LoL Esports Now and in the Future

Riot·Sep 22, 2016·2 votes·45,786 views

Background/TL;DR

Back in 2012, one of our founders Brandon Beck talked about the five-year vision for what LoL esports could be. He described a future where events and broadcasts matched the production quality and excitement level of traditional sports and where pro players could build legendary careers based on their skills on the Rift. While this felt ambitious, even in 2012 we knew that those milestones were part of a larger journey to build a global esport that could last for generations. We’re still walking that path today, and want to talk about how we’re building towards the future.

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The Future of LoL Esports

As we move into 2017 and beyond, we’re continuing to take steps towards a future where top LoL players have very well paid, long careers doing what they love - and where LoL esports team organizations are thriving businesses led by empowered owners who share responsibility and accountability for the long term prosperity of the sport. To help get us there, we’ll share LoL esports revenue streams and collaborate with our partners to develop new business models and actively shape the league. We want these partners to have permanent stakes, to be invested in a stable future and to profit from the continued success of the sport.

We’re committed to leading LoL esports to this future.

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How We Get There

At its core, LoL esports succeeds by following a three step path:

Fandom
Economics
Stability

These three steps build off each other - and not all of the 13 LoL leagues across the world are at the same stage of maturity. Some of the more mature leagues (LPL, LCK, NA LCS, and EU LCS) have strong fandom foundations and are working to improve their economics, while other leagues are still working on some of the more developmental stages that Brandon described in 2012. Let’s take a closer look at each of the steps.

Fandom

The fandom that we’ve always believed in is about much more than the number of viewers watching a match. Fans are communities bonded together by the shared experience of supporting their favorite teams, players, and leagues. These deep connections are forged in both the euphoria of a late game ace that seals victory and the agony of a Worlds upset resulting in a favorite team’s elimination.

We also believe that fandom is best when shared with others who share your passion. Whether you cheer in arenas, at home, or at a viewing party, we hope to give LoL esports fans the chance to share every experience with their community. We’ve been thrilled to see the growth of shared viewing experiences all over the world and have loved the amazing entrepreneurs who have gone to great lengths to build communities around the world to support LoL esports. We greatly appreciate all of your efforts and look forward to doing even more to support you all.

Let’s be clear - none of this works without you. Millions of players tuning in to a Worlds Final isn’t just a number to us - it’s the foundation upon which all of this is built.

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Economics

Once we’ve seen the growth of fandom in our regional leagues and across the globe, we believe it’s our responsibility to then unlock the sport’s sustainable economic future. Our esports fan community - and your ongoing engagement with the sport - has tangible value and gives us the opportunity to build a profitable and thriving ecosystem for owners and teams. To continue to attract the type of healthy, long-term investment that has helped mature the scene to date and will support the long-term evolution of the sport, we need to unlock new revenue streams. We need to grow the pie so that there’s more for teams and pros. At the moment, revenue can be categorized into several major buckets - with more to come as the scene matures:

Media / sponsorships
Merchandise
In-game content

Media/sponsorships are a vital part of LoL esports’ economic future. We've been working for over a year to restructure and expand our approach to media distribution and ad/sponsorship sales. Unfortunately, we can’t share more details until deals are inked, but we believe this is an important component to long term success.

Merch requires much closer collaboration with teams. Recent tests have shown strong interest from fans, and we’d like to work with teams more closely to help them amplify their efforts to get cool stuff to those that want it.

Finally, selling in-game content has always been an important part of our economic plan for both teams and the league. We started with summoner icons, and have been working with teams to explore new items and increased revenue sharing. For specific details on some key changes to in-game content we’re making soon (not ™) we have a detailed section below. Stay strong and keep reading!

Stability

Nailing fandom and strong economics is important for a thriving sport - but stability, with partnered organizations and the right structure, helps create a healthier environment in which our sport can grow and evolve over the longer term.

