'Fruit Ninja' CEO on making games that are a cut above

The video game market is evolving fast, and at least one hit-maker says the days when a new game could break through by virtue of its awesomeness may be over.

"If you go back a couple years, it was a level playing field," said Shainiel Deo, CEO of Halfbrick Studios, whose "Fruit Ninja" is surpassed only by "Angry Birds" in total downloads. "If you had a great game, you could cut through the noise. But now it's really about user acquisition and paying big dollars to get the players you want for your games."

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He told CNBC's "Squawk on the Street" that for now, Australia-based Halfbrick has been able to grow its users through "the virality of our games and word-of-mouth recommendations. ...But I think we'll have to look at user acquisition in the future."

The way Halfbrick keeps good numbers is by continually innovating on its games, he said, putting some 20 percent of its budget into research and development and holding regular "game jams," in which all 80 employees toss around ideas. "We support ours games to keep things fresh and keep users coming back for more."

The 12-year-old company's games have been downloaded 650 million times—500 million of that for "Fruit Ninja" since its launch three years ago. The game's simple and intuitive swiping gameplay of slicing fruit has made it a draw for all ages, but it has also shown remarkable momentum—40 percent of the game's half-billion downloads have been in the last 13 months.

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The reigning king of game apps, "Angry Birds," from privately held Finnish game maker Rovio, reportedly hit its billionth download in May 2012, 2 1/2 years after its debut.

Meanwhile, social game maker Zynga's stock took a big hit after an earnings release last week. The earnings were not so much the problem as the announcement that the maker of "FarmVille" would abandon plans for real-money gaming in the United States. Shares fell about 18 percent as investors fled.

By CNBC's Matt Twomey. Follow him on Twitter @Matt_Twomey.