FarmVille deserves recognition for its role in social gaming history. The three-year-old game, which has been played by 100 million people, was one of the first social games on Facebook to capture a mass audience.

Amazingly, after all this time, FarmVille continues to attract more than 18 million players a month, making it Zynga’s sixth-most-popular game. It also brings in more revenue than any other Zynga title, accounting for 29 percent of the company’s revenue in the second quarter.

As such an important brand to the company, it makes sense to experiment with creating sequels — which have become the lifeblood of the traditional videogame market. But for the same reasons stated above, it will also be a delicate balancing act. One false move may irritate a legion of players, who have invested thousands of hours and significant amounts of money in the original game.

What’s more, Zynga desperately needs to prove right now that it can turn its past successes into franchises that will continue attracting players for many years to come.

Based on what I’ve seen in a brief online demo provided to me by the creative director and Zynga’s VP of games, the new game has a shot.

FarmVille 2 looks and behaves differently from the original.

In the first iteration, users were motivated to return to harvest crops before they wither. Zynga’s CEO Mark Pincus has famously talked about how its players were so passionate they’d set their alarm clocks to wake up in the middle of the night in order to plow their fields. But in the sequel, withering will not be a central theme.

In the sequel, there are much more realistic scenarios, including classic resource-management challenges. Players must make sure to have enough water to keep their crops alive, and must get fertilizer from the cows to make crops grow. To get eggs, you must feed your chickens; and to get milk, you must care for the cows.

The resources, including the eggs, milk, wheat and fruit from the trees, are then used in your farmhouse kitchen to make scones and other tasty treats that can be sold at your own roadside stand.

Instead of acting out some of these scenarios in solitude as in the original game, in FarmVille 2, the relationships on the farm are symbiotic — without one, the other is not possible.

“We wanted this very tactile and touchable experience,” said Tim LeTourneau, Zynga’s VP of Games. “We are embracing the technical advancements to make the screen come to life. The animals are fully animated and respond to your touch. You have a world that comes to life at your finger.”

In other words, coins don’t just fall out of the sky, LeTourneau said; you have to sell things in the market in order to earn them.

The game is also Zynga’s first developed entirely in 3-D, thanks to Adobe Flash 11.

For instance, shirts and pants are pinned to a clothesline, where they sway in the wind; a rocking chair actually rocks; a campfire crackles and wind chimes jingle in the breeze. Navigation is also vastly improved, making the game far less tedious to play. Instead of having to click on each individual parcel of land to plant new seeds or water, users can click and drag the mouse around on the screen. The movement, which Zynga calls “painting,” looks like a motion borrowed from a touchscreen, not a PC game. Additionally, to move different elements around on the board, far fewer actions are required. Now players must only right-click and drag.

The combination of better graphics and navigation results in much more active and fun game play. When relocating a cow from one side of the farm to another, the beast’s eyes bulge in surprise while the animal is suspended in the air, like a several-ton animal undoubtedly would.

“They don’t hate it, but they don’t love it either,” said Mike McCarthy, FarmVille 2’s creative director.

But the game is not mind-blowingly different — it’s still a game about a farm, as it should be.

Many of the tasks are the same in the two games, and even some of the colors and textures will be familiar. Still, the updates represent many positive changes that should attract some of the 100 million original FarmVille players — who have since retired their work gloves — back to the game.

Zynga is also sensitive to its original players, who are still playing the first FarmVille.

A year ago, it rolled out Mafia Wars 2, which pretty much put an end to the once very popular franchise. Original players of the game felt snubbed when the new version came out and it didn’t live up to expectations. All the time they’d spent on the previous version ended up being a total waste.

LeTourneau, who joined Zynga from Electronic Arts where he worked on the long-standing Sims franchise, said they took that experience into account when developing FarmVille 2. ”Although it’s a sequel, it’s not intended to replace FarmVille,” he said. “It’s not a continuation; it’s a reimagining of FarmVille. We are taking advantage of all the things we’ve learned about social games, and using the technology that’s available to create a new and different farming experience.”

