Virgin Interactive
Nick Alexander started Virgin Games in 1983 after leaving Thorn EMI. It was headquartered in Portobello Road, London. The firm initially relied on submissions by freelancer developers, but set up its own in-house development team in 1984, known as the Gang of Five. Early successes included "Sorcery" and "Dan Dare". The company expanded with the acquisition of several smaller publishers, Rabbit Software, New Generation Software and Leisure Genius (publishers of the first officially licensed computer versions of "Scrabble", "Monopoly" and "Cluedo"). 1987 marked a turning point for Virgin after its acquisition of struggling distributor Mastertronic. Mastertronic had opened its North American headquarters in Irvine, California just a year earlier to build on its success at home, though growth exhausted its resources after expanding in Europe and acquiring publisher Melbourne House. Richard Branson stepped in and offered to buy 45 percent of Mastertronic stake, in exchange Mastertronic joined the Virgin Group. The subsequent merger created Virgin Mastertronic Ltd. in 1988 with Alper as its president which enabled Virgin to expand its business reach overseas. Mastertronic had been the distributor of the Master System in the United Kingdom and is credited with introducing Sega to the European market, where they expanded rapidly. The Mastertronic acquisition enabled Virgin to compete with Nintendo in the growing home console market. To gain a foothold in its newly established market, Sega Enterprises, Ltd. acquired Mastertronic in 1991 while Virgin retained a small publishing unit, which was renamed Virgin Interactive Entertainment in 1993. Hasbro, who had previously licensed some of its properties to Virgin, bought 15 percent—later increased to 16.2 percent—stake in VIE in August 1993. Hasbro wanted to create titles based on its brands, which included Transformers, G.I. Joe and Monopoly. The deal cut off competitors like Mattel and Fisher-Price who were interested in a similar partnership. In late 1993, Virgin Interactive spun off a new company, Virgin Sound And Vision, to focus exclusively on CD-based children entertainment. As more media companies became interested in interactive entertainment, Blockbuster Entertainment, then the world's largest video-store chain, acquired 20 percent of Virgin Interactive Entertainment in January 1994. It acquired 75 percent of VIE's stock later in 1994 and purchased the remaining shares held by Hasbro in an effort to expand beyond its video store base. Hasbro went on to found their own game company, Hasbro Interactive the following year. The partnership with Blockbuster ended a year later when Blockbuster sold its stake to Spelling Entertainment, at the time being a subsidiary of Viacom. Viacom is the owner of Paramount Pictures and MTV, which made Virgin Interactive part of one of the world's largest entertainment companies. Viacom had planned to sell Spelling and buy Virgin Interactive out of Spelling before the sale. While it abandoned the Spelling sale some time ago, the collapse in the games market appears to have killed off any interest in buying Virgin. Blockbuster and Viacom invested heavily in the production of CD-based interactive multimedia—video games featuring sophisticated motion-picture video, stereo sound and computer animation. VIE's headquarters were expanded to include 17 production studios where expensive SGI “graphics supercomputers” were used to build increasingly complicated games, eventually becoming one of the five largest U.S.-based video game companies. In 1995, VIE signed a deal with Capcom to publish its titles in Europe, supplanting Acclaim Entertainment as Capcom's designated European distributor. VIE later published titles released by other companies, such as Hudson Soft. Spelling put its ownership of Virgin up for sale as a public stock offering in 1997, stating that Virgin's financial performance had been disappointing. Since Spelling's purchase of the company, Virgin had lost $14 million in 1995 and was expected to post similar losses for 1996. In 1998, Virgin Interactive's US operations were divested to Electronic Arts as part of its $122.5 million (£75 million) acquisition of Westwood Studios that same year. Electronic Arts also acquired the Burst Studios development studio, which was renamed to Westwood Pacific by its new owners. The European division though was put out in a majority stake buyout backed by Mark Dyne, who became its Chief Executive Officer in the same year. Tim Chaney, the former Managing Director was named president. On February 17, 1999, Interplay Entertainment purchased a 49.9% minority interest in the company, allowing Interplay to distribute Virgin's titles in North America and Virgin distributing Interplay's titles in Europe. In October of that year, Titus Interactive acquired a 50.1% majority interest in VIE after the company acquired a majority interest in Interplay. In 2001, Titus Software Corporation, the North American division of Titus Interactive, announced a new line of games to be branded under the Virgin Interactive name in North America, which were to be sold at a budget price of $20. These games would be "Screamer 4x4", "Codename: Outbreak", "Original War", "Jimmy White's Cueball World" and "Nightstone". This would be the first time since 1998 that the Virgin Interactive name would be used for publishing in the country, excluding the North American release of "Jimmy White's 2: Cueball", which was handled by Bay Area Multimedia. In early 2002, as part of Titus Interactive's buyout of Interplay's European operations, Interplay's shares in Virgin Interactive were sold to Titus, which made the company a 100% owned subsidiary of Titus Software. Virgin Interactive ceased publishing their own games soon afterwards, and become solely a video game distributor for Titus and Interplay's titles. In June 2002, Titus accepted the MBO (management buyout) of Virgin Interactive's Spanish operations by Tim Chaney but would continue to distribute Titus' titles in the region. With this, the company was out of Titus' hands and was rebranded as Virgin Play in October of that year. On July 1, 2003, Virgin Interactive's British and French operations were renamed to Avalon Interactive and Avalon France by Titus, respectively. In January 2005, Titus Interactive filed for bankruptcy with €33 million ($43.8 million) debt. Avalon France and all of Titus' French operations were closed down immediately, while the UK branch continued to trade as Titus’ non-French operations were unaffected. Avalon Interactive was eventually closed by May 2006.
History
Virgin Interactive Entertainment (later renamed Avalon Interactive) was the video game publishing division of British conglomerate the Virgin Group. Others include video game composer Tommy Tallarico and animators Bill Kroyer and Andy Luckey.
Formed as Virgin Games in 1983, and built around a small development team called the Gang of Five, the company grew significantly after purchasing budget label Mastertronic in 1987. To highlight its focus beyond video games and on multimedia, the publisher was renamed Virgin Interactive Entertainment in 1993. As result of a growing trend throughout the 1990s of media companies, movie studios and telecom firms investing in video game makers to create new forms of entertainment, VIE became part of the entertainment industry after being acquired by media companies Blockbuster and Viacom, who were attracted by its multimedia and CD-ROM-based software development. VIE ceased to exist in mid-2003 after being acquired by French publisher Titus Software who rebranded them to Avalon Interactive in July of that year. The VIE library and intellectual properties are owned by Interplay Entertainment as a result of its acquisition of Titus. A close affiliate and successor of Spanish origin, Virgin Play, was formed in 2002 from the ashes of former Virgin Interactive's Spanish division and kept operating until it folded in 2009.