Traditional game publishers have begun taking the Faceook gaming space seriously, and seminal game industry name Atari is among them. In October of 2009, the studio released its first social networking application: Atari Photo Sauce, a simple photo manipulation tool that thrives on interplay between Facebook friends.

Atari, in the midst of financial troubles, announced in 2008 its plans to refocus its primary efforts away from traditional big-budget console and PC games, and move towards social and online gaming.

At the time, Atari president Phil Harrison (who has since stepped down from that role) said that "Atari is part of an industry in some transition from pure packaged media to an online business model and social communication and community model," and that Atari may "take a slightly aggressive, leading-edge role in that transition."

Here, Atari London Studio development director and former SingStar franchise director Paulina Bozek talks about Atari's motivations to pursue the social space, the studio's process of conceiving its project, and what "You’ve been Photo Sauced!" means.

What prompted you to tackle a Facebook app?

Paulina Bozek: Facebook has attracted over 300 million users and the potential to engage this audience with fun games and applications is very exciting. We were set up as a mass-market social game studio and our background is in social games. Facebook is where friends hang out these days, and as social game developers we wanted to be there.

Salt Lake City-based developer Smart Bomb Interactive has added Joi Podgorny to its team as the director of Community Engagement for upcoming kids virtual world National Geographic’s Animal Jam. Her responsibilities will include building and overseeing all aspects of community management for Animal Jam.

The online world is scheduled to launch this summer and will target children aged 5-9 years old. Players will create, customize, and dress animal avatars for various "exploration adventures." They'll also design habitat areas for their animals, play mini-games with friends, and complete multiplayer quests/expeditions.

Prior to Smart Bomb, Podgorny was head of community for Mind Candy, the British developed behind another free-to-play, kid-targeted virtual world, Moshi Monsters. That browser-based MMO ended up attracting more than 10 million registered users since launching in April 2008, and those children played more than 120 million educational puzzles.

Smart Bomb Interactive has mostly focused on home console titles since it was founded in 2003. Its past releases include licensed games based on Snoopy, Pac-Man, and Bee Movie. It's also currently working on Snoopy WWI Flying Ace for Xbox 360 and Wii.

"This team and this project are a perfect fit for me," said Podgorny. "Kids who love animals are going to be immersed in a fascinating virtual world of unprecedented depth, and they’ll be part of an online community that parents can feel good about letting their children explore."

Sony Online Entertainment will be the first publisher to implement Live Gamer's Elements microtransaction platform, enabling it to offer unified, cross-platform digital wallet and virtual item purchases across its client-side PC online titles through social, web and in-game channels.

SOE already uses the microtransaction company's Live Gamer Exchange service for real money trading in several of its games. The two will work together over the next quarter to upgrade the existing infrastructure in SOE's titles; the games slated to take advantage of the Elements platform include EverQuest, EverQuest II, Free Realms, PoxNora, and other future releases.

Live Gamer says Elements helps clients improve conversion rates, average revenue per user, and retention through new tools like an enhanced enterprise storefront, retail merchandising capabilities, advanced item offers, and new analytics features. The platform is designed for browser-based games, social network platforms, social applications, and client-side MMOs, with configurations for different integration types.

Some of the upgrades introduced with the platform include options for SaaS or on-premise installation, dynamic currency conversion, batch programming, web storefront OpenSocial integration and Facebook Connect support, per user e-wallet policies (overdraft or maximum balances), parental controls for spending limits, API support for integration into existing thihrd-party platforms and products, and more.

"The microtransaction industry has become increasingly specialized, and Live Gamer has helped us with advanced functionality that allows us to continually stay ahead of the curve in ecommerce," says Sony Online Entertainment president John Smedley.

He continues, "We chose Live Gamer to power our payments, merchandising and primary-secondary market solutions based on innovative technology, recognized track record in the market and an advanced, holistic approach."

