that only the very best and most viral games make it onto the platform.

“Because we see which games fail outside of Facebook, what we have managed to do is have a hit-proof business on Facebook,” said chief executive officer Riccardo Zacconi. It’s worth noting that Zynga and many other developers like Kixeye are ironically going in the opposite direction by pouring resources into standalone destination sites.

The business now has several legs to stand on. It has a destination site for casual games, Facebook games and then mobile titles. Like Zynga, it makes money through virtual currency sales and advertising. But it also has a third revenue model. The company also recently signed a deal with AOL to provide skilled tournament games. Those are games where players have to pay a very small entry cost (like less than $1) and compete with others. This deal is financially material to King.com, although the company won’t say how much the partnership will bring in.

All this said, King.com is starting to feel the competitive heat on Facebook. Zynga recently launched Bubble Safari, which looks a lot like Bubble Witch Saga, King.com’s top game on Facebook.

“We have the leading bubble shooter on Facebook. While there are a fair number of copycats popping up, we’re pleased with the continued audience engagement that we get with Bubble Witch Saga,” said chief marketing officer Alex Dale. “We think that will improve further when we launch the game on mobile.”

Zacconi adds that King.com’s model is more capital efficient than Zynga’s. “For one of their games, they might need 80 people,” he said. “But Bubble Witch Saga had a team of eight. To launch a new game on the web, we need two people.”

He also says that the company hasn’t been feeling the effects that other game developers have as Facebook clamped down on viral channels, notifications and requests for games. He says King.com’s K-factor or viral coefficient is roughly 0.8. “For every user we get, we get almost another one for free,” Zacconi said. Keep in mind though, that number is still way down from the heights of 2008 and 2009, when apps ran wild on the Facebook platform. Other social gaming companies, which still have the institutional memory of that era, have had a harder time coping with the Facebook platform’s new realities.

When Mallet comes on-board, she’ll be spearheading the development of casual games. Zacconi stresses that King.com is not going into resource management or sim games. Mallet was of the top producers behind Sims Social and she came to EA through the up to $400 million acquisition of social gaming company Playfish.

Over the last year, EA’s social gaming push has faced several management changes. After Zynga poached John Schappert to be chief operating officer, Barry Cottle followed him over to spearhead mergers and acquisitions. That made room for Playfish co-founder Kristian Segerstrale to move up in the ranks and become EA’s executive vice president of digital. Another key Playfish executive, John Earner, recently left to be an entrepreneur in residence at Accel Partners.

GameStop is hurting. Same store sales fell 5%-11% and revenue was down 17% to $2 billion. Profit fell to $72.5 million. Arguably, those are still huge numbers and presumably a new console refresh should push the company out of the doldrums. But what the company has just launched – a new MVNO called GameStop Mobile – is almost inexplicable.

GameStop Mobile is, in short, an unlimited voice with limited data offering for $55 a month (down to $20 a month for pay-as-you-go plans.) GameStop is just selling SIM cards and service and is running on AT&T’s network with some notable dead spots.

The stores actually do take trade-in electronics so, potentially, the company could begin selling unlocked GSM phones to customers who come in for games. Because of the intended audience – kids and the adults who bring them as well as a few die-hards who aren’t yet into PC gaming – it makes some sense for this service to exist.

The synergy also opens AT&T to new markets and, more important, places GameStop right at the nexus of mobile and gaming – a place it absolutely needs to be once future consoles stop accepting optical media.

However, with revenue down and hard-core gamers moving to services like Origin and Steam, there is little impetus for folks to trek out to the local GameStop for titles. Here’s hoping this latest attempt at monetizing the audience works as well as their midnight launches of Diablo III.

For some inexplicable reason, Nintendo and Toyota have teamed up to turn the Nintendo DS into a navigational remote control, thereby allowing drivers (although I hope passengers do most of the fiddling) to set their routes using their game consoles.

The service, called Kuruma de DS lets you see map and destination info as well as tour information as you drive through town. The service slightly gamifies the experience by adding a POI saving option.

The compatible Toyota Smart Navi system costs about $3,000 while the game itself costs $92 – quite a bit of cash to simulate the map screens in Super Mario World. The DS connects to the car via Bluetooth and includes quiz games and delightful Mii characters who show you around town.

via 4gamer via Kotaku

Ogmento is a gaming company dedicated to the creation of high-quality augmented reality games. Although AR games aren’t that rare – the 3DS does a few quite well and there are a number available on mobile phones – Ogmento is focusing on higher-end experiences. The demo above shows how they’re able to track targets in real time and, with a few button presses, have a tank fire into a crowd of luminaries including Will Wright and Bruce Sterling.