We’re not yet at the stage where we can describe exactly what long-term org partnerships will look like; we’re not sure how they’ll work, or even if there will be the same structure in each region. Creating long-term partnerships across the globe is complicated - legally, financially, operationally. That said, the first step is securing those partners and putting the right structure in place. We will be looking to make this step in 2018.

LoL Esports in 2017

As we invest and build towards the future, we recognize that the current ecosystem isn’t consistently profitable yet for team owners or for the league. Costs have risen - namely in the form of player salary increases and support for those pros - mainly as a direct result of significant external investment and interest in the scene. For example, motivated owners in the LPL have been trying to be more competitive globally in part by importing star players at high salary, which has led to a similar increase in salaries in leagues like the LCK as they try to protect their homegrown talent. That investment is a positive thing, especially for pros, but we understand it creates pressure for teams juggling costs in the short-term and we want to help them avoid cutting pro salaries and support.

This part of the journey isn’t unusual; escalated investment is a natural occurrence in a growing ecosystem, and is a sign that our initial approach has been working. However, we recognize that we can help rebalance the scene by accelerating some of our longer-term economic tactics to help address short-term pain felt by many of our partners.

Unlocking digital revenue

Starting with Worlds 2016, we’re making some changes around in-game content which will create additional revenue streams for players and teams.

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Championship skin & ward - From now, 25% of revenue from each year’s Championship skin and Championship Ward will be added to the Worlds prize pool. That means every purchase of Championship Zed will directly increase the prize pool for Worlds 2016. For context, had this been applied last year, it would have more than doubled the prize pool.
Challenger skin - Similarly, going forward, 25% of revenue from each year’s Challenger skin will be added to the MSI prize pool.
Team Championship skins - Beginning with the winning team from this year’s Worlds, we will be sharing 25% of the revenue earned on skin sales in the launch year of each set of Team Championship skins directly with the players who inspired them, as well as their team and league (because it takes a village to make a champion). In the spirit of celebrating past champions, we’ll also be sharing revenue from past Team Championship skins with the previous winners - players, teams and leagues (Fnatic, TPA, SKT, Samsung White and SKT again)
New (and improved) digital goods - Next year, we’ll be introducing new revenue sharing opportunities, such as team-branded in-game items and esports promotions, as well as improving revenue sharing on summoner icons (World icons increasing from 20-30% and regional league increasing as determined by each league). We believe the potential for revenue is extremely strong for committed teams building strong brands - but given that these are new and untested products and we’re looking to address an immediate gap in team revenue, in 2017 each league will set aside a guaranteed minimum to each of its teams as it determines appropriate based on regional needs. For example, the EU LCS will have a minimum revenue amount of €100,000 per team for the full season, of which 50% will go to players as supplemental income on top of their existing salaries

Even without counting the retroactive payments to past champions, this will contribute millions of dollars in additional revenue to teams and pros each year.

Moving Into the Future

We believed the future was bright for LoL esports in 2012 - and it’s even brighter today as we take our most significant steps yet. As we face additional challenges and future unknowns, we’ll continue to stick to our core beliefs; to put esports fans first, to build a great ecosystem that keeps the sport you love around for the long-term, and which fans, pros & teams all aspire to.

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Thanks for making our sport what it is. See you at Worlds!

31 Comments

neSnaJSep 22, 201610 votes

Keep up the great work, Riot!

HakumeleSep 22, 20169 votes

There's not a lot of eSports news that gets me super hyped (seeing as how it doesn't affect me or my influence on the scene), but seeing this really excites me. eSports is fairly new still, even with it's popularity right now, and by doing this, you're not only setting the tone for any future companies looking to do the same, but are giving players more incentive to be a part of this specific environment. Revenue sharing is probably the easiest way to say, "look, you're already doing what you love, and you make money being here, but if you're even better, you can see just a little bit more." It's that extra tip that may separate the best from the truly exceptional, and it's a way of allowing someone to gain residual income for the part they played in the growth of the game and the eSports scene.