Namco Bandai is yet another packaged goods publisher that is trying to make more headway in non-traditional digital markets such as social networks and digital downloads.

On Monday, U.S.-based Namco Networks said that it surpassed 23 million downloads on Apple's App Store for iPhone and iPod Touch, across both free and paid titles.

Namco Networks said it is averaging 36,450 downloads per day since the App Store's opening in June 2008. However, a rep for Namco Networks confirmed to Gamasutra that the total download amount includes both free and paid downloads, although the company did not immediately have a ratio at hand.

Namco has partially relied on popular franchises born in the arcade and home consoles in order to gain a foothold in digital markets, with App Store renditions of Pac-Man, Mr. Driller, Galaga and Ace Combat. The company has also released new properties such as Garters & Ghouls and Isaac Newton’s Gravity on the App Store.

The firm expects to continue its expansion into the App Store market with 20 more games to launch on the service this year. "With over 100,000 applications available and three billion downloaded apps, the App Store is booming," said Jonathan Kromrey, general manager of Apple Games for Namco Networks.

In a separate announcement, Namco said it relaunched its social networking efforts on the 350 million-user-strong Facebook with Namco Arcade. A Namco Bandai Networks Europe statement said the Facebook app hosts games including Time Crisis Elite, Pac-Man: Championship Edition and others.

Germany-based BattleForge developer EA Phenomic unveiled its latest project, Lord of Ultima, a browser-based title reviving the almost 30-year-old Ultima RPG franchise as an online strategy game.

In Lord of Ultima, players build and manage a unique city in a fantasy setting, interacting with other online gamers doing the same. The mechanics and presentation are similar to Blue Byte Software's The Settlers real-time strategy series, though it takes place in the Ultima universe. The game is currently available to play for free with a limited closed beta.

Originally debuted in 1981 and created by Richard "Lord British" Garriott, the Ultima series has seen dozens of releases on PC, home consoles, and handhelds, and a popular online spin-off in the form of Ultima Online. UO was one of the first successful MMORPGs before the genre took off with World of Warcraft, boasting a 250,000+ subscriber base at its peak.

Electronic Arts planned at least two follow-ups to Ultima Online, Ultima Worlds Online: Origin and Ultima X: Odyssey, but terminated both projects as the publisher laid off and eventually shuttered developer Origin Systems. The company, however, released Ultima Online: Kingdom Reborn, a free client with updated graphics and a new interface in 2007.

Lord of Ultima's developer EA Phenomic, which was purchased by Electronic Arts in 2006 when it was named Phenomic Game Development, most recently released BattleForge last year, a free-to-play and card-based strategy PC game with microtransactions. Before the acquisition, the studio was best known for its SpellForce strategy and RPG series.

Neither Electronic Arts or EA Phenomic have announced details on Lord of Ultima's full release or planned pricing models.

Capcom revealed that its hit Japanese online action game franchise Monster Hunter will be coming to the Xbox 360 in Japan this summer in the form Monster Hunter Frontier.

According to VG247, the publisher "can't announce" if and when the updated title will be coming to Western audiences -- this version of the franchise originally released in 2007 on PC and PlayStation 2, but has never launched outside Japan.

The grind-centric, multiplayer-friendly franchise has sold millions of copies in Japan, where it's particularly popular on the PlayStation Portable -- but has also recently debuted a Wii version, Monster Hunter Tri, which is confirmed for Western release in April.

In the meantime, consumer weblog Kotaku reports that the title's closed beta will start in May 2010 in Japan. When services begin this summer, users will pay ¥1,400 ($15) a month -- a fee that also includes a monthly Xbox Live Gold membership. This means Monster Hunter Frontier players become Gold members for free so long as they subscribe to the MMO.

In what's been a busy month for the Chinese MMO company, Shanda Games Limited has announced that CEO Diana Li is resigning from her chief executive position and the company's board of directors in order to pursue other interests. The company's chairman and co-founder Qunzhao Tan will take over as CEO.