The company currently sells an AR game called NBA: King of the Court. The tank game, above, is a prototype.

The company is using a number of cool rendering technologies to make the AR experience more compelling. For example, the tank game includes an “x-ray” feature that will fill in space that is destroyed in the game, creating engrossing gameplay.

“This is the first time in history of mobile phones a technology like SLAM (Simultaneous Localization and Mapping) is running in real time and in parallel to high-end rendering and reconstruction of the physical space,” said CEO Ori Inbar. “SLAM is a technique typically used by robots and autonomous vehicles to build up a map within an unknown environment (without a priori knowledge), while at the same time keeping track of their current location. It is now being understood in game play environments where the computer can drop in digital assets that understand their physical environment including surfaces, walls, etc.”

Inbar and his co-founder, Brian Selzer, have experience in gaming and augmented reality. Selzer worked with Fox, Activision, EA, and Marvel creating online and mobile content.

The company raised $7 million Series A in a round led by Chart Venture Partners with participation from CNF Investments, Robert Bosch Venture Capital, and other private investors.

As this demo shows, AR is more than just greasy kid’s stuff. Although it’s really hard to see where the space is headed, it’s clear that games like this one become more interesting once the entire environment becomes fully mapped and trackable. The added x-ray fun is just gravy.

If you’ve ever wanted to swing a magic wand around and make things happen (besides encouraging the cool kids to give you a swirly, that is), here’s your chance. A new game on Kickstarter called Incantor promises some real-live olde timey majicke fun for your iPhone.

Built by a Rhode Island company, Movable Code, the game will allow you to cast spells and plan tactics by waving your wand around. The wand is actually a motion control device with haptic feedback and you can “shape” spells in the air to cast them. You can also use the wand to lock onto targets on the screen.

The designers include Nicholas Napp and Kevin Mowrer, formerly head of R&D for Hasbro. Mowrer is also a noted designer and artist while Napp was an “external technology scout” for Sony Ericsson. They have been working on the product for over a year and it’s very close to completion.

A pledge of $100 gets you a wand and a copy of the iPhone game. They’re about $6,000 into a $100,000 funding request.

“The premise is magic made real. It’s a game you play in the real world with a smartphone, a magic wand and your friends. We are aiming to bring the gaming mechanics of an MMOG and the strategy of a trading card game into the real world,” said Napp.

Hopefully we’ll have a hands on with this thing shortly so dry your hair off and stay-tuned.

Zynga has picked up the team behind Wild Needle, a female-focused casual games company that was backed by Playdom co-founder Rick Thompson.

Wild Needle was raising funding back in late 2010 to build casual, mobile games for women and closed a round with Thompson and Shasta Ventures. They didn’t release their first title until more than a year later in March (which is a pretty long time to be building a casual, freemium game). It was called Shoptown Hero and it looks like it lasted in the store for about a month before they pulled it two weeks ago.

On the surface, Shoptown Hero looks like many of the casual sim games that were popular in early 2011 on iOS. In the game, players have to save a small town from a tycoon named Fat Ralph. They have to fill their stores with virtual goods and sell them. The twist is that they have to negotiate prices with customers to earn profits. After launching, the game didn’t manage to break into the top free apps category in the U.S. and remained ranked in the smaller ‘Kids’ and ‘Education’ categories in the app store (see the App Annie chart below).

We hear this was a talent-sized deal, which is in line with most Zynga acquisitions. Zynga usually does smaller deals in the $5 to 20 million range for teams of game developers. But it has bumped up spending over the last year and a half, as the value of Zynga’s equity has become priced in and even declined over the last year. OMGPOP, for example, took all cash in its $180 million acquisition. Another small developer Zynga picked up recently was GameDoctors, which makes Zombie Smash.

Also worth noting: Wild Needle is Thompson’s second exit in the past month after another company he backed, Funzio, got picked up by GREE for $210 million. We reached out to Zynga for comment. A few employees have already changed their LinkedIn profiles. One of Wild Needle’s investors Rob Coneybeer, also talked about the deal to The Wall Street Journal (although we heard about it separately).

Very rarely do we see gaming startups launch on the rather limited platform of SMS. Mobile games are all about the graphics, the functionality, and the ability to leverage the very best of technology through an app. But StrayBoots, a real-world scavenger hunt via text, has managed to generate $200,000 in revenue over the past 12 months, with nearly 50,000 paying customers.