For original FarmVille fans, there will be no way to transfer your accomplishments from one game into the next. Instead, Zynga will keep that version alive by continuing to create content updates for the players who still like it.

One very noticeable difference between the two games is that while the original was about creating a sprawling farm, this one is about the attention to detail. In other words, bigger is not necessarily better. Instead of creating vast spaces to mass-produce more crops, this one is about nurturing each and every tomato and pumpkin. Mini-competitions within the game challenge players to see who can grow the largest crops, like the exhibits you see at county fairs. In this game, strawberries can hit 12 pounds, so imagine how big pumpkins can get.

But just when you may find that too tedious or claustrophobic, players can zoom out and see the countryside. There’s a village off in the distance that’s not available today, but promises additional subplots where you can meet friends, trade goods and visit carnivals and county fairs.

Lastly, this is still a social game, so if you are looking for something different in that regard, you won’t find it here. There are still plenty of ties to your friends on Facebook. You can visit other friends’ farms, where you can potentially find a final ingredient you may need to complete a recipe. Friends are also allowed to visit your farm, where they can be “Farm Helpers.” Each action performed by a farm helper accelerates progress on the farm, including harvesting crops and feeding animals.

But most fun of all, it seems Zynga has learned a mechanic or two from more traditional videogames. At the end of each level, all of the players’ crops grow instantly — with a big “pop,” everything blooms. Not only is it a visually stimulating moment, it’s one that players can strategize around to make sure everything is watered and planted to get the biggest bang possible.

“All of these games are about progression, and feeling the reward and success of that progress,” LeTourneau said. “We want the level-up moment in the game to feel exciting.”

FarmVille 2 is live today on both Facebook and Zynga.com, and will be available in 16 languages, unlike the original, which only launched in English. There are no immediate plans for a mobile version, but with painting motions included in the game play, it only seems like a matter of time before it rolls out on phones and tablets.

Yes, indeed, if morale at the San Francisco-based social games company continues to sink as quickly as its stock has been dropping.

It’s the unfortunate flip side of a company that has stressed that its employees should be their own CEO and “move at Zynga speed.” It’s a culture driven by analytics, where every move is recorded, measured and evaluated.

Now it appears that the long hours and taxing work environment are causing the inevitable — some are deciding to leave, especially as shares trade 70 percent lower than the company’s public offering.

Several sources at other companies say they’ve started seeing a “flood of resumes” in recent weeks from Zynga developers looking for jobs or trying to raise capital.

On the inside, employees, who spoke on the condition of anonymity, described morale as “grim,” while another characterized the feeling as “anxious.”

To be sure, at times, it can also be business as usual. During the company’s 16th all-hands quarterly meeting today, CEO Mark Pincus reportedly talked about the company’s future, and fielded tough questions from the crowd as he usually does, according to a Zynga spokesperson, who declined to elaborate on the state of morale.

But if an employee hasn’t bought into the company’s mission by now, the past three weeks haven’t helped.

On Wednesday, Zynga’s COO John Schappert resigned, after only 15 months on the job.

And two weeks ago, Zynga reported a second-quarter earnings flop that led to its stock sliding by 40 percent. It has remained relatively stable at these depressed levels ever since, and closed today at $3.01 a share.

In addition, the company has also been hounded by at least two lawsuits — one targeting its management team, and the other, its games.

Employees at Zynga’s headquarters gather around the atrium at its 2012 Unleashed event.

The first suit is alleging that executives made false and misleading statements in order to liquidate their personal holdings at elevated prices four months after the IPO. In the suit, filed Tuesday in the U.S. District Court of Northern California, it named Zynga and a dozen of its executives and board members as defendants. In the company’s secondary offering, Pincus sold about $200 million in shares; Schappert sold $3.9 million; and CTO Cadir Lee sold $13.6 million.

But low-level employees were prohibited from participating in the sale, which also isn’t helping with morale, according to numerous staffers.