"I want to thank the company's board members and employees for their support and trust in me," says Li. "It is with great difficulty that I leave a company in which I have devoted the last five years to help build. I want our business partners, investors, and employees to know that I am leaving the Company in good hands."

Li's departure comes just two weeks after Shanda announced its acquisition of Mochi Media, a Flash gaming ad network and payments platform, for $80 million. A week before that, the Shanghai-based company revealed it purchased MMORPG developer Goldcool (Hades Realm), obtained exclusive licenses for operating Bubble Fighter and Mir III, and bought the movie rights for Mir II.

Shanda also recently revealed plans to establish a joint venture with software company Kingsoft Corporation Limited for the development, marketing, and operation of free-to-play martial arts MMORPGs JX Online World and JX Online 3. And last September, Shanda raised a huge $1.04 billion IPO in the U.S.

Li's successor, Qunzhao Tan, was previously in charge of the MMO company's game research and development, operations, and infrastructure management centers. Starting in 2005, he was appointed president of Shanda's games business unit. He's also the producer of Mir II and WOOOL, and is heading the teams for World Zero and Legend of Immortals.

"Over the past several years we have built up a strong management system and team to execute our corporate strategy," comments Li. "At the same time, I believe our chairman, who has extensive experience and a deep knowledge of the online games industry, will be able to lead the company to new heights. I wish the company continued success in the coming years."

On Tuesday, Worlds in Motion sister site Gamasutra received word from a reliable source close to online game maker Red 5 Studios that the company recently underwent a round of layoffs.

The studio, founded by former members of Blizzard's World of Warcraft team, has been around since 2005, working quietly on an unannounced MMO.

Our source estimated around 30 people were laid off. In a December 2008 interview, president and CEO Michael Weingartner said Red 5 employed 100 people across two studios--one in Orange County, the other in Shanghai.

Multiple calls to Red 5's Orange County studio were not answered, and exact headcount and layoff figures are unconfirmed.

Red 5's founding members include chief creative officer Mark Kern, who was team lead on Blizzard's World of Warcraft, and VP of creative Bill Petras, former art director on WoW.

Red 5 has been operating quietly since September 2005, staying relatively below the radar through the years regarding its MMO ambitions. In December 2006, the studio revealed that it secured an $18.5 million investment from Benchmark Capital and Sierra Ventures to develop its game.

In 2006, the studio had also announced a partnership with Seoul, South Korea-based online game company Webzen, which in 2009 closed down its L.A.-based branch, Webzen America. We'll update with more details on the reported layoffs as they become available.

Every week, we'll examine the most popular Facebook applications (according to MUA, monthly active users), as well as the social network's up-and-coming apps that have picked up the most users in the past seven days.

Shikha's Pillow Fight, which has stayed at the top of the "gainers" list for the better part of the past month, shed several hundred thousands users in the past few days and is now nowhere to be seen on the chart. The game is still popular, though, claiming more than 15 million monthly active users and positioning itself as the 15th most popular app on Facebook.

RockYou!'s Zoo World remains popular and kept its #4 spot on the gainers chart as it drew 1.3 million new players, a 9 percent increase that brings its total to 14.9 million users. Zynga's Mafia Wars jumped back into the top ten at #7 and brought in 821,878 new virtual gangsters, increasing its ranks 3 percent to 24.2 million.

#8 TikiFarm from Playdom saw 700,141 new users (+12 percent, 5.8 million total), #9 FarmVille from Zynga enjoyed 658,962 new users (1 percent, 74.8 million total), and #10 Happy Island from CrowdStar attracted 627,878 new users (6 percent, 10 million total). The full top ten chart of Facebook apps that've picked up the most new players follows after the break:

Parisian developer and publisher Monte Cristo announced it will close the multiplayer segment of its recently released Cities XL PC game next March, citing difficulties with attracting susbcribers to the paid MMO section of the city-building game.

