Second Life rival seeks €1bn UK listing
Virgin-backed start-up promises to become the 'iTunes for the games industry' — An internet start-up backed by Sir Richard Branson, that promises to transform the global computer games industry, is set to list in London with a €1bn (£670m) valuation.
Context & Ripple Effects
The virtual worlds sector entered 2007 with momentum: the BBC reported in March that the category was already 'worth $1bn', and by May Second Life's audience had tilted decisively toward Europe, with European users outnumbering Americans three to one on the platform.
Against that backdrop, Sir Richard Branson's Virgin is backing a direct Second Life rival that bills itself as the 'iTunes for the games industry' — and rather than raising another private round, it intends to list in London at a €1bn (£670m) valuation, effectively pricing one start-up at the value the BBC ascribed to the whole sector just months earlier.
First-order effects
- London investors gain their first pure-play listed vehicle for the virtual-goods economy, with Virgin's brand attached as the credibility anchor for a pre-revenue-scale proposition.
- Second Life now faces a funded, Branson-endorsed challenger whose stated ambition is to own games distribution the way iTunes owns music, not merely to host a social world.
Second-order effects
- A successful listing would give this start-up a currency — listed equity — to acquire content partners and smaller virtual-world players, forcing privately held rivals to raise aggressively or seek listings of their own to keep pace.
- With Second Life's user base already majority-European, a London listing reinforces the City as the financing centre for the virtual-goods economy, competing with US venture backers for deal flow in the category.
Third-order effects
- If the 'iTunes for games' framing holds, the structural prize is a marketplace position over digital game distribution — moving the industry's economics from retail units toward platform take-rates on virtual goods.
- Public-market scrutiny of a €1bn virtual-worlds valuation will test whether investor appetite for these assets survives contact with disclosure-grade financials, setting the template for how the next wave of such companies can price their exits.
The trend: Consumer virtual-worlds start-ups are moving from venture funding straight to public listings as they attempt to convert social-platform audiences into paid content-distribution businesses.