(FORTUNE Small Business) – "Improbable" is a good word to describe Morris Sutton--a 65-year-old man who founded videogame maker Majesco, based in Edison, N.J., in 1986 with his sons, Jesse and Joey. Morris, who was an investment banker with Dreyfus & Co. and then an electronics distributor, proudly professes to care little about videogames. "I sell widgets," he says. "What I forgot about business, they haven't learned yet."

It's that kind of attitude that gave Morris the confidence two years ago to risk several million dollars of his fortune and enter the world of videogame publishers, dominated by such giants as Activision, Electronic Arts, and Nintendo. Until recently Majesco had developed mainly ports--transferring hit PC games onto cassettes that can be played on consoles such as the PlayStation and Xbox. But as the videogame industry grew, Morris and his sons weren't content to let their 70-person firm sit on the sidelines.

So in 2002, Majesco began launching its own games. One of the first was BloodRayne, an action adventure game featuring a sexy, gun-toting vampire. Sutton sank $6 million of the family's money into producing, marketing, and distributing the game. Adding to the risk was the nearly simultaneous release of Blade II, a similarly themed vampire game from Activision. "It's definitely riskier, but having [original content] of this caliber is key to our company's growth," says Jesse, 34.

That bet paid off, and BloodRayne not only beat expectations, selling more than 600,000 units and bringing in $30 million so far, but also became Majesco's first blockbuster franchise, resulting in both a feature film (about to start production) and a game sequel, expected to be released in October. (BloodRayne also outperformed Blade II, which sold only 194,000 copies.)

BloodRayne's success, however, was not enough to ensure Majesco's security. While big publishers have the deep pockets to ride out a flop, virtually every one of Majesco's major titles--which can cost $5 million to $10 million each--had to hit big. So the Suttons took out the equivalent of an insurance policy. While Majesco releases five to ten games a year, only one or two are premium games such as BloodRayne. The rest are "value titles"--with names such as Hypersonic Extreme and Blowout--that sell for $9.99 or $19.99 at Target or Wal-Mart. Those cheap games may not have flashy, big-budget effects, but parents are often more than willing to snatch one up for their kids on an impulse. Even more to the point, "there's not much competition in the value-game market," Jesse says. Indeed, the bargain bins are usually filled with poorly selling mainstream games, not products developed specifically for a value-conscious audience.

Because the average value game costs a mere $250,000 to produce, Majesco needs to sell only 15,000 to 50,000 copies to break even, vs. anywhere from 200,000 to one million for more expensive titles. So far, those numbers have been very easy for Majesco to hit. Hypersonic Extreme, one of the company's more popular value titles, sold 170,000 copies last year.

Today about 30% of Majesco's revenues come from low-cost games. Majesco's sales for the first quarter of 2004 rose to $24.6 million, and profits grew to $7.5 million, an increase of 84% and 42%, respectively, over the same period last year. The company's stock has risen to $4.18 a share, up from $1.05 a share when Majesco went public last December. And the company predicts that revenues will hit $110 million this year, up from $47 million last year, buoyed by new video technology Majesco has developed for Nintendo's Gameboy Advance, which will allow children to play short cartoons on their handheld game systems.

Now that it's a public company, Majesco is likely to feel heavy pressure from Wall Street to keep its hit machine going. Is being public worth the aggravation? "Being a private company for as long as we have has been good," says Jesse, who runs the day-to-day operations. "But it's a challenge when it comes to next-generation publishing. Game publishing requires a lot of up-front capital, and it's two years before you see a return on it. [Going public] gives us the capital breadth to work on new opportunities."

Majesco's status as a public company also allows it to pay game developers with the company stock. That helped the firm persuade GlyphX, a hot new game developer based in Orem, Utah, to create what Majesco hopes will be its next big game in 2004: Advent Rising. An action game set in a world created by science-fiction writer Orson Scott Card, Advent Rising is one of Majesco's most expensive undertakings. If the game doesn't become a smash when it's released in September, BloodRayne 2 is due out in time for Halloween and the start of the holiday shopping season.

Like his father, Jesse sounds confident when he discusses his firm's chances. "Our small size is our strength," he says. "It enables us to be more nimble than many of our competitors."