"Three months after the launch, we have to admit that the subscription rate is lower than what we expected, and therefore the Planet Offer is not sustainable," the company explained in an email sent to player. "Not enough players decided to subscribe. "Therefore, it is with deep regret that we decided to put an end to the Planet Offer as of March 8th 2010. It will no longer be possible to subscribe to the game starting Monday February 1st 2010."

Though Cities XL owners will still be able to play the game's single-player mode, the Planet Offer service enabled player's to build their cities on a persistent planet with other subscribers, trading resources and working with each other. Along with Planet Offer's termination, Monte Cristo will shut down susbcriber's profile pages and city journals that are tied into the MMO portion.

The studio also announced plans to refocus the title as a single-player game as a new release called Cities XL 2011, adding many of the MMO mode's features (e.g. trading, blueprints, megastructures), along with other new features. Monte Cristo does not plan to publish new patches or content for Cities XL until Cities XL 2011 releases.

"We do realize that some of you were real fans of the Planet Offer, and loved to be able to visit other player’s cities and trade tokens between players," said the company. "There are simply not enough of us. Thank you again for your understanding and support."

Drimmi, a Moscow-based social games developer currently operating in stealth mode, has raised an undisclosed amount from Mangrove Capital Partners and ABRT Fund, which it will spend on the development and launches for several titles on Russian social networks Vkontakte, Odnoklassniki.ru and MoiMir@Mail.ru.

Though the total financing was not annnnounced, Russian search/analytics/monetization company Quintura reports that Mangrove and ABRT agreed to invest "several million" into the studio in exchange for a 20 percent stake in Drimmi. Both funds also previously invested in Quintura, in-game advertising copany EnterMedia, and online shopping club KupiVIP.

Founded in September 2009 and currently employing 20 workers, the startup is lead by CEO Nikita Sherman and COO Viktor Zakharchenko. Previous to Drimmi, Sherman was the CEO of online dating platform Mamba, which used micro-payments for premium services. He was also president of Odnoklassniki.ru, a social networking site centered around schools.

Drimmi will release its first game in a few weeks and plans to release over ten titles in 2010. The company is entering a rapidly growing space in Russia, as the country's social games market grew from almost nothing in 2008 to $30 million in 2009, according to Quintura's estiates. Vessely Fermer (Cheerful farmer), the most popular game on social network VKontakte, alone generates more than $1 million per month.

Following revelations of layoffs, funding challenges and unconfirmed buyout reports at developer Red 5, Electronic Arts says backer Benchmark Capital had been trying to sell the studio.

Benchmark partner and former EA exec Mitch Lasky published a sharp and widely-circulated critique of EA's management and business model on his blog just two weeks ago, and it would seem EA feels vindicated by Benchmark's own struggle for success with Red 5.

"Now that Red 5 Studios is bankrupt, Mitch Lasky can devote more time to giving business advice on his blog," EA corporate communications VP Jeff Brown told Gamasutra, confirming that Benchmark made multiple attempts at a purchase of Red 5 by EA.

Lasky had written that EA is "in the wrong business, with the wrong cost structure and the wrong team," and criticized the company's cost management structure and the decisions of CEO John Riccitiello.

Benchmark and Sierra Ventures invested $18.5 million in Red 5 in 2006 to back its unannounced MMO in development. Yesterday, Gamasutra sources confirmed that Red 5 had laid off some 30 workers, while other reports from consumer weblog Kotaku claimed that the developer was near closure before being purchased last week by an undisclosed company.

The buyout has reportedly put Red 5's project, "a futuristic military game built on Offset Software's video game engine," on indefinite hold, while its development focus shifts to a project aimed at the Chinese market.

Game publisher Atari and science fiction-themed cable network Syfy announced an exclusive partnership to promote the imminent release of upcoming PC MMORPG Star Trek Online both on television and on the internet. The game ships to store on February 2nd.

