Backflip Studios will use light games to draw fans to its deeper iPhone game DragonVale

Backflip Studios is launching the free-to-play game DragonVale today, which represents the pioneering game studio’s latest efforts to raise the stakes in the iPhone game market. And the mobile game studio will use its casual titles to draw more users to this type of deeper mobile gaming experience.

We’ve monitored Backflip’s progress over the years, particularly since chief executive Julian Farrior has always been good about sharing helpful details about the state of the iPhone gaming business. This new title has a depth and higher quality of art that’s reminiscent of the work that went into early console games. Put that together with a huge fan base that Backflip already has with its casual games and you have good distribution model.

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Backflip’s heavy investment in game development has yielded a string of hits and nearly 150 million game installations. Many of those are related to light and casual games like Paper Toss, NinJump, Shape Shift and Backflip Solitaire.

“We will continue to bring in and entertain our user base (3 million daily active users and 27 million monthly active users) with ultra casual fare, but more and more we are finding we have the ability to have them playing multiple games, many of which have higher yield,” Farrior said. “This is very important for us as a company.”

To succeed now, Farrior said, “It takes a combination of very good game design and even better distribution muscle.  Distribution can be bought to some extent but you are in a much better position when starting with an active user base as large as ours.”

The DragonVale game has been out in Canada, a usual test market, for a month and has been ranked in the top 50 since its debut and is currently the No. 2 grossing game in that market. The title fulfills Farrior’s lifelong dream of making a game about discovering, hatching, raising, collecting and competing with dragons. Farrior’s team included an artist who worked extensively on the Ratchet and Clank console game series for Insomniac Games.

“I used to subscribe to Dragon Magazine back in the day,” Farrior said.

After 12 hours on the U.S. market, the DragonVale game has already made it onto the top 100 game lists on the Apple App Store. Now that Farrior has built a sizable iPhone game business, he can indulge himself on his dreams and make bigger investments in his titles. The game took a team of 10 (plus Farrior) about six months to make. The game includes 50 collectible dragons that are all animated in different ways. It includes a coliseum where dragons can compete for prizes, with an original soundtrack.

Meanwhile, Farrior has also hired a new vice president of marketing, Joe Lazarus, from Yahoo, where Farrior spent many years before setting up Backflip in Boulder, Colo. Lazarus’ goal is to help improve user engagement, which can lead to higher average revenue per user (ARPU). That’s important in free-to-play games such as DragonVale, where users play for free and pay real money for virtual goods.

Farrior and Dale Thoms started Backflip in April 2009 with a $145,000 investment. Now it has 30 employees and revenues that will be in the tens of millions of dollars this year, Farrior said, with 60-percent-plus profit margins. The company continues to hire and is moving to a new 12,000-square-feet headquarters. Backflip is also working with external game developers to publish their games.

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Farrior said that his company is now serving more than 1 billion ad impressions per month and had 30 million game installations this summer. The user base comes in through ultra-casual games. Then it cross-promotes its titles to move fans over to higher ARPU games such as Army of Darkness and, hopefully, DragonVale. Now, there are more users paying in multiple Backflip games at the same time.

After DragonVale, Backflip’s next major game is Ragdoll Blaster 3, launching in November. Meanwhile, Backflip is preparing to launch Strike Knight, Shape Shift and Backflip Solitaire as free games on Android in the next month. But Farrior said that the iPhone is still the best place to reap revenues right now.