Oh, and did I mention that it’s all through SMS?

The margins must be incredible, considering that CEO Avi Millman explained that each two- to three-hour scavenger hunt costs the user between $6 and $12 and it’s currently only available on one phone per game.

The company also has deals in place with Time Out, Serious Eats, MyCityWay, and Leisure Pass North America, wherein the partnerships will create co-branded nightlife and food games that are to be promoted by both parties.

It works rather simply: just go to the StrayBoots website and choose a city and a game category, like restaurants or museums. You’ll then be emailed a code for your game, and once you’re in the specified starting point, just text the code in to StrayBoots. You can go at whatever pace you’d like, and play on a team, against a team, or by yourself.

The game currently supports walking tours in the following locations: New York, Chicago, San Francisco, Las Vegas, Washington D.C., Seattle, Boston, Los Angeles, Nashville, New Orleans, Philadelphia, Portland, San Diego, and the U.K.

iOS and Android apps are in the works.

Editor’s note: Tim Chang is a managing director at Mayfield Fund. Follow Tim on Twitter @timechange. He’s hosting a workshop on gamification at the Mayfield Fund offices on June 6 and has reserved 10 spots for TechCrunch readers — more details at the end of this post.

I have been active in the field of gamification for the past couple of years, working with companies like Badgeville, HealthTap, Gigya, Basis and others on leveraging game mechanics for end user behavior measurement, scoring and shaping. Last week, I participated on an investor panel of at VatorSplash’s Gamification Summit and the group shared several noteworthy points:

Gamification is expanding beyond the initial verticals of media and fitness: The next target verticals are education, eCommerce, local retail (example: Belly), and financial services.

Gamification is not just for consumer end users, but also corporate employees: Corporations can not only gamify their products and services for consumers and end users, but also leverage game mechanics to make work more fun, measurable, productive, and rewarding for internal employees. In fact, the internal enterprise-facing gamification market may turn out to be just as large (if not larger) than the consumer-facing opportunity, given the budgets and SW/SaaS spending involved with worker productivity.

Companies that let customers embrace gamification in baby steps will win: Rather than slamming existing and new users into a fully gamified experience out of the gate, companies may want to allow users to opt in to the game mechanics that they find most compelling and appealing. After all, different personalities “play” in different ways, and a common mistake for businesses is to assume that a single gamification element will appeal universally to all users. That said, simply bolting on gamification-lite to an existing business is likely to flop (remember when many companies attempted to add in avatars or virtual currencies because it was the trend at the time?) Companies should first think about their key business goals and target outcomes, match appropriate game mechanics to these goals, and then weave them into the user experience as seamlessly as possible — even if this means allowing users to initially opt-out or not engage in gamification elements.

Gamification needs to address all four phases of the user life-cycle: Think about leveraging game mechanics to facilitate and graduate users along each specific phase of the user experience: 1) new user onboarding (gamification is an excellent way to implement interactive tutorials); 2) user engagement; 3) conversion of free users to paid (or opt-in data sharing); 4) retention of power users. Remember that different mechanics are best suited for certain personality types and phases.

Gamification and Social often go hand in hand: Just as games come in single-player and multi-player flavors, gamification can be oriented towards solo or social play. For many companies, implementing gamification may first require installing social plumbing. As an example, Mayfield portfolio company Gigya (www.gigya.com) is a SaaS social infrastructure company that provides a suite of tools (like Social Login) that enables any business to add a social layer to their Web presence. Interestingly, they have found that users who are logged-in with Social Login spent 30% more time on-site than users who sign in with native site login. Customers like Pepsi use Gigya to build custom co-viewing experience sites for Pepsi-sponsored TV shows like The X-Factor, The Grammies and the SuperBowl, allowing users to collect “caps” (badges) and gain social ranking by commenting, sharing, and liking other users’ comments. Verizon Wireless created a community site of local events called VerizonInsider, where users are rewarded with points and badges for interacting with content.

Gamification design is about to emerge as a specific skill set: There’s likely to be a whole new talent pool trained at places like Playdom and Zynga that will be branded as “gamification designers” – many of our portfolio companies are already actively hunting for such people!

The possibilities for gamification are universal and endless: Every aspect of the human experience is a journey of sorts, meaning that there is a learning and leveling curve, a start, mid-point, and end goal…and multiple ways and strategies to reach the destination. Gamification should be thought of as helpful signposts, markers, scorecards, feedback loops and treats to guide the user along the way, show him or her different ways to “play” and provide hints as to what may be behind choice A, B, or C that they’re about to make.