The second legal blow was a copyright-infringement lawsuit filed by Electronic Arts, which alleges that Zynga is making an “unmistakable copy” of its game, The Sims Social.

In some respects, Zynga has made it fairly far without a talent drain. In comparison, it took only three months for there to be at least three notable departures from Facebook, the social network that it works with very closely, and which is also suffering from post-IPO stock woes.

Another point that employees can celebrate is that most have been awarded stock grants, and not options. The benefit of grants is they can’t ever be underwater.

That said, for employees who are heavily compensated by stock, it may not mean much, as they’ve watched their net worth on paper drop by 70 percent over the past few months. At those rates, it’s the difference between being able to afford a nice house and buying a nice car.

For a majority of the 3,000-plus employees, many are also short-timers, which creates another issue.

Without a long history at the company, it may be hard for some to feel nostalgic about staying during difficult times. According to a document filed with the Securities and Exchange Commission, Zynga said 80 percent of the staff has been there less than two years. In fact, many employees have joined the company through a dozen or more acquisitions. This short tenure could potentially represent an ongoing challenge for Zynga to manage, as it tries to figure out how to create a sense of dedication among its employees.

Otherwise, Zynga can be like many other Silicon Valley companies offering free lunch and other perks. But now, some employees think it might be the time to pull out the checkbook and spend some of the $1 billion it raised in its IPO on retention bonuses.

In a statement, Pincus said that Schappert’s departure was amicable and had nothing to do with the company’s operations — in other words, it was Schappert’s decision to resign.

But if Zynga doesn’t find a catalyst to get its stock moving in the right direction, it’s not a risky bet that investors could see other such “voluntary” departures in the near future.

At that scale, CEO Riccardo Zacconi believes the London-based company is fit to wear the crown of a public company.

Never mind concerns about Facebook as a game platform, or that Zynga’s stock has fallen 70 percent since its public offering eight months ago.

During an interview at Casual Connect last week in Seattle, Zacconi confirmed that King.com is planning to go public next year on the Nasdaq stock exchange.

“We have not kickstarted the IPO yet,” he said, but “we are thinking about it. We first have to execute and then the rest is easy.

“This year is focused entirely on execution. From the management perspective, we have to think long-term, and if we do our job properly, and we put a couple of ticks in a couple of boxes, such as social and mobile, then we have the option next year if we decide to go for an IPO.”

Just last year, King.com started making it first games for Facebook after spending the eight previous years building its own game portal at King.com. The company’s games fall into the bubble-shooter category, including Bubble Witch Saga, and, more recently, Candy Crush Saga. When they first hit Facebook, they were nearly overnight hits, and still attract tens of millions of players every month.

During the past year, Zacconi said traffic has grown from 300 million game plays a month to three billion.

The company last raised capital in September 2005, securing $50 million in cash, but he said King has not spent a dime, having achieved profitability at around the same time. Today, it has 230 employees, and has plans to hire another 100 by the end of the year.

Zacconi would not discuss the company’s financials or how they compare to Zynga, but by the company’s headcount alone, King.com sounds much smaller than Zynga.

At the end of the second quarter, Zynga had a force of more than 3,200 coders and other people to make it the industry leader.

“The biggest hindrance for growing faster is people,” Zacconi admits, but he says he doesn’t require thousands of employees in order to be successful. He said today King has about eight people working on each game, despite at least two games being bigger than Zynga’s FarmVille. Keeping headcount low is a lesson Zacconi learned from running the company’s game portal.

“If you spend so much money on a game, and spend two years to develop it, then you can’t experiment. It is pretty bad news if it doesn’t go well. If you develop a game with three people in three months, and it doesn’t go well, that’s fine,” he said.

For the company’s next stage of growth, it is focused on bringing all six of its Facebook games to mobile.

Last Thursday, it launched Bubble Witch Saga, it’s first on iPhone and iPad. The game, which draws more than four million daily active users on Facebook, will fully sync across mobile and social, allowing players to save their scores, progress and virtual goods on one platform, and pick up exactly where they left off on the another device. Such synchronicity is still rare across mobile and social.

