Turbine Raises $40M from Time Warner and Friends

Art is expensive. Particularly electronic, interactive art that allows its audience to participate in everything from the slaying of Barrow-Wights, to break-neck police chases through crowded, virtual streets. As hardware and software developers continue to push the envelope of the video game experience – progressing from little more than colorful distractions (Frogger and Pong come to mind) to complex interactive narratives – the production of their art becomes more costly.

An unfathomably enormous amount of man-hours goes into the construction of games the likes of the recent smash hit Grand Theft Auto IV. Today, Pong and Frogger only satisfy if the player’s avatar can play them on a decrepit old arcade machine inside a virtual bar so luminescent with detail that one can practically smell the urine stain in the corner.


Yes, video games are expensive, but video games also make money – NPD’s tallied $17.94 billion in video game and console sales in 2007. Of course video game developers and distributors can only get a piece of that big, green, eighteen billion dollar pie if they have the capital. GTA IV cost Rockstar $100 Million to produce from the conceptual stage to the retail shelves.

And that is where the investors come in. Maybe a developer has just emerged on the scene and needs start up money to build a competitive game; maybe the company has already produced a number of successful titles, but lacks the funds to tackle their upcoming, innovative, juggernaut of a project. Turbine exemplifies the latter.

Turbine, the MMO developer of Lord of the Rings Online, Asheron’s Call and its sequel, as well as Dungeons and Dragons Online, recently raised $40 million in capital from its current stakeholders and two outside entities: GGV, a private equity investment firm, and Time Warner, the sprawling media conglomerate.

Using this revenue, Turbine will expand its MMOs into the Asian market where they hope that hundreds of thousands of new subscribers will fork over monthly payments to hack Orcs and Hobbits to pieces.

NPD’s 2007 sales figures do not account for the approximately $1 billion in subscription revenue that online games bring in every year (currently, Turbine’s LOTR Online holds the number three spot behind Runescape and the big daddy, World of Warcraft), so it comes as no surprise that Time Warner and other investment groups are eager to support the growth of this very lucrative market.

With these investments, Turbine, Time Warner, GGV, and Turbine’s other stakeholders are affirming their belief that the Pacific Rim will maintain its affection for camping, raiding, questing, and holding virtual weddings. It might not compare to what it cost to bring Niko Bellic to the shores of Liberty city, but $40 million can still buy lots of swords, spears, and virtual prostitutes.