Virgin Online Game Tournament Business Plans Big Cash Giveaways

LOS ANGELES -- Breaking into the online game tournament business in signature style (CED June 15 p5), Richard Branson, founder of the Virgin Group, told reporters at a pre-E3 briefing that Virgin Gaming will set aside $1 million for cash giveaways to be doled out for online gaming tournaments over the next 12 months.

Citing Virgin’s strong resume as creator of such popular titles as Resident Evil and Command & Conquer, Branson said Monday that Virgin has decided to come back to the gaming world --not as a publisher “but by creating a new way for people to enjoy games.” Branson said Virgin Gaming has no plans to get back into the publishing business. What brought Virgin back to the gaming market now, he said, is “getting in on the ground floor with an extremely innovative idea."

Virgin Gaming “saw a need and created a better customer service,” the way other Virgin businesses do, Branson said. The gaming service, which allows people to play console games competitively for cash, points and prizes, uses a rating system that matches players with others at comparable skill levels.

Virgin holds an undisclosed share of World Gaming, founded by Bill Levy and Zach Zeldin, two traveling tournament gamers who identified the need for an online arena four years ago as Xbox 360 and PS3 started moving online. Gaming industry veteran Rob Segal, who invested in World Gaming and became chief marketing officer, is Virgin Gaming’s CEO. Over the next several months, Segal said, the company will disclose publisher relationships, new titles introduced at E3 that will be available for online tournament play, and a social media component.

According to Levy, the early online tournament picture “wasn’t very pretty,” with payments handled on an honor system basis between gamers using PayPal or Western Union, and then it played out unsatisfactorily on forums, as losers didn’t hold up their end of the deal. “We needed to create a technology, what we call the ‘game validator,'” that automated the whole process, Levy said. An algorithm that Levy and Zeldin created is the basis for a rating system that enables gamers of all skill levels to compete fairly, not just the most skilled, “to give everyone a chance to win, not just the best.” He said players can recoup their cost of entry to a tournament with a single victory. The site has held more than 80,000 cash tournaments and challenges, and more than $1 million in cash prizes have been awarded through the system, Levy said.