By 10 am on Day One, the game was ranked 28th in the U.S. and in the top five in Italy, the U.K. and France. It has a 4.5 star average rating with more than 1,000 ratings.

While Zacconi is excited about the company’s prospects on mobile, he admits it is difficult to get discovered on the iOS platform. To help with that he plans to rely heavily on Facebook for distribution. Facebook users will be able to discover the game through the iPhone or iPad Facebook application. If they play it online, it will appear in the app’s left-hand navigation, or through notifications. If a user clicks on the game inside of the Facebook app or on a notification, they will be sent to the iOS App Store, where they can download the native version of the game — if they haven’t already.

He said customers are saying they also want to play their games on mobile. “Strategically, it’s important to have a strong position on canvas in order to have a strong position on mobile,” he said.

It’s a strategy that Zynga is also taking, and if King can figure it out first, then perhaps the public markets will see value there, too.

Companies normally get a lift when they exceed estimates, but in this case, investor confidence has been so low that some think a meet will be enough to change the tide.

“We expect Zynga to deliver in-line 2Q bookings, which we think is enough to move the stock higher given sentiment in the name remains weak,” according to a note sent on Monday by J.P. Morgan analysts.

Yesterday, Zynga’s stock closed at $5.09 a share, up 6 percent for the day, but down 63 percent over the past four months.

For the second quarter, analysts are estimating bookings of $345 million and non-GAAP earnings per share of six cents a share, representing little to no growth over the previous quarter, when it reported a profit of six cents a share, excluding some items, on bookings of $329 million.

Bookings are what Zynga actually sells in the quarter versus revenue, which is amortized over multiple quarters. It reports these two figures because virtual goods are perceived as having a long shelf life. Bookings are often considered a better measure for how the company did during the immediate period.

Over the past five years, the company has become the largest game maker on Facebook, attracting 292 million users in 175 countries, based on producing hit games such as FarmVille, CityVille and Words With Friends. But as Facebook’s growth has plateaued (which has also been a problem for its own stock), investors have become concerned that Zynga won’t be able to keep accelerating as fast as it once did.

Last month, the company revealed its upcoming plans at Unleashed, which included the announcement of new games such as The Ville and FarmVille 2, a sequel to one of its most popular games. It also talked about its strategy for becoming a publisher of third-party game titles across both Facebook and mobile, but generally, it wasn’t enough to get investors excited enough to buy.

Since then, the company’s CEO Mark Pincus has been eager to talk about the company’s goal of achieving one billion people playing its games.

Last quarter, Zynga warned that it expects slower sequential growth in the first half of the year, with most of its growth weighted toward the second half.  For the full year, Zynga is projecting non-GAAP earnings of 23 cents to 29 cents a share on bookings in the range of $1.4 billion to $1.5 billion. Tomorrow, analysts will be looking closely to see if those projections have changed.

J.P. Morgan suggested that concerns over the company’s growth rates are overblown, and is slightly more bullish than the consensus. Based on information from AppData, which tracks the popularity of apps on Facebook, J.P. Morgan says that the number of people playing Zynga’s games on a daily basis has increased 2 percent quarter over quarter. Additionally, it noted that data only paints one piece of the picture, because AppData doesn’t take into account how many users come from mobile, and that mobile accounted for one-third of Zynga’s total daily users last quarter.

One concern that multiple analysts mentioned was Zynga’s staggered lock-up expirations. Since going public, the number of shares available to trade has increased to 600 million from 100 million, and by mid-August, the so-called float should jump to around 800 million shares. More shares will mean having to please even more investors.

ZNGA data by YCharts

236 years ago, Twitter was a dude yelling in a town square, Linkedin was just your last name, and you played FarmVille to survive.

– Aaron Levie, via Twitter

The announcement was made onstage today at the company’s Unleashed event at its San Francisco headquarters by Mark Skaggs, Zynga’s SVP of product development.

The game launches tomorrow on Facebook for free, and will be monetized through virtual goods for sale.

