Trion World Network raises $70 million for server-based online games

Trion World Network announced it has raised $70 million in a third round of funding to finance its massively multiplayer online games for the PC.

The amount is a big haul for a game company and, coming off the heels of an $83 million round for Big Fish Games earlier this month, shows that video games are in favor among investors despite the tough economy. To date, Redwood City, Calif.-based Trion has raised more than $100 million.

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Trion is making server-based games, or ones that are stored and operated on servers more so than they are on your actual PC desktop, as many other hardcore MMOs are. The company says the design of its games to emphasize server-based interaction allows it to achieve the combination of high-quality graphics as well as dynamic game play. An example of the latter is a user could log into a virtual world and the environment could change overnight.

Trion hasn’t yet shown off any of its games. The amount of funding is a vote of confidence that Trion is on the right track with its cloud-based game development, which includes a joint venture game with NBC Universal’s Sci-Fi Channel. That game will debut alongside an unnannounced TV show on the channel. That deal was announced in June.

As we explained in that earlier story, the company can develop an episode at a time. If gamers don’t like it, the company can cancel the game without a lot of sunk costs. Lars Buttler, chief executive of Trion, described the ability to hold “prime time events,” like staging an event inside a game just before a big plot point is revealed in the TV show. Those prime-time events can feature in-game ads. Thus, the development of a game and TV show can be far more intermingled than ever before.

The companies didn’t reveal the name of the game/show. But Trion will be able to change the story and environment of the game to match the TV show’s episodes. That lets the games become more of a social magnet for gamers who are also fans of the show, allowing user participation in the same way that fans of the TV show “Lost” congregate on web forums with the TV show’s producers.

The company was founded by former Electronic Arts online game executive Buttler and Jon Van Caneghem, creator of the best-selling “Might and Magic” and “Heroes” franchises. It has studios in Redwoo City; San Diego, Calif.; and Austin, Texas. Van Caneghem is working on a fantasy role-playing MMO.

The new round was led by Act II Capital and an unnamed “large global financial institution.” All previous investors also participated, including initial-round investors DCM and Trinity Ventures, and second-round investors Rustic Canyon, Time Warner, Bertelsmann and Peacock Equity – the joint venture between GE Commercial Finance’s Media, Communications & Entertainment business and NBC Universal.

The company’s rivals include Activsion Blizzard’s “World of Warcraft,” which has more than 10 million subscribers worldwide, as well as titles from other big companies in games such as Funcom and NCSoft. Trion has a lot of challenges. But it won’t be deterred by lack of funding.