What really blows me away is that you guys are going back through five seasons of champions just to ensure those players/teams earn what they've worked for (and supplied you with). The whole environment of eSports works in this kind of partnership, and it's humbling to see you guys do something so kind. I've only been a part of the "fandom" as you called it for this year. I was just starting to get into it last year, but I couldn't fully appreciate it until I put in the work I did this year, and seeing this amount of support allows me to believe that one day we may turn on the television and see Worlds playing alongside of NFL or the like.

I see/read a lot of complaints on these forums (and elsewhere) about what you guys are doing wrong, how you don't listen, who you haven't buffed/nerfed etc. Seeing posts like this one remind me that you're not just listening, but creating your own ideas and ways to support the very same community that has brought you the amount of success you've seen since your beginnings in 2009. No one is perfect, but you guys are looking at the macro game, not just the micro.

YuppyboySep 23, 20166 votes

Is there going to be a live counter for the worlds prize pool? I think that it would be a cool addition to the client in the worlds tab.

RisenDarkKnightSep 22, 20165 votes

Jeez that was surprisingly generous of Riot. Imagine how much money they're going to have to give to SKT.

Support LyfSep 22, 201612 votes

Imagine how much money SKT has made for them* SKT is getting a cut, Riot is making a profit.

RisenDarkKnightSep 22, 20164 votes

Eh SKT already made a lot of money off league of Legends, and I'm sure league esports would be fine if a different korean team had won world's those two times.

It's pretty unusual for a company to give back revenue they got years ago when they haven't been forced to by a lawsuit or something.

ScutMonkeySep 22, 20162 votes

"It's pretty unusual for a company to give back revenue they got years ago when they haven't been forced to by a lawsuit or something."

Which was probably coming and why they did it. Riot didn't wake up and suddenly get "generous."

BloodyTomponSep 23, 20165 votes

Would be a waste of time and money attempting to sue for this. It's perfectly legal to do as Riot did.

nemesis208Sep 24, 20162 votes

What do you mean give back? It is revenue that Riot earned legally its not like they lied to the teams and stole from them. Those were the terms everyone agreed to. Now they are making a change and its for the better, teams get a bigger cut and players can have longer careers and fandom grows because they want to follow their favorite players and teams.

I Am MagicianSep 23, 20161 votes

I was far more excited for SKTs wins than SSW win. I'm sure they have the statistics showing how many more people bought SKT stuff than SSW. So no any other korean team would not have been nearly the same hype nor profit.

Sure SKT has made great money off league but this is mutually beneficial. Riot is restoring faith and also further incentivizing the sale of it's already extremely popular skins. This will make them even more money by growing their brand and attracting very influential business people (to buy teams). This isn't "just being generous" this is luring investors and rewarding the faithful (teams, players, and fans!).

It's a win win win.

p0psiclesSep 23, 20161 votes

Or that company realizes that teams are not happy with them and they are also holding back further investments in the scene because they aren't currently profitable.

Riot can't make more money if they aren't spending enough to sustain the ecosystem. Giving back to teams from years ago is just a gesture of good faith that they hope shows organization they are willing to do the right thing.

ScutMonkeySep 22, 20161 votes

Amen. Those teams which had their logos sold by Riot in game did ALL the work creating the logos, putting together the teams, creating a fan base, winning, etc. to make that logo popular and Riot gets 75% of the money? The get 75% for coming down from on high long enough to put those logos into their in game store?

It's better than nothing but profit sharing in the average sports league has the players getting 45-55% of the profits. The players in LoL get a portion of 25% and that's only for those purchases. Riot gets everything else when the e-sport side does such a fantastic job of driving sales to them.