Much like other ’Ville games, which challenged users to build a farm, a city, or an imaginary fantasy land, the point of The Ville is to create a character and build a home, complete with swimming pools, workout rooms and state-of-the-art kitchen appliances.

After getting a good glance at the game during an embargoed briefing with Skaggs, it looks shockingly similar to Electronic Arts’ The Sims Social, and frankly, at times, it is hard to tell the two apart.

The Ville Dream Home

“We call it the house and people genre,” he said. “We wanted to take the fun we saw in YoVille and pull it forward and update it and create a new game in the genre.”

When pressed further about the similarities between it and The Sims Social, he said, “I’m not an expert on that game, but what I tried to do here is to create fun things to do with your friends.”

The Sims Social

Today, it no longer ranks in the top 25, and EA has turned its attention to a city-building game based on SimCity, which recently launched in beta.

Both The Ville and Sims Social are considered simulation games, meaning that players mimic real life by building homes, dressing up avatars and conducting everyday experiences, like cooking, eating, dancing and sleeping. Both games have wacky life-like elements that could wreak havoc on real-life relationships.

For instance, EA’s Sims Social lets players have pillow fights and take showers with crushes. Likewise, Zynga’s The Ville allows players to make “whoopie” by lying down in a bed together — or baking and sharing a pie.

The real innovation in The Ville appears to be the way players can communicate with one another. Here are three ways:

• Through a new messaging system called “ZTalk,” players will be able to leave comments on a friend’s game board. The technology could be brought to other games in the future.
• Zynga will allow you to check status updates for your friends inside of the game. Therefore, if you see your friend is having a bad day, you can bake her a cake, or try to cheer him up in the virtual world.
• Players will be able to take photos of their game boards and post them to their Facebook timeline to share them with friends.

Zynga aims to change this. At the company’s second annual Zynga Unleashed event in San Francisco on Tuesday, Zynga unveiled a unified platform to bring players together across portals such as the Web, Android and iOS, Facebook and Google+.

“The social engagement across our network is industry leading, but it’s also fragmented,” said Manuel Bronstein, Zynga general manager.

The idea is centered around the Zynga message center — the hub found on Facebook and Zynga.com that contains a player’s friends list, an activity feed of friends’ gaming statuses and a list of gaming suggestions based on what games you and your friends are already playing.

Also, with the newly launched Zynga API, third-party developers can beef up their games with widgets previously available only on Zynga.com, like group chat, a live social activity stream, and a zFriends list. More social, the philosophy goes, means increased engagement — exactly what Zynga and partner developers want.

Players can also connect using the newly launched real-time multiplayer feature which, just like it sounds, allows multiple players across separate devices to play with — or against — one another simultaneously. That’s a far cry from the typical turn-based gaming that Zynga offers, like those games in the “With Friends” franchise.

What’s unclear at this point, however, is how the new network will affect Zynga’s relationship with Facebook. If multiple players aren’t forced to play the same games through the same platform, that means players have the option to disperse across multiple mediums — mobile devices, Facebook and Zynga.com. And that also means revenues could potentially be more evenly distributed.

Of course, a bolstered internal social platform still has the capacity to increase engagement inside existing Facebook-hosted Zynga games, so it’s not necessarily an entirely bad thing for Facebook. It’ll be interesting to see how players end up using the platform as the new initiative launches.

The platform will roll out sometime in the near future (TBA), on Zynga.com, Facebook and mobile devices.

The event, starting at 10:30 am PT, will be hosted by the company’s CEO Mark Pincus at its swanky San Francisco headquarters. As usual, the canine-friendly company has invited both the press and their furry friends to attend.

But the social game maker has been fairly tight-lipped about what it will be announcing. Last week, it sent reporters red boxes, consisting of only an invitation folded into the shape of a paper airplane. The message was cryptic, but I’m taking it to mean that the company is hoping for its next set of products to really take off.

