In a bid to make augmented reality more than just a buzzword, AR company Total Immersion will make its D’Fusion Studio software free for developers, it said today. The move should remove a significant barrier to entry towards creating augmented reality apps.

Augmented reality (AR) refers to a view of real-world environments that’s overlayed with digital information. As a proof of concept, the company is launching SkinVaders today, a free iOS game built with D’Fusion Studio that uses your face as its game terrain.  The game involves keeping your face free of alien invaders by tapping on them and popping their eggs. (See trailer below.) Gross? Maybe — but it’s the sort of thing kids will love, and it shows the potential of what other developers can accomplish with AR.

Total Immersion has been working on augmented reality for over 12 years — long before the topic was hip. In an interview yesterday, co-founder and CEO Bruno Uzzan regaled me with tales of how hard it was to evangelize AR a decade ago. At that point, setting up an AR demonstration took an hour, several computers, and lots of cabling. Now, many of us are walking around with AR-capable smartphones in our pockets.

Thanks to the emergence of powerful mobile hardware — in particular, fast mobile processors, high-quality cameras, and improving wireless network speeds — Uzzan believes augmented reality’s time has finally come. While there are plenty of AR-like apps out there, like Google Goggles and Layar’s apps, Total Immersion is one of the few offering “true AR” with its platform, according to Forrester. Total Immersion’s platform lets you superimpose 3D objects on top of real-world views, which gives it a leg-up on some of the lighter AR experiences out there.

The company will make the latest version of its software, D’Fusion Studio 3.2, freely available for developers to use. It supports multiple platforms, including iOS, Android, web, and even Microsoft’s Kinect. But while the software is free, Uzzan tells me the company will work out licensing deals with any developers who choose to use its technology in their apps.

Up until now, Total Immersion has been using its AR expertise to power marketing campaigns for big brands like Paramount Pictures, Hallmark, and Nike. The company decided to offer its software for free after several requests from interested developers.

Even though it’s releasing SkinVaders, Uzzan tells me that Total Immersion isn’t planning to become a game studio anytime soon. SkinVaders took about three months to develop, and another month to test, before it was ready for release. If the game ends up taking off though, the company may change its plans.

Total Immersion has offices in LA, Hong Kong, London, and more. It has received around $13 million in funding so far and has around 90 employees. Uzzan tells me that it has made a good business out of AR so far, so it hasn’t needed to request too much funding. The company also unveiled a new product at the 2007 DEMO conference, where it earned a coveted DEMO God award.