Avalon Interactive Group, Ltd., formerly known as Virgin Interactive Entertainment, was a British video game distributor based within Europe that formerly traded as the video game publishing and distributing division of British conglomerate the Virgin Group.

During the company's time under the Virgin brand, they had developed and published games for major platforms and employed developers, including Westwood Studios co-founder Brett Sperry and Earthworm Jim creators David Perry and Doug TenNapel. Others include video game composer Tommy Tallarico and animators Bill Kroyer and Andy Luckey.

Formed as Virgin Games in 1983, and built around a small development team called the Gang of Five, the company grew significantly after purchasing budget label Mastertronic in 1987. As Virgin's video game division grew into a multimedia powerhouse, it crossed over to other industries from toys to film to education. To highlight its focus beyond video games and on multimedia, the publisher was renamed Virgin Interactive Entertainment in 1993.

As result of a growing trend throughout the 1990s of media companies, movie studios and telecom firms investing in video game makers to create new forms of entertainment, VIE became part of the entertainment industry after being acquired by media companies Blockbuster and Viacom, who were attracted by its multimedia and CD-ROM-based software development. Being located in close proximity to the thirty-mile zone and having access to the media content of its parent companies drew Virgin Interactive's U.S. division closer to Hollywood as it began developing sophisticated interactive games, leading to partnerships with Disney and other major studios on motion picture-based games such as The Lion King, Aladdin, RoboCop, and The Terminator, in addition to being the publisher of popular titles from other companies like Capcom's Resident Evil series and Street Fighter Collection and id Software's Doom II in the European market.

Within the late-1990s, the North American operations were sold to Electronic Arts, while the European division later went under the hands of Interplay Entertainment and Titus Interactive. They soon transitioned exclusively as a distributor and were rebranded by Titus as Avalon Interactive in August 2003, and closed in 2005 following the former's bankruptcy. Currently, the VIE library and intellectual properties are owned by Interplay Entertainment as a result of its acquisition of Titus. A close affiliate and successor of Spanish origin, Virgin Play, was formed in 2002 from the ashes of former Virgin Interactive's Spanish division and kept operating until it folded in 2009.

Nick Alexander formed Virgin Games in 1983 after leaving Thorn EMI. It was headquartered in Portobello Road, London. The firm initially relied on submissions by freelancer developers, but set up its own in-house development team in 1984, known as the Gang of Five. Early successes included Sorcery and Dan Dare. The company expanded with the acquisition of several smaller publishers, Rabbit Software, New Generation Software and Leisure Genius (publishers of the first officially licensed computer versions of Scrabble, Monopoly and Cluedo).

1987 marked a turning point for Virgin after its acquisition of struggling distributor Mastertronic. Mastertronic had opened its North American headquarters in Irvine, California just a year earlier to build on its success at home, though growth exhausted its resources after expanding in Europe and acquiring publisher Melbourne House. Richard Branson stepped in and offered to buy 45 percent of Mastertronic stake, in exchange Mastertronic joined the Virgin Group. The subsequent merger created Virgin Mastertronic Ltd. in 1988 with Alper as its president which enabled Virgin to expand its business reach overseas. Mastertronic had been the distributor of the Master System in the United Kingdom and is credited with introducing Sega to the European market, where they expanded rapidly. The Mastertronic acquisition enabled Virgin to compete with Nintendo in the growing home console market. The new owners then dissolved the Gang of Five internal development team in 1989.

To gain a foothold in its newly established market, Sega Enterprises, Ltd. acquired Mastertronic in 1991 while Virgin retained a small publishing unit, which was renamed Virgin Interactive Entertainment in 1993. A new London internal development team was set up in 1992.