Indeed, Zynga — which is known for social game hits on Facebook like FarmVille, CityVille and Words With Friends — is probably looking for a catalyst. The company’s stock traded higher today based on buzz ahead of tomorrow’s event, but it is still down 40 percent since its IPO in December.

It is certain that Pincus and other executives will introduce a number of new mobile and social games onstage tomorrow. Included in that, we will likely see a game or two from its supremely popular ’Ville franchise, as well as games from the company’s two major genres, including casino and arcade. Any mobile announcements will be particularly important as smartphones become a significant driver of growth going forward.

I will also be keeping a lookout for an update on its Zynga.com platform, which was announced eight months ago as part of the company’s first “Unleashed” event. Zynga.com is a place other than Facebook for users to play games.

Since it launched in March, the platform has added seven games for users to play. Tomorrow, I’d expect Zynga to announce its own next wave of titles, as well as titles from third-party developers.

As the company adds games, it will be relevant to track the number of users attracted to the platform. While likely not a huge number yet, especially compared to its more than 50 million daily players on Facebook, it may be large enough to start attracting advertisers. Just last week, the first Facebook ads started appearing on Zynga’s network, hinting that it could soon be significant. (One ad I saw today was for doggyloot, a daily deals site offering 70 percent off toys and treats for dog owners. How appropriate!)

Whatever the company announces, however, I expect tomorrow’s event to be similar to Zynga’s first Unleashed event eight months ago, where it announced 10 new products, including a slate of new mobile games, a new ’Ville title and Zynga.com, which at the time it was calling Project Z. After the announcements, the company allowed press to get some hands-on time with some of the games.

The one big difference last time was that the company was getting ready for its IPO, and therefore, it was officially in a quiet period. This year, I expect Pincus to have a bigger presence since the gag has been lifted.

You may notice something different while goofing off at work playing FarmVille this morning: The first Facebook ads are appearing on Zynga.com’s in-game pages, marking the first time ever that the social giant’s ads have shown up on a Web site outside of its own.

But more significantly, it’s also the first sign of a Facebook advertising network, one that extends beyond Facebook’s own site and across the Internet at large. It’s the same thing Google has done for years, and a long-expected next step for Facebook in its longer-term advertising strategy — one that has come under fire lately for being ineffective and lacking relevance.

As for the new ads, which were first noticed by Inside Facebook, Facebook confirmed their existence, though it’s not clear whether or not the ads are appearing across all of Zynga’s games. And Facebook was quick to reassert its stance on privacy: “We don’t share any information about people or advertisers with Zynga and advertisers do not have any new targeting criteria,” a Facebook spokeswoman told me in an emailed statement.

It’s not wholly unexpected. In Zynga’s S-1 filing last July, the company noted the possibility of a revenue sharing agreement where Facebook’s ads appear on Zynga properties. The new ads will indeed include a rev share, though we don’t know the exact amount (that part was redacted from Zynga’s S-1, unfortunately).

The timing is peculiar. Earlier this week, Facebook killed Credits, the company’s proprietary virtual currency of the past year and a half. The extra layer of Credits meant extra friction for users, which often results in decreased spending. And that’s obviously bad for companies like Zynga.

So it’s possible that in the constant push and pull between Facebook and game makers, Facebook made the Credits concession while Zynga swung open the door to Facebook running ads on Zynga.com.

For what it’s worth, Facebook flatly denies my theory: “The timing of this announcement is unrelated to our news about Credits earlier this week,” a company spokeswoman told me. Zynga didn’t return my phone call.

Whatever the case, it’s another step toward what many assume will come from Facebook one day. In the meantime, I’ll keep my eyes peeled for Facebook ads on other sites.

Surely, I thought, there must be something one could do on social media that would be more fun than growing turnips and feeding chickens. Like, say, scheming and plotting, murders and marriages, contesting for power.

– George R.R. Martin, on Game of Thrones: Ascent, a social game for Facebook licensed by HBO and based on his novels

American Express and Zynga are rolling out a rewards program today that will allow players to earn virtual currency when they spend money in the real world.