As part of the campaign, Syfy will air a two-day Star Trek marathon starting on February 1st, showing episodes from Star Trek: Enterprise from 8AM to 5PM. On the following day, the channel will broadcast episodes from Star Trek: The Next Generation from 8AM to 5PM. Atari will support promotions with TV and digital advertising for the game throughout February.

Syfy has also built a "one-stop hub" for Star Trek Online on its official site, offering game information, contests, and even an exclusive digital download bundle. The limited edition bundle includes an in-game item (Neodymium Deflector Dish) that offers bonuses ship enhancements, 500 Cryptic Points (microtransaction credits for buying virtual goods and bonuses), and a 15 percent discount of the user's next Syfy.com store purchase.

"The Syfy audience has immense passion for video games," says Syfy Ventures SVP Alan Seiffert. "With that said, we are making a significant commitment to growing our presence in gaming and establishing Syfy.com's Game Center as a leading destination for cutting edge interactive entertainment from a news, entertainment and even sales perspective."

Seiffert continues, "This joint venture with Atari helps showcase the types of unique partnerships we will look to develop to provide our audience with exclusive experiences tied to today's hottest interactive entertainment."

After news of layoffs and widespread reports of financial troubles, developer Red 5 is confirming that it's received a new investment as it undergoes a reorganization.

"Red 5 Studios, Inc. is currently working on an unannounced massively multiplayer online game," says the company in a statement that did not offer further details on the project nor confirm or deny whether this is the same MMO it's been developing since it received $18.5 million from Benchmark Capital and Sierra Ventures in 2008.

"Recently, the team formed around a new direction and took on additional investment from a strategic partner in the online games industry," it continues. "Red 5 remains committed to releasing a AAA quality, online title targeted for a worldwide release."

Red 5 had been funded in part by Benchmark Capital, and Electronic Arts told us earlier today that Benchmark had tried multiple times to sell Red 5 to it.

In a jab at Benchmark partner and former EA exec Mitch Lasky -- who has been vocal in his disapproval of EA's management -- the publisher also suggested that Red 5 is "bankrupt". Benchmark now stresses that's not the case.

"Red 5 is not bankrupt nor is it considering such a thing," Benchmark's Bill Gurley tells Worlds in Motion sister site Gamasutra.

Red 5 did confirm, though, that it had to restructure its team to meet its current goals, though it declined to offer specifics. "As part of the restructuring, some team members chose to part ways while others were let go," it says.

Concludes its statement: "Red 5 has great respect for these departing team members and the contributions they have made."

Just a day after Apple announced the iPad, revealing support for iPhone Apps/Games and the potential for developers to adapt their titles to the new hardware's bigger 9.7-inch display, at least three companies -- Scoreloop, OpenFeint, and Chillingo -- have said they will bring their social gaming infrastructures to the tablet.

Scoreloop's Core Social white-label technology enables developers to implement features like online high scores, achievements, friend recommendations, virtual currencies, and more in their games across iPhone and Android. The first announced iPad title to integrate the infrastructure is Astro Ranch HD, a revision of Tag Games's Astro Ranch for iPhone that takes advantage of the hardware's larger screen.

"We were thrilled when we first saw the iPad. There was no question that we would support it in addition to the iPhone and Android. We’re now extremely proud to officially announce support for the iPad — starting today," said Marc Gumpinger, Scoreloop CEO. "And now we’re free to state as well, that the first Scoreloop enabled games for the iPad are already in the works."

Peter Relan, chairman for Openfeint, whose iPhone platform allows similar social gaming features like instant messaging and seeing what friends are playing, said his company will also support iPad releases. "We have plans for some really special features for the iPad that will make social gaming even more immersive," he told Pocketgamer. "OpenFeint will support multiple logged in profiles for local multiplayer games just like Xbox Live."