Note to Entrepreneurs: Please avoid the “gamification as panacea” trap, tacking gamification as a “badge” onto every pitch, as VCs can see through this, just as consumers will shun bolted-on game mechanics.

We will be hosting an interactive evening workshop on gamification and game mechanics on June 6 at the Mayfield Fund offices on Sandhill Road, which will cover a broad range of topics including consumer motivation, leveling curve designs, pros and cons of various gamification tools; freemium conversion tuning for microtransaction and subscriptions; and using the seven deadly sins as a design framework.

We have reserved 10 spots for TechCrunch readers/entrepreneurs.  To be considered, please comment and share this post to Facebook and we will pick the folks who we think will benefit the most from the discussion.

[image via flickr/Fiona Shields]

You know how many Android developers complain about fragmentation? Yeah, this is what fragmentation looks like.

Animoca, a Hong Kong mobile app developer that has seen more than 70 million downloads, says it does quality assurance testing with about 400 Android devices. Again, that’s testing with four hundred different phones and tablets for every app they ship!

The photo above is just a sampling of Animoca’s fleet of Android test units. Yat Siu, who is CEO of Animoca’s parent company Outblaze, snapped and posted it from Outblaze’s headquarters today. In total, Siu says their studio has detected about 600 unique Android devices on their network.

“We haven’t managed to track down all of those devices because, in large part, they are no longer available for sale,” he says. Sad cakes!

On top of that, Siu said that the number of handsets from the lower-end Asian manufacturers is also growing rapidly. These are the phone makers that Nokia chief executive Stephen Elop was probably talking about in his famous “burning platform” memo when he said that are Chinese OEMs were “cranking out a device much faster than, as one Nokia employee said only partially in jest, ‘the time that it takes us to polish a PowerPoint presentation.’” If you take those out, the actual number of devices you need to test for is much lower.

But if you want to break into Asian markets, these phones matter and make it especially challenging for Android developers to ensure their apps work on every single Android device. Android fragmentation is a huge issue because developers have to check their work on dozens of devices. Animoca happens to be backed by Intel Capital and IDG-Accel, so it has the resources to buy all of these devices for testing and pay employees to use them.

But imagine the long-tail of developers! Imagine the people who make the roughly 500,000 apps in the Google Play store. Total nightmare.

It puts a real dent in Eric Schmidt’s prediction from six months ago that developers might start going Android first within six months. His deadline is up now and there aren’t signs of this happening. Appcelerator did a survey of 2,100 of its developer clients in March and found that, if anything, interest in Android development is stagnating.

Siu isn’t fazed though. He’s told me in the past that thorough QA testing makes Animoca’s apps retain users better because so many other Android developers do a bad job at it. Unlike iOS users who throw up their hands in frustration, write bad reviews and just leave, Android users tend to be delighted when they find apps that work even if they have a glitch or two.

He adds, “We like fragmentation as users prefer choice. We are not big believers that one size fits all.”

Update: We just got more photos of QA testing walls from another developer! Pocket Gems had two of the 10 top-grossing games on iOS last year, according to Apple’s iTunes Rewind. Plus, they’re backed by top-tier venture firm Sequoia Capital.

Co-founder Harlan Crystal sent us these photos. Here’s a photo of the iOS testing wall:

Then here’s their Android QA table. They actually keep their Android testing devices in a safe. But apparently, there are so many of them now, that they overflow out of the safe.

So Crystal spilled them out onto a table:

Note: I am not necessarily ragging on Android. The platform just presents more of a QA testing challenge than iOS does. Pocket Gems actually launched their first Android exclusive game this week called Tap Dragon Park.

If you’re a mid-size or large developer, how do you deal with QA on Android?

Is this Zynga’s next cash cow? It looks like FarmVille 2.0 is already in beta testing under the name ‘Big Harvest’ in the Philippines, a tipster tells us.

As you can see from the screenshot below, the game is way more three-dimensional, the crops are really lush and the graphics are just of a different quality level. There are several tweaks to the game play. Crops that are harvested can be turned into feed. Animals jump around after being fed. Players can take the milk and eggs from their animals and make pies.

Zynga declined to comment. “We don’t comment on what we may or may not be working on. What we can tell you is that we’re always looking for ways to bring players the best experience by listening to their feedback and continuously innovating on our games,” the company said in a statement.