FarmVille fans willing to jump through a number of hoops, including signing up for a Zynga-branded prepaid card from American Express, will earn in-game currency, similarly to how consumers earn free airline miles for every dollar spent on an airline-issued credit card.

The rewards program will first roll out in Zynga’s FarmVille game and then will expand to CityVille, CastleVille and other titles over time.

The partnership is smart for American Express since it is working hard to promote Serve, its alternative payment service that is targeting a wider demographic that goes beyond its core business user.

“It opens up tremendous opportunities to address segments of the market that we weren’t able to address with traditional credit or charge products, including the youth or underserved markets,” said Dan Schulman, American Express’s President of Enterprise Growth.

By partnering with Zynga, American Express will be able to pitch the card to a lot of new users.

The two companies started implementing the program five days ago, by offering FarmVille players the chance to visit a Serve-branded farm, where they can earn a virtual tiger. In less than a week, Schulman reports that already 500,000 people have “liked” Serve and have received the tiger.

While FarmVille is one of Zynga’s older properties, it is still one of its most popular, attracting 4.5 million unique users a day.

As I said earlier, it takes a number of steps to sign up.

First, FarmVille fans who visit the Serve farm will be prompted to plant a virtual Serve Money Tree on their farm. Then, they can register to receive a Zynga Serve co-branded prepaid card in the mail. Next, they’ll have to link the card to a bank account, debit card, credit card or cash using a GreenDot MoneyPak.

Only when all the steps are completed will they then be able to use the Serve card anywhere American Express is accepted.

Initially, American Express will reward a consumer’s first five purchases of $25 or more, but over time it expects to expand the program.

Starting later this year, Schulman said the Zynga Serve Rewards program will be able to link to deals inside of the game that can be redeemed in person. For instance, Starbucks could award consumers who have planted coffee crops a chance to redeem a coupon inside the store. Because the offer is linked to the Serve card, the discount will be redeemed automatically and consumers won’t have to remember to print out the coupon.

“It’s a closed loop for Zynga players,” Schulman said. “It’s so very different than what anyone else has done.”

Zynga’s CMO Jeff Karp said the program is not replacing the company’s current rewards program, but rather represents an extension of it. “Our goal is to build and scale the blurring of the lines between the virtual world and the physical world,” he said.

He compared it to other promotions that Zynga has done where it worked with brands, such as 7-11 and Frito Lay.

He said during those promotions, consumers were able to purchase bags of chips or other items, which had codes that could be redeemed inside FarmVille or other games. In those deals, consumers were obviously able to make the mental leap from buying something in the physical world to redeeming credits in the virtual world. Karp said the promotions experienced a redemption rate that was five to 10 times industry averages.

“What’s appealing to these brands is our 292 million monthly uniques, which is providing them with the reach of TV with the effectiveness of online and gaming,” he said.

In the company’s first-quarter report, filed with the Securities and Exchange Commission yesterday, it disclosed that players who dig planting and harvesting crops accounted for 29 percent of the company’s revenue during the period.

One frequently asked question is whether social games will be played over the long term, or if companies like Zynga will have to continue creating hits to stay afloat.

Since the company went public last year, it has been claiming that the former is true — the older the title, the more revenue it generates. In theory, that’s because long-term players are more committed, and therefore spend more.

Based on the numbers disclosed yesterday, that continues to be the case. In fact, all four of the company’s top titles are at least a year-and-a-half old, and FarmVille continues on the upswing. A year ago, it was contributing 27 percent of the company’s revenue; now it’s contributing 29 percent.

CityVille, which launched in December 2010, accounts for 17 percent of the company’s revenue; Zynga Poker, which is five years old, accounts for 16 percent of revenue; and two-year-old FrontierVille accounts for 10 percent.

Zynga said the primary reason that FarmVille’s bookings increased during the quarter was the release of new content in the game.

However, older titles don’t always perform better.

Mafia Wars is a case in point. Last year, the game was Zynga’s third-best-performing title, and accounted for 18 percent of the company’s revenues. But after the company launched the sequel, Mafia Wars 2, the game suffered, as longtime Mafia Wars players failed to make the transition to the new version.

