Over the summer, there were rumblings that one or more of the companies that came of age in the smartphone era like Rovio Mobile or Storm8 would close a round at a $1 billion valuation or higher.

But summer has turned into fall and we haven’t seen a deal close.

Why? First of all, don’t count it out from happening, because the fundamentals are in place for a $1 billion Android or iOS-based gaming company to eventually happen with at least 440 million Android and iOS activations or cumulative device sales. Smartphones are becoming more far more ubiquitous than any previous generation of portable gaming devices.

However, it’s just taking a little longer than expected for this latest crop of companies to break the $1 billion barrier. It appears that there was a temporary peak in valuations sometime over the summer as developers got hungry for revenue multiples that were too aggressive.  (Yes, some people have pointed out GREE and DeNA have multi-billion dollar market caps, but I’m really referring to the generation of mobile gaming companies that only began to have traction once the iPhone era started.)

The two leading contenders going into rounds that would’ve put them at around a $1 billion valuation were Storm8 and Rovio Mobile.

The two could not be more different from each other. Rovio Mobile has a beloved brand in Angry Birds and merchandising tentacles reaching out into books, movies and plush toys. But it doesn’t have a second franchise and it hasn’t gone anywhere near maximizing the revenue it could make from virtual goods.

Storm8 has reach with a large portfolio of RPGs and casual sim games and a strong presence on Android with more top-grossing titles than any other developer on the platform. It’s also arguably the closest pure smartphone gaming company that’s comparable to an early Zynga in terms of its dedication to data-driven game design, the virtual currency model and raw distribution. But it doesn’t have defensible intellectual property in the way that Rovio does.

So what happened in both cases? Storm8 was in negotiations to do a huge, late-stage round after exploring various exit possibilities as was reported here and in TechCrunch. It wasn’t Technology Crossover Ventures that was in final contention for the round however, even though the firm did take a look. Instead, it was a different growth-stage venture fund and Accel Partners, sources tell us. (At the time, sources at Accel denied the “crazy” rumors.)

But sources are telling us that that original deal didn’t come together after the firms realized there were simply too many changes that would have needed to happen to Storm8′s culture and operations for such a high valuation. The company has a messy early history with two of the original founders leaving to create rival Funzio.

On top of that, profit margins on free-to-play, casual mobile games are in decline at the moment because marketing costs keep rising, especially after the loss of incentivized offer walls. Every company with a similar model across the board including Pocket Gems, TinyCo, Backflip Studios and so on, is affected by these pressures. Publicly-traded comparable companies like Glu Mobile and Gameloft have also seen their shares decline by 42 percent and 19 percent respectively over the last three months (although to be fair, that has to do with two acquisitions Glu made plus macroeconomic turmoil). So the lofty valuations that could have been demanded in April or May no longer hold weight. At a panel I moderated two weeks ago at the Game Developers’ Conference in Austin, Storm8′s chief executive Perry Tam declined to comment on the progress of financing talks.

Rovio appears better positioned to close a round at a valuation close to or above $1 billion. The company’s Mighty Eagle Peter Vesterbacka was on Bloomberg as recently as a week and a half ago saying that the business was worth “north” of $1 billion and might file to go public next year. The talk seemed designed to provoke a sale in the same way that PopCap Games very publicly trumpeted its 2010 revenues in the run-up to its sale to Electronic Arts in a deal worth up to $1.3 billion. But sources say strategic acquirers like Electronic Arts and Zynga haven’t moved forward at Rovio’s asking price, with one suggesting that Rovio find investors to validate its valuation first.

Rovio has had a long history in making aggressive demands with investors and partners — whether that’s because of the company’s irreverent Finnish roots or its six-year-long sojourn through the dark before creating runaway hit Angry Birds. Brushed aside in the carrier-controlled era of mobile apps, Rovio now gets to smugly sit as the most sought-after launch partner for nearly every new gaming platform or app store. When Rovio considered exits the first time around, acquisition offers were not enough to their liking so they opted for $42 million in funding from Atomico Ventures and Accel Partners, which sources say cashed out the co-founders’ father Kaj Hed. The company has had a way of getting what it wants over the last two years.

But we’re still waiting for that $1 billion valuation to happen. As the market gets increasingly competitive and as margins come down, the next several months will separate the strong from the weak. It will become obvious who is looking for a quick exit and who is ready to build something durable.