Zynga has to be super, crazy careful with FarmVille. This game is the company’s crown jewel and still makes more money than any other Zynga game. Last quarter, FarmVille still produced 29 percent of Zynga’s online game revenue, according to an SEC filing this week. That’s $84.9 million in one quarter alone from Farmville.

Tinkering with the company’s biggest home run is a huge deal. There are risks to sequels so Zynga needs to pull this launch off perfectly. In the same SEC filing this week, Zynga revealed that Mafia Wars’ revenue declined by $26.5 million in the first quarter compared to the year before. This was partly because the game’s sequel Mafia Wars 2 apparently drew many of the “whales” (the people who actually pay a lot of money in these games) away from the original. But Mafia Wars 2 didn’t ended up retaining them.

However, if they are successful, Zynga will prove that it has truly enduring franchises. Earlier today, I wrote about another freemium gaming company called Nexon that has made some of its earlier hits produce more than $1 billion in revenue over several years. One of its earlier hits, Dungeon Fighter, has made more than $2 billion since it launched in 2005.

This is the big test to see if Zynga can do the same.

Here in these parts, we may write a tad too much about our Silicon Valley gaming brethren like San Francisco’s Zynga and Redwood Shores’ Electronic Arts.

But there’s actually a company that’s worth quite a bit more and has outperformed both since its IPO last December. It’s Nexon, a free-to-play gaming company that started out in South Korea and quietly grew a handful of titles into multi-billion dollar franchises over the last decade (see the chart below). The Tokyo-based company went public the same week Zynga did in December. Its shares have climbed 15 percent while Zynga’s have fallen more than 20 percent since their debuts. Now Nexon’s worth $7.9 billion while Zynga has a $5.5 billion market cap.

We caught up with Nexon’s chief financial officer Owen Mahoney just as the company came off its first earnings call yesterday. The company grew revenue by 46 percent year-over-year to $379.9 million (or 30.4 billion yen) with $154.8 million in net income. (Yeah, freemium gaming companies in Asia have ridiculous profit margins.)

Nexon takes a long and slow approach to building games. Many of its most lucrative hits are five to 10 years old and just keep chugging along, thanks to continuing servicing and content updates. Dungeon Fighter, for example, has done more than $2 billion in revenue since it launched in 2005. Nexon also has a direct relationship with most of its customers and doesn’t have to go through any platform (like, cough, Facebook) where it has to give up a 30 percent revenue share.

As for this last quarter, the real standout was China, Nexon’s biggest market by revenue. Revenues there almost doubled from last year to $190 million in the quarter (or 15.2 billion yen). It helps that there was Chinese New Year, which gives the same seasonal bump that you’d see during the holidays in the U.S. and Europe.

“I’d like to say it was because of a major strategic move or because we did something radically different, but it was just really solid execution by the teams responsible for building the games,” Mahoney said. “It was doing content updates that the market took really well.”

North America was down a little bit to $17.4 million (or 1.4 billion yen) because of a hacking attack during Christmas that the company is still recovering from. ”We feel like the situation is more stable than it was,” he said. He added that he expects Nexon expand a lot more here. Two other Tokyo-based gaming companies, GREE and DeNA, have made a big push on the West Coast through spending more than a half billion dollars on acquisitions of U.S. gaming startups like OpenFeint, Funzio and Ngmoco.

“North America and Europe are really emerging markets for online games,” he said. “Korea really shows the future that’s in store for the U.S.”

In Japan, Mahoney said Nexon is fairly immune to the regulatory crackdown that has sent GREE’s shares down by more than 30 percent over the past week. Earlier this week, the Japanese consumer affairs agency said that it was taking a closer look at a special kind of game mechanic that’s popular in many of GREE and DeNA’s titles. It’s called kompu gacha. It’s kind of like a random lottery where a user pays a little bit to pick up a random item. If they collect many special, rare items, they’ll get an even more valuable and rare item. Under pressure from the government, six of the big Japanese gaming companies this week said they’re abandoning the practice.

Mahoney said the tactic is more popular in mobile games, and not the kind that Nexon builds. ”It’s going to have little to no effect on our business,” he said. Indeed, Nexon’s shares are basically flat from a week ago when the story broke.

As for the future, Mahoney said the company is really interested in building and publishing for the Android and iOS platforms. They are looking at acquisitions, but they’re not looking to buy the hot flavor of the moment or a gaming company that’s throwing off a lot of cash.

“We do not go and buy revenue. We are very focused on teams and intellectual property that we think we can grow over time, and that’s where we’re looking today.”