Now the game makes up less than 10 percent of the company’s revenue, which means Zynga is not required to break out its individual performance. It did note, however, that the quarter’s online game revenue was offset by a decrease of $26.5 million in revenue from Mafia Wars, compared to the first quarter of 2011.

Ouch. That’s a lot less ammunition.

Yesterday, Nintendo reported an annual loss — its first in more than three decades — after revenues fell 36 percent. Hours later, five-year-old upstart Zynga reported nearly the opposite results, saying that first-quarter revenues jumped 32 percent year over year.

“Social, accessible and free are changing things,” said Zynga’s COO John Schappert in an interview. “We were built for this market; we live on free and in-app purchases. We never grew up on $60 games and consoles. It’s a different world, and it’s hard for some companies as they make the transition.”

For more than a year, the game industry has worried about the shift toward social and mobile from more traditional platforms like the home console. And now, after yesterday’s two drastically different financial reports, there is more than anecdotal evidence for concern.

Zynga continues to gain momentum and attract larger audiences with titles like FarmVille and CastleVille on Facebook and Words With Friends on mobile. On the flipside, Nintendo is facing yet another hardware cycle, with consumers waiting for its newest console, the Wii U, coming later this year.

Generally, experts believe that social and mobile games are expanding the overall games market. But yesterday it was hard not to see Nintendo’s first loss in three decades — totaling $531.1 million — as a hint of where things are headed.

Michael Pachter, an analyst with Wedbush Securities, is bullish on Zynga’s prospects but is not optimistic about the future of console games.

“Nintendo is living in the past, repeating what got them to where they are, and hoping that the recent downturn is a fad,” he said. “They aren’t adapting to the times, and it’s hurting them.”

To be fair, the companies approach the market completely differently, so it’s hard to compare the two.

Nintendo sells proprietary portable and home gaming units as well as the games that work on top of them. Meanwhile, Zynga gives away its games for free and lets them work across most computers and mobile phones. It makes money on advertising and microtransactions.

The two approaches lead to drastically different audience sizes.

Zynga said the number of monthly active users playing its games increased to 292 million in the first quarter, up 24 percent. The game company, which got its start on Facebook, is also expanding rapidly to mobile, reporting that it had 22 million monthly users on mobile, up from only 12 million one quarter ago.

Nintendo does not break out quarterly figures, but the number of new customers it reached during its fiscal year pales in comparison. Over the past year, it sold 13.53 million 3DS units, and expects to sell 18.5 million this year. Nintendo sold 9.84 million Wiis over the past year, down 35 percent.

This year, Nintendo is banking on the Wii U to revive the company and to better position itself against mobile devices like the iPad. The new console will come with a 6.2-inch touchscreen that will allow users to interact in a new way with games on TV screens. It plans to sell 10.5 million Wii units this year, including the Wii U.

Last year, Nintendo Global President Satoru Iwata told AllThingsD in an interview that he is not willing to gamble on free-to-play games, because consumers are willing to pay for Nintendo’s superior experiences and brands.

“If we were simply going to say okay, the only the way we could sell more products is by decreasing the price, then there wouldn’t be a bright future, and the entire industry will fold,” he said.

His point is not entirely lost.

Zynga makes far less money per user than Nintendo. In fact, the gap between them is enormous.

Each console or portable game unit Nintendo sells has the opportunity to generate hundreds of dollars in income, since console games cost $60 and portable games cost around $40 (not to mention the initial cost of the hardware).

Meanwhile, Zynga makes very little on each player. It reports a metric called average daily bookings per average daily active users (ABPU). Yesterday, Zynga said ABPU increased to $0.055 in the first quarter from $0.051 in the same period a year earlier.

For Nintendo to switch from one model to the other would be like giving up the farm.

And to be entirely fair, Zynga wasn’t profitable, either. In the first quarter it lost $85 million, primarily due to stock-based compensation.