Is Riot Inept?

Pippen The Short·May 15, 2017·1 votes·643 views

Riot, as of last September, posted they have 100 million unique logins playing League every month. 100 million.

But somehow they can't convert that into a profitable LCS? Supposedly, as many different sites, such as DOT Esports, Esports Observer, etc, etc have reported that the LCS does not make money for the LCS. Which just baffles me.

The NFL reported they revenue $100 Million a year off of Jersey sales alone.

So it seems to me that Riot could make skins, or chroma's that revolve around popular players favorite champions. So a Bjergsen TSM Taliyah skin, or something like that.

But, I don't know, I just have a hard time believing that Riot doesn't make money off of the LCS.

29 Comments

Warlord ScrapMay 15, 20172 votes

look at the price of nfl ticket sales compared to lcs sales. Also the nfl is on tv where they make money as well as having the nfl package. The lcs is free to watch on twitch. Its a poor comparision because differences in sales models

Miror BMay 15, 20171 votes

The NFL's fanbase is also far larger than LoL with their total viewership of the superbowl last year being around 50m households and their total profit from last year hovering around the 10b-ish range. Comparing league to it is like comparing apples to the planet jupiter.

Pippen The ShortMay 15, 20171 votes

{quoted}

The NFL's fanbase is also far larger than LoL with their total viewership of the superbowl last year being around 50m households and their total profit from last year hovering around the 10b-ish range. Comparing league to it is like comparing apples to the planet jupiter.

Really? 50 million viewers for the Supebowl one time a year vs. 100 million unique logins to play League every month.

From a money perspective, advertisements are always sold on the value of exposure. So Riot, only needs to captivate half of its playing populace to watch the Worlds finals, to generate $10 Billion in revenue for a single day. Now, lets just assume that's true, what disincentive exists to prevent Riot from at least trying to get to that level?

Miror BMay 15, 20171 votes

Out of those logins, how many actively watch the LCS though? (Hint: worlds viewership was only averaging 500k a day on twitch) Monetarily-wise, LCS is never going to reach the peak of "professional sports" simply due to the sheer amount of control these companies have over their said games, making it incredibly risky to actively invest in said thing due to how unstable the game is (remember the juggernaut patch pre-worlds 2015 that basically f'cked over the entire meta?). Even if rito were to get half of its "playerbase" (which I'm under the impression is hovering around 20m different players due to the number of alts) to watch their programming, the revenue wouldn't exactly change much.

Oh, and you're heavily misguided on the idea that the LCS somehow isn't profitable. It is profitable, for them. For the teams involved in it, they were sorta getting shafted up until regi made a bunch of things known (hence why they're bragging about all the MSI karma stuff and the "increased jackpots" for tournaments).

Pippen The ShortMay 15, 20171 votes

{quoted}

Out of those logins, how many actively watch the LCS though? (Hint: worlds viewership was only averaging 500k a day on twitch) Monetarily-wise, LCS is never going to reach the peak of "professional sports" simply due to the sheer amount of control these companies have over their said games, making it incredibly risky to actively invest in said thing due to how unstable the game is (remember the juggernaut patch pre-worlds 2015 that basically f'cked over the entire meta?). Even if rito were to get half of its "playerbase" (which I'm under the impression is hovering around 20m different players due to the number of alts) to watch their programming, the revenue wouldn't exactly change much.

Oh, and you're heavily misguided on the idea that the LCS somehow isn't profitable. It is profitable, for them. For the teams involved in it, they were sorta getting shafted up until regi made a bunch of things known (hence why they're bragging about all the MSI karma stuff and the "increased jackpots" for tournaments).

http://www.lolesports.com/en_US/articles/2016-league-legends-world-championship-numbers

http://www.espn.com/esports/story/_/id/18221739/2016-league-legends-world-championship-numbers

Ok, so Twitch was only 1 streaming site, and as much as I like twitch its the worst site to view LCS events on. I always find myself switching over to the Youtube broadcast.

So, 14.7 million people watch the LCS final, as an emerging market. Which, because of Riots refusal to create a stable league, ie stable teams, advertisers have been reluctant to sponsor for long term and major amounts of money, like you find in other more established leagues. So yes, higher viewership is only half of the coin. You also need a sound structure worth investing into.

But Esports is growing, and in prime position to take advantage of the advertisers looking to target younger generations. While Valve and other developers are looking to create steady stable leagues, which are ripe for advertisers to invest in, Riot is just sitting on its hands.

http://www.businessinsider.com/esports-is-nascent-but-growing-steadily-2017-5

http://adage.com/article/news/e-sports/308447/

Also, it's not me thats "misguided". This is simply the current belief in the media and perpetuated by the head of Riot himself.

https://dotesports.com/league-of-legends/reginald-marc-merrill-riot-games-3744

http://esportsobserver.com/lcs-isnt-profitable-riot-doesnt-want-profitable/

Pippen The ShortMay 15, 20171 votes

{quoted}

look at the price of nfl ticket sales compared to lcs sales. Also the nfl is on tv where they make money as well as having the nfl package. The lcs is free to watch on twitch. Its a poor comparision because differences in sales models

I agree that it would be unrealistic to compare the NFL to the LCS.

But League of Legends is the largest online game, the largest Esports in terms of viewers for major events, etc, etc. So how they supposedly generate zero profit off of the LCS is just a wild assertion that I have to believe is either wrong or the result of inept leadership in the development of the LCS as a spectator Esport. Which, if you look at the facts and the efforts of Riot it appears its the latter of the two.

Kal Vas FlamMay 15, 20172 votes

Riots entire esports scene has been butchered from day one. Instead of simply doing what other sports have proven to be successful for decades they tried to reinvent the wheel and failed.

137434May 15, 20171 votes

[{quoted}](name=Pippen The Short,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=,timestamp=2017-05-15T19:27:29.208+0000) So it seems to me that Riot could make skins, or chroma's that revolve around popular players favorite champions. So a Bjergsen TSM Taliyah skin, or something like that.

There is a huge difference between actual jerseys and in game representations of jerseys, and how much money you are willing to spend for one. One is a product that people can wear at anytime, and competes with other articles of clothing. The other is something that can only be used when playing a certain character in a video game, and competes with other thematics (that don't need to actually be realistic or practical) that Riot may also come up with for the same champion.

Pippen The ShortMay 15, 20171 votes

{quoted}

There is a huge difference between actual jerseys and in game representations of jerseys, and how much money you are willing to spend for one. One is a product that people can wear at anytime, and competes with other articles of clothing. The other is something that can only be used when playing a certain character in a video game, and competes with other thematics (that don't need to actually be realistic or practical) that Riot may also come up with for the same champion.

Ok? So do that?

Lets just go through the basics here.

Riot has not made any effort to create marketable merchandise for the LCS. Much like the NFL has the NFL store, or the NBA, the MLB, or something comparable. Now, I only mentioned in game skins/chromas because Riot had a recent article about this very subject and said they were more interested in developing in game content. If Riot wanted to setup an actual League by-laws that dictated how jerseys or similar team related merchandise wanted to be sold, they could very easily do that. Creating in-game content that specifically related to a player or team, that would be another layer that you couldn't get with the NFL and NBA standard jersey sales. It should also be