Here’s a little something to file away for when your weekend gets dull — the Australian devs at Halfbrick have brought their premier flying-around-and-dodging-things game to its new home away from iOS.

Starting today, users looking to waste a few minutes playing Jetpack Joyride don’t need to look any further than Facebook for their fix.

If you haven’t yet played the game, think of it as a more graphically rich version of that classic helicopter Flash game, except you control guy with gatling guns strapped to his back. Distance is the name of the game here, and by snagging coins along the way you can purchase new bits of clothing and gear to help you soar even farther (the truly impatient can also buy coins in bulk with Facebook Credits).

Be warned though — the game is currently still in beta, and it certainly shows at times. After I spent a few moments mucking around with the game, for instance, the game window seemed to resize itself within its frame. It was sort of cool in a way — the game’s obstacles and assets would load faster the background — but it tended to make playing the game much more difficult than it needed to be.

You mileage with that particular glitch may vary, but a quick peek at some of the comments that users have left on Jetpack Joyride’s Facebook page point to a handful of other issues. Still, early hiccups are to be expected at this stage, and the game is still just as fun (and addictive) as ever when things finally gel. Just make sure you’re running the latest version of Flash in place before you try to take it for a spin, or else your plans for cruising through the air and snagging coins could stall before you know it.

Yesterday Rovio announced that it had reached 1 billion downloads of games from its hugely popular Angry Birds franchise — and with it, a little teaser of what might come next from the Finnish developers.

Today the company has confirmed to us some more detail about that, and the clearest sign yet of what it plans for its big follow up. It says that it has bought the IP for the game Casey’s Contraptions — Casey is the guy in the little video clip yesterday, pictured here — from Snappy Touch and Mystery Coconut.

The original title developed by Mystery Coconut and Snappy Touch is no longer available. Rovio’s Ville Heijari, VP of franchise development wrote in an email to me that the new title – effectively Rovio’s follow-up to Angry Birds – will come this summer, first on iOS and Android, then “extending to further platforms rapidly after that.”

“Working with [developers] Noel and Miguel has been fantastic, and this is a game that we all fell in love with from the first play,” Heijari wrote in response to my question yesterday about the video. “The gameplay is a perfect fit in our arsenal with its approachable, fun and highly addictive take on the physics puzzler genre.”

He adds that Rovio is currently reworking and rebranding the title, and “getting ready to re-introduce it in a true ‘expect the unexpected’ Rovio-style launch to an even larger audience.”

Rovio has had a huge success with Angry Birds, not only reaching 1 billion downloads across the different titles and platforms, but also increased revenues tenfold to $106.3 million in 2011.

Draw Something, the game that could do no wrong now seems like it can do little right, at least according to the blogosphere. There’s been a string of stories from virtually everyone saying that the OMGPOP acquisition is “haunting” Zynga because Draw Something’s daily active usage is down to 9.1 million daily active users from its peak of 14.6 million daily active users.

It’s funny how the press turns (and we know this too well). On the day we broke the story that Zynga was about to buy OMGPOP for what turned out to be $180 million, Business Insider said that our rumored price range was way too low. When the company sold, they then wrote a story citing Flurry’s CEO that OMGPOP had left $800 million on the table.

But now, the story is totally opposite! “Interest is fading!” The deal was a debacle! This chart below from AppData is getting rehashed over and over again.

It looks dismal. But while Draw Something’s decline seems a little scary (as it should be), there’s a lot of context to keep in mind –

1) Zynga raised its bookings guidance by around $50 to 75 million for the year, mostly on OMGPOP. Zynga said late last month that bookings for the year would come in at between $1.425 billion to $1.5 billion, up from $1.35 to $1.45 billion. They said on the earnings call that the $50 to 75 million bump was mostly because of Draw Something. While that seems high, it’s not out of line if you look at other comparable company monthly revenues. Funzio was making $5 million a month at the time of its sale to GREE. Glu Mobile, a publicly-traded company, did $17 million in Android and iOS gaming revenues in the first quarter.

2) Games usually peak and then taper off in usage. But revenue sometimes goes in the opposite direction with optimization and improvement (like with Farmville). Zynga probably knows the natural lifecycle of freemium game better than most other companies. Games peak early and then taper down over long stretches of time.

Even hit games often contribute the majority of their revenue to the company after they peak. Farmville was still Zynga’s top game by revenue last quarter even though it’s several years old. It made up 29 percent of the company’s online game revenue, followed by Cityville which had a 17 percent share, according to an SEC filing today.