Chillingo head Chris Bayette expressed a similar sentiment for Crystal, his studio's platform for allowing achievements, social network integration, buddy lists, player profiles, and more in its games. "Chillingo is already working to make Crystal compatible at the iPad's higher resolution," said Bayette, according to a report from Mobile Entertainment.

Online game publisher Aeria Games & Entertainment (a subsidiary of Japanese company Aeria) says its player community has surpassed 10 million registered members, a milestone that the company says comes at the end of record year in terms of launches, userbase, revenue, and website traffic.

Launched in 2006, Aeria publishes a wide range of free-to-play massively multiplayer online titles, from martial arts games and racers to casual titles and first-person shooters. Its portal currently offers 16 titles, and recently expanded its portfolio to include browser-based games and releases available in multiple languages (Spanish, French, German, and Turkish).

Aeria's catalog includes games such as Shaiya, Shin Megami Tensei: Imagine Online, Project Torque, LaTale, Turf Battles, Last Chaos, and Hello Kitty Online. The Santa Clara-based publisher most recently launched anime-inspired fantasy MMO Grand Fantasia. It plans to unveil several more titles for its portal later this year.

"Our player community has been the primary driving force behind our growth," says Aeria Games's chief operating officer JT Nguyen. "No other MMO portal has such a robust, active, and loyal fan base, and we have every intention of showing our fans our gratitude by running generous promotions and events in the coming weeks."

London-based indie developer Avaloop announced the launch of Papermint, it's uniquely designed free-to-play 3D virtual world and social networking game, in the UK. The browser-based title stands out from many other virtual environment not just for its stylised, illustrated graphics, but for its target audience: females aged 15 to 35.

In Papermint, players create a custom character, explore a world where everything is made of paper, meet friends, play games with others, pick flowers, buy virtual clothes/furniture, or create their own in-game goods out of the plants they pick. Players can even fall in love with a partner, plan a wedding party, get married, play a "child-making game", and give birth to a baby -- which is actually another new player logging into Papermint.

Another unique aspect of the online world is that it uses a sophisticated profile system that tracks player's behavior and deliberately selected characteristics. The system is designed to determine the "psyche and inner values" of players, and then display its interpretation of that information in "a magic soul box" that floats above each player's head.

Avaloop spent more than three years creating Papermint, during which it went through "the heaven and hell of entrepreneurship." The team's staff grew and shrank again, and moved from Vienna to London, among other hardships. "Papermint was lumped together with Second Life, then Animal Crossing... Google Lively and then Pet Society," says the studio. "But Papermint was always planned to be just Papermint – the very first game of its kind, which is now finally ready to launch."

"This isn't Second Life," explains Dr Barbara "Babsi" Lippe in a "love letter" about the virtual world's development process. "Nobody in Papermint has to care about their virtual cup-size because everyone is flat anyway. Beside the decision to ignore any trend towards hyper-realism in videogames and do it the stylized way, Papermint offers a unique way to socialise, express oneself, and grow one's personality.

You can watch a video of Papermint and see an illustrated journey through its unique world after the break.

As Electronic Arts reveals FIFA Online, a free-to-play PC version of the company's soccer franchise, EA Sports head Peter Moore says the company will likely consider buying more social gaming studios like recently purchased Playfish.

As Electronic Arts reveals FIFA Online, a free-to-play PC version of the company's soccer franchise, EA Sports head Peter Moore says the company will likely consider buying more social gaming studios like recently purchased Pet Society developer Playfish.

Designed for gamers with broadband internet connections and "average spec" laptop and desktop computers, FIFA Online will offer 30 licensed leagues, 500 clubs, and over 15,000 player. The downloadable title will enable players to acquire players, upgrade skills, and receive unique apparel by earning in-game currency or through microtransactions.

EA will launch a closed beta test in Europe with 20,000 fans, followed by an open test in June with hundreds of thousands of gamers. The publisher plans to release an English language version of FIFA Online in June 2010, then put out the title in other languages across Europe and North America some time during the 12-24 months afterward.

