At the 17th hole on Kiawah Island Golf Resort's challenging Ocean Course, the foursome paused. The Atlantic Ocean can be seen from many of the raised greens, but on this hole, all eyes were on an adjacent pond—and its resident alligator. Chad Nelson joked to YuChiang Cheng that a Kiawah pro had suggested not going after any lost balls, then pulled out a 3-wood and chipped his over the drink. Cheng followed suit.

Cheng, C.E.O. of San Francisco-based videogame maker World Golf Tour, has never been to South Carolina. But he's played Ocean Course hundreds of times. It is one of dozens of premier resorts that the start-up has recreated in what the founders call "2 ½-D" in an effort to become a new gaming heavyweight.

For years, the virtual-golf scene has been dominated by Electronic Arts, the world's largest independent game publisher. E.A. Sports' Tiger Woods PGA Tour franchise has sold more than 26 million copies since it was first released in 1998. Much like Woods, it has squashed the competition: Microsoft's Links franchise, which started in 1990, shut down after five years against E.A. And in addition to locking up Woods, E.A. Sports holds the exclusive license for the P.G.A. Tour, essentially shutting out other comers—until now.

World Golf Tour is trying to sidestep the roadblocks. It's cutting individual deals with top golf courses so that it doesn't need to deal with the P.G.A. Tour. The stars of its greens will not be pro golfers, but players' avatars. And it is making the games in Flash, so they will be available to a far wider audience of players—for free.   

Nelson, World Golf Tour's president and co-founder, conceived the game in early 2006 while golfing in Italy. He and Cheng had sold their PC game-development studio, WagerWorks, to IGT for $90 million the year before, and he wondered why there were no good online golf games.

Since the pair knew they didn't want to be just another game developer, they decided to come up with a new business model, one that would combine online distribution, advertising opportunities, and virtual sale items. And the game couldn't be like its predecessors—Flash-based golf experiences at the time were like the miniature golf of videogames.

"We're going for a true golf simulation," Nelson says. "Things like course management—where you place the ball, type of clubs and stance you use, how you use spin control—has an impact on the game."

In October 2007, the company unleashed a dozen technicians, programmers, and photographers onto Kiawah's Ocean Course, to meticulously record the layouts with digital photography on the ground and in the air (using remote drones and full-size helicopters), G.P.S. technology, and terrain mapping. The company had a pair of ex-Electronic Arts programmers build an online physics engine to replicate the way balls roll across different surfaces; hundreds of high-definition digital photographs (an average of 700 per hole) layered atop a 3-D map allows balls to "bounce" and "roll"—paving the way for golfers to experiment with shots virtually before trying them for real.

"A lot of our golfers are going to want to do that," Cheng claims, which is why the company has built into its contracts the ability to offer discounted rates at the resorts.

It's not the only way they're hoping to bridge the gap between the real and virtual worlds—and to make money. The founders see three main revenue streams from the game—product placement within the game, ads on the site, and partnerships with television broadcasters and major golf events.

When it is released to the public late this summer, W.G.T. will allow players to create their own avatars that can wear (sponsored) clothing and use virtual versions of real (sponsored) golf equipment. Last May the company released a scaled-down version of the game, a "skills challenge" with a few holes from the Las Vegas Bali Hai Golf Course; for monthly competitions it has been offering real-world prizes from TaylorMade.

As it completes work on its slate of courses for this year (the game officially launches in late summer, with nine new holes being released every month afterward), it is focusing on creating partnerships around 2009 golf broadcasts so it can jointly sell advertising and share revenues. Its first deal comes in September, with the Muscular Dystrophy Association for the Jerry Lewis M.D.A. Golf Tournament.

"This would include those that don't necessarily attend or play real-world golf events, but would have a keen interest in the opportunities (and fun) offered by this platform," said Jerry Weinberg, president and C.E.O. of the M.D.A.

W.G.T. is pinning additional advertising hopes on a social-networking component, which lets players create online profiles, post blog entries and videos of shots, and send friends a news feed with information like scores or how to do better on a hole.

Relatively speaking, the cost of building this game is low. It takes roughly six months and $200,000 to make one World Golf Tour course simulation. (They've already completed four of the 10 licensed courses through investments from Series A lender Battery Ventures and Series B leader Panorama Capital.) A next console game, like Tiger Woods, can cost upward of $10 million for its initial creation, slightly less to develop sequels.

Michael Pachter, videogame analyst for Wedbush Morgan Securities, says E.A. sells an average of 2.5 million copies of the Tiger Woods golf game annually for PCs, consoles, and handheld game devices. He believes a free Flash-based PC game could attract 10 times the players, but won't be much of a threat to successful console games—at least not for several years.  

"I think that will work if they create a sticky product, and they appear to think it's sticky," he said. "I doubt that the game play and customization is as good as Tiger, but if it's free, I'm sure World Golf Tour is good enough."