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Red 5 Studios raises $18.5 million

December 12, 2006|From Reuters

Red 5 Studios, an online video game developer led by members of the team behind the wildly popular "World of Warcraft" game, said Monday that it had raised $18.5 million in venture capital.

The funding from Benchmark Capital and Sierra Ventures comes as a rise in high-speed Internet use in the United States and elsewhere fuels interest in online gaming -- the standard mode of play in many Asian countries.

"World of Warcraft" from Vivendi's Blizzard Entertainment provides an online world in which thousands of players compete simultaneously.

Revenue comes from game sales of about $20 per unit, subscription fees of about $15 a month and downloads of add-on content.

The game has obliterated former records with a subscriber base of more than 6.5 million globally, and forced U.S. video game publishers to rethink online gaming as development costs climb.

In the United States, games for consoles such as Sony Corp.'s PlayStation 2 and Microsoft Corp.'s Xbox 360 are dominant. Top titles sell for $50 to $60, and play time is often measured in hours rather than months.

Mark Kern, Red 5's chief executive and former team leader on "World of Warcraft," said his Aliso Viejo-based studio would create original games for online game operators and distributors -- much as Pixar Animation Studios did in the movie world with its animated films such as "Toy Story" and "Finding Nemo."

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