The company is no stranger to the free-to-play space, as it's released microtransaction-based games under its Play 4 Free brand like BattleForge and Battlefield Heroes. It's also working to establish a presence in the social gaming market as evidenced by its $300 million purchase of Playfish late last year, but Electronic Arts might not be finished buying up studios yet.

In our latest employment-specific round-up, we highlight some of the notable jobs posted in big sister site Gamasutra's industry-leading game jobs section this week, including positions from 38 Studios, Vicarious Visions and more.

Each position posted by employers will appear on the main Gamasutra job board, and appear in the site's daily and weekly newsletters, reaching our readers directly.

It will also be cross-posted for free across its network of submarket sites, which includes content sites focused on online worlds, cellphone games, 'serious games', independent games and more.

Some of the notable jobs posted this week include:

38 Studios: User Interface Engineer
"Would you like to become part of the team that includes the creative visionaries behind Drizzt Do’Urden and Spawn? 38 Studios is currently seeking a User Interface Engineer to join our Engineering department. This is a full-time position with competitive salary, full benefits and 401(k), and the chance to be part of online gaming history!"

Bungie: Gameplay Design Lead
"Do you love the challenge of designing great gameplay? Do you have 10 ideas on how to make Halo’s player interface better? Do you hate that moment in a game when you realize that you’ve found the ultimate powerful weapon, making all others pointless? Are you an experienced game designer looking to work on AAA games with talented and passionate people in a team environment? If so we have the job for you! Bungie Studios is looking for a passionate, creative and hard-working Gameplay Design Lead for our next project."

Helping fund relief efforts for those affected by Haiti's devastating earthquake earlier in the month, many MMO and social gaming studios have raised money through virtual goods sales for donations. The latest companies to launch campaigns and contribute to Haiti aid include Outspark, Frogster, and Tall Trees.

Free-to-play MMO publisher Outspark is selling "Help Haiti" in-game bundles in four of its popular titles -- Fiesta, Secret of the Solstice, Wind Slayer, and Project Powder -- for $5, donating all of the proceeds to Yele Haiti, musician Wyclef Jean's relief organization. That campaign launched in January 15th and ends on the 31st.

London-based developer Tall Trees has contributed $20,000 to UNICEF's relief efforts in Haiti, which it raised through the sale of virtual Haitian cichlid fish in its Facebook game Fish World. The aquarium simulator began offering the fish to players last week for $2.

Runes of Magic publisher Frogster also sent €40,000 ($55,476) to Save the Children Deutschland e.V. The charity is devoted to helping kids grow up healthy and attend school, protecting children from exploitation and violence, and helping families in emergency and disaster situations, such as the earthquake in Haiti. Frogster raised the money with a promotion selling an in-game mount to Runes of Magic players late last year.

These efforts follow similar fundraising promotions from other online game companies like Zynga and Sony Online Entertainment. Zynga raised more than $1.5 million through virtual good sales in titles like FarmVille and Mafia Wars, while SOE raised $25,000 doing the same in titles like Free Realms and the EverQuest series.

The game industry had a down year in 2009, and softer hardware sales alongside the rise of mobile and digital revenue streams have left many investors leery of investing in traditional game publishers.

This means weaker stock for leading companies as mixed messages abound on the fate of the core market; companies like Electronic Arts have reacted to missed estimates by reducing the prices of certain console SKUs and stressing new digital revenue pipelines, while companies like Ubisoft and Activision have centralized on their core franchises for the majority of their revenues.

But Cowen Group analyst Doug Creutz says it's still a great time to be in the console business, and that new markets are simply adjacent segments, not rivals that will erode marketshare.

"Notably, we reject the notion that competition from non-traditional video gaming formats such as the iPhone and social gaming have significantly impacted the traditional console cycle," he says. "We believe that these newer gaming media represent a distinct and non-competitive market segment from console gaming, which is dominated by the core gamer."