Here’s the life cycle of Cityville, Zynga’s top game on the Facebook canvas by monthly active users:

Here’s what Farmville looked like:

If you zoom out, here’s what Draw Something’s life cycle looks like. Kinda familiar?

True, mobile is a little bit different. The titles that were first to market like Angry Birds and Zeptolab’s Cut The Rope, have managed to last longer than your typical social game on the Facebook. There are also exceptions like Words With Friends, which has a very unusual curve and Zynga Poker. But life cycles for mobile games are getting shorter every quarter.

3) OMGPOP’s price may seem high, but the deal was far from the most aggressively priced one in recent social gaming memory.

Remember when Disney paid up to $763.2 million for social gaming startup Playdom in 2010? At Playdom’s peak, the company had 7.3 million daily active users. When the deal finally closed, they had about 5 million. Even if you exclude the $200 million earnout, Disney paid more than three times as much as Zynga did for one-half of the daily active users. And that’s factoring in Draw Something’s recent declines. (Note: We used to have a chart of Playdom’s aggregate daily active users in this story, but we had to take it out per requests from AppData’s owner Inside Network).

Or how about the time when DeNA paid up to $403 million for Ngmoco in 2010?  When DeNA won the bidding war against Zynga for this company led by former EA execs, they got 12 million registered users. That’s registered, as in people who touched Ngmoco’s Plus+ gaming network maybe one or two times (not people who used it every month or every day).

OMGPOP had peak usage of 14.6 million users every day. Up until now, Ngmoco has mostly been a source of costs for its Japanese parent as it only launched its Android-based mobile gaming network last fall. If they start materially adding to revenues, it won’t be until now or later in the year, two years after they were acquired.

Or how about the time when GREE paid $104 million for mobile-social gaming network OpenFeint even though it lost more than $6 million on $282,500 in revenue the year before? OMGPOP made about that much revenue per day when it sold to Zynga.

4) There are a lot of other conflating factors that have driven the stock downward over the past few months:

The lock-up period for Zynga’s employees ended a week ago, so now the company’s rank-and-file can sell their holdings. Pincus himself sold close to $200 million in stock at the beginning of last month through a secondary offering. Both Pandora and LinkedIn, which went public last year, matched or found new lows when they hit their critical lock-up dates.

Maybe there are some underlying concerns about where Zynga will find new growth as the company’s business on Facebook seems mature. Draw Something might tie a little bit into that as it’s part of Zynga’s mobile strategy, but it’s not just the game itself. It’s hard to envision a gaming business on iOS or Android that has the market share that Zynga has on Facebook. Furthermore, many standalone Android or iOS gaming companies trade or have been sold at somewhere between $200 million and 400 million.

At a $5.89 billion market cap, Zynga is aggressively priced for growth and is worth about four times its projected revenues this year. Meanwhile, Electronic Arts trades at not much more than what it will bring in revenue for this year. Zynga is also changing a lot internally as early employees, many of whom didn’t have a genuine gaming background, phase out. The company is now pulling in a lot of EA’s middle management. That could bring some creative firepower but it could also create internal culture clash.

But OMGPOP? That’s just one game. And the title’s decline, while fast, mirrors what you see with other hit games.

A little footnote — no, actually, a big footnote — to Rovio’s news earlier this week that revenues had increased by more than tenfold in 2011: the games developer says that its Angry Birds games have now passed the one billion download mark.

Finland-based Rovio notes that this is taking into account the full range of games, including the original Angry Birds, Angry Birds Seasons, Angry Birds Rio, and the newest, Angry Birds Space.

The company has been milking the Angry Birds brand since first launching its iOS version of the game in December 2009, and in addition to a number of versions of the original game, there is now also an extensive merchandising operation that contributed 30 percent of all of Rovio’s sales for 2011.

But the company is also looking ahead. Many believe that it will be later this year that Rovio will launch a new franchise, while continuing to develop the huge Angry Birds brand at the same time. It is expected that the company will IPO in 2013 listing in New York and/or Hong Kong.

And yesterday, its Finnish neighbor, Nokia, announced that it would be investing in a new team of developers with Rovio to develop games for the Windows Phone platform — another sign of how the company is evolving, since the vast majority of its business today is on two platforms: Apple’s iOS and Google’s Android.

In a run-down of its 2011 earnings earlier this week, Rovio noted it made $106.3 million in revenues in 2011, some ten times more than its estimated 2010 revenues.

The short and sweet video Rovio made in honor of today’s news is below. And I should also point out that the blog 148apps is making an interesting connection here: they’ve spotted that the little boy in the video below looks a lot like the character from Casey’s Contraptions, and he speculates that it may be that Rovio is developing that game as its first post-Angry Birds project. I’ve reached out to Rovio to ask about this and will update as I learn more…

Three months after launching the PS Vita is still a hard sale. There simply isn’t a killer title yet. Uncharted: Golden Abyss is boring, the racing games fall flat, and the best game so far, Ninja Gaiden, is tepid at best. Worst yet, several of the Vita’s relatively strong titles are simply ports of smartphone games. In the age of $5 iPad games, spending $50 on a port is downright ludicrous.

Sackboy and LittleBigPlanet might be the ace the the PS Vita so desperately need. And it’s about to hit beta.

Sony just posted the details on its Playstation blog. While no exact dates were given, interested players should put their name down on this sign-up list to reserve a spot. As Sony states, the developers are looking for last minute feedback prior to the game’s launch next month.

We played an early version of LittleBigPlanet last June at E3. It was easily the best title at the show and cleverly takes advantage of the Vita’s multiple controls and social connectivity. But still, the game will likely debut with a $50 price tag, which as I previously stated, is a lot to swallow when equally immersive games can be had for dramatically less on hardware you already own.

San Francisco-based mobile gaming startup Funzio had just come off making more than $5 million in sales per month when it sold to Japan’s GREE for $210 million last week. Profits may be another story, and there’s less visibility into that. But Funzio had to decide between raising additional funding or selling at the time the deal happened.

The numbers were revealed in GREE’s earnings statement today. Funzio’s acquisition comes at a very fascinating time for GREE, a $4.8 billion mobile gaming company from Japan. Like Zynga in the U.S., GREE and its archrival DeNA are part of a younger vanguard of freemium gaming companies that have found success in their home market of Japan. The company made $168.5 million (13.4 billion yen) in net income on $578.9 million in revenue (46.2 billion yen) in the quarter ending in March. Just for comparison, that’s about 80 percent more revenue than Zynga in the same time period.

But there are threats on the horizon. GREE’s shares were absolutely slaughtered on the Tokyo Stock Exchange on Monday. The company’s shares fell a record 23 percent after the Japanese government said it was investigating the legality of various game mechanics in the social gaming industry. Many Japanese games have a slot machine-like mechanic called “Gacha,” where players will randomly win different special items. If they win all the items, they might get a grand prize. The National Consumer Affairs Agency said it’s now looking at regulating this tactic, which could seriously crimp revenues for GREE.

If anything, this underscores the urgency there is in expanding the company abroad. With the Japanese market becoming saturated, GREE is looking to the West and it’s done two major acquisitions to break into the U.S. with the $104 million deal to OpenFeint and last week’s $210 million deal to buy Funzio. The plan is to be a dual games platform and developer, just like the company is in Japan. They’ll make their own in-house games, but they’ll also distribute, publish and promote games from other developers.

San Francisco’s Funzio fits into the first-party game development side. The company, which was started by experienced game developers who had spent time at Zynga, Storm8 and hi5, had three mobile gaming titles to its name. They were behind graphical role-playing games like the mafia-themed Crime City, the military-themed Modern War and the fantasy-themed Kingdom Age.

They only arrived on mobile platforms last August with the debut of Crime City, a brand that the company had already put on the Facebook platform. That set them up to have a $2 million quarter between July and September of last year. Then they launched Modern War in November and the two titles got them to a $6 million quarter during Christmas. Finally, Kingdom Age, launched last month, got them to a $12 million quarter.

Just after Kingdom Age launched, I spoke with Funzio’s vice president of business development Jamil Moledina. Even though the game was downloaded at roughly the same pace that the company’s earlier games were, engagement was up. Both Modern War and Kingdom Age got to 1 million downloads in about the same time. But Kingdom Age saw the equivalent of 93 years of gameplay, while Modern War saw about 50 years of gameplay in its first five days.

Again, I don’t really have visibility into profits. But it wouldn’t be surprising if margins were tight as the cost of marketing apps and acquiring users has gone up dramatically over the past year. Glu Mobile, another San Francisco-based mobile game developer that’s publicly traded, posted very strong quarterly growth with $17 million in smartphone revenues for the first quarter. But it still reported a net loss of $6.8 million, which was probably partially fueled by its lingering featurephone gaming business.