SmileyOwnsYouSep 22, 20165 votes

MonteCristo and Weldon have been letting out videos talking about how stingy Riot is with money. Also on how pro teams are struggling to get money to pay the players the money they deserve. Higher end teams have it easier but lower teams have it hard. Riot does nothing to help those teams, even with the amount of money they make. It is not that Riot decided to get "generous" all of a sudden, they're doing it before more people within the league system start complaining. Have you wondered why Monte won't be at worlds this year? it's because he has been speaking up against Riot and their ways. However it is nice to see that they're finally realizing what they've been doing wrong. Keep on improving riot! :)

I Am MagicianSep 23, 20161 votes

Eh sorta. They didn't do those as much from backlash as they did from increasing their investors and growing their league into an even more profitable market for themselves. But you are right that Monte and others have spurred this on so they'd take action now before this worlds. Something important to note is all this comes after the Chinese corp that owns riot decided to get their hands in on the esports section of the game globally (they already controlled LPL). It's a great choice and a great change, for the first time ever I'm happy a foreign company owns sway over the local startup.... Because Tryndamere especially did not sound like he was anywhere near this type of change. Feels like it came from pressure from the controlling corporation because of PR backlash and a strong desire to make the esports scene larger and actually profitable. For many years Riot runs Esports at a loss but depended on the investment hardcore fans made into the game (besides team oriented stuff). Now they will eventually turn a profit just from the team stuff they roll out.

BloodyTomponSep 23, 20161 votes

Monte Cristo is not at worlds this year because part of Riot's policy with disciplinary action includes not being employed by Riot (I think for a year). He was still able to be a shout caster because that was not something done by Riot.

EleshakaiSep 23, 20161 votes

They did this because it's a good financial decision for them - similar to how companies putting items on sale is not 'being generous'.

Not because Monte said something. I promise. This would've still happened if Monte had become a hermit 6 years ago and nobody had spoken to him or heard from him in that entire time.

TrollFan01Sep 22, 20164 votes

Good to know players will be getting more of the cut from their championship skin buys.

Spilled BeansSep 22, 20163 votes

FeelsGoodMan

SariokSep 22, 20162 votes

Any updates for the new spectator HUD for worlds/LCS?

ExWhiteWolfSep 22, 20161 votes

I don't think this solves anything at all.

CressaliaSep 22, 201611 votes

I'm pretty sure this came with the agreement of teams, such as TSM where Reginald has probably been talking to people to negotiate more revenue coming in so him and other teams aren't losing money. This helps improve stipends, teams also get more money from the content you buy, sponsorships help boost money to esports. While they didn't mention anything about teams being able to get more money from sponsorships it does solve some problems we have with the current system of people buying skins and summoner icons.

TrollFan01Sep 22, 20164 votes

If anyone can make Riot pat teams more it's Regi. After smacking Tryndamere around with logic and what happened with G2/FNC and how things went with REN and TDK Riot had to do something to restore faith.

JgrhymesSep 22, 20164 votes

Then you haven't thought about it long...

Far easier to keep existing fans/players than to acquire/develop new ones. Further incentivising existing players and teams can only be positive for sustainability.

p0psiclesSep 23, 20162 votes

It doesn't solve everything, but it's a good start. As Riot said, this will add millions in revenue to teams. However, this sort of in-game content can only go so far. Especially because most of the changes mentioned have to do with worlds/championship merch. That kind of stuff only helps the best of the best.

[Out-of-game] merchandise and sponsorships are the biggest pieces of the pie because those give every team a steady, healthy revenue stream. From this post it sounds like Riot is working on that. Let's hope it comes to fruition.

Kledy McKledFaceSep 22, 20161 votes

Any sights for Olympics? :P

JgrhymesSep 22, 20161 votes

Good look. Some constructive feedback; incentive based financial rewards may increase barriers to new/sustainable ownership and developing markets. Having said that, I'd assume this will help keep existing players/teams active and motivated. Sustainability and growth, a tale as old as time...

LaerykenSep 22, 20161 votes

Thank you. From the bottom of my heart, increasing the prize pool and increased revenue shares with teams is fantastic. I've bought many team icons every year to support them, and am now 100% buying the championship ward!