ISwifter’s TheWorx iPad app recreates Facebook, but with games

Just days before Facebook’s big IPO, the company is getting a lesson from another Silicon Valley startup on how to improve its iPad app (s aapl). ISwifter is showing how it can create a full-fledged Facebook app that also includes Flash gaming. TheWorx iPad app, a Facebook application that is set to go live next month, will provide users with access to status updates, their news feed and photos. But the kicker is that it will also give iPad users access to Facebook’s Flash-based games through an App Hub.

Currently, iSwifter’s iPad app allows people to play thousands of Facebook games using its streaming cloud-infrastructure, which doesn’t require any extra work by developers. But with TheWorx, Facebook users now have a way to get more of their whole experience in one iPad app. Facebook’s website relies on Flash for gaming but that doesn’t translate well to Android devices and is not available on iOS devices.

TheWorx app pulls in Facebook information using the Open Graph API. Users will have to pay to get access to the App Hub tab using Apple’s in-app purchasing system, with the one-time fee still yet to be determined. But they will also be able to use their Facebook Credits inside the games to buy virtual goods. ISwifter’s platform streams the games from its servers so it gets around the iPad’s ban on Flash.

This would seem to be more competition for Facebook, evidence of how another company can create a better iPad experience than Facebook can. But there  may be reasons why Facebook isn’t that worried. TheWorx will allow existing PC ads to run on the right side, so Facebook can still make money from those ads. In its S-1, Facebook said 4 percent of its revenue came from ads next to Zynga (s znga) games. Also, the ability to still make money from iPad gaming on TheWorx app could also be appealing. Zynga’s games contributed 15 percent of Facebook’s revenues in the first quarter. Most of that comes from Facebook’s 30 percent cut of purchases in Zynga games on the platform or from advertising revenue paid directly from Zynga.

Still, it’s another reminder that Facebook still has to figure out how to get its mobile act together. Its apps are slow and often perform worse compared to their mobile web counterparts. We had a good explanation about why that’s the case.

Facebook is looking to expand advertising through mobile but that can be a tricky play with the smaller screens found on smartphone and tablet devices. But if it can get more revenue out of its app usage and Facebook credits on mobile devices, it could help make up for its poor showing in mobile. I still wonder if Facebook will tolerate TheWorx, which could siphon people away from its existing apps and sites.

Facebook could fix this issue by figuring out a way to support its Flash-based games on its mobile apps. It’s working on getting content specifically made for its iPad app but it hasn’t happened on a large scale. Or it could think about buying iSwifter, which has done a lot of the work already.