Nintendo isn't the only winner to emerge from the casual-gaming revolution: Majesco Games, a New Jersey game publisher that flirted with bankruptcy just a few years ago, is making a comeback by concentrating on games for Wii and the DS handheld.

This winter, the company is working on a new game by the creators of the super-popular 1997 music game PaRappa the Rapper for the Wii. The high-profile title marks a dramatic turnaround for a company that, just a few years ago, was in dire financial straits after its entire lineup of big-budget games bombed.

"The problem with the old Majesco was that they made three or four big bets and they missed on all of them," Wedbush Morgan Securities analyst Michael Pachter said. "If one out of four worked, they probably would have been OK."

Casual gaming – with its lower development costs and wider sea of potential gamers – is proving to be a potent market for publishers such as Majesco. With Wii outpacing Microsoft's Xbox and Sony's PlayStation 3 in sales, Majesco is focusing on fun, family-friendly games for the millions of gamers hooked on the DS and the white-hot Wii.

It's a lesson Majesco learned the hard way.

In 2003, the company, previously known for releasing budget software, went public and invested in a slate of console games like Psychonauts and Advent Rising, both of which sucked wind at retail.

After those failures, the company revised its business plan to take advantage of casual gaming's lower development costs. Majesco bailed on next-gen gaming development altogether in 2006, canceling several games and selling others, like The Darkness and Ghost Rider.

"They had to dramatically lower their cost structure just to keep from going bankrupt," Pachter said.

On Monday, Majesco reported an operating loss of only $1.7 million for 2007, down from $7.7 million the previous year. Pachter predicts Majesco will likely be profitable again within the next year on the strength of its casual-game offerings.

The comeback started when Majesco scored one of the first breakout hits for the Nintendo DS with Cooking Mama, a girl-oriented game in which players use the touch screen to roll dough, make meatballs, chop carrots and cook up different recipes.

Majesco licensed Cooking Mama from Japanese gamemaker Taito. In its home country, the game didn't do especially well, but it exploded in the United States, selling more than 500,000 copies. A sequel and a Wii version soon followed, and sales of the series have surpassed 1 million units, Majesco CEO Jesse Sutton said.

The focus on small, fun games has paid off for Majesco.

"They've been pretty savvy about the games they've decided to chase," Pachter said.

Majesco is hoping for another winner with its upcoming Wii music game. The company is working directly with Tokyo game designer Masaya Matsuura and New York graphic artist Rodney Greenblat, the team that gave PaRappa the Rapper its innovative look and feel.

Pachter says that while Majesco will have a small market share going forward, the company's lower cost structure means it can make a profit off significantly lower revenues.

"Activision can't even consider making a game unless is does between $50 (million) and $100 million, but (Majesco is) happy to make a game that does $5 million in revenue," Pachter said. "Small guys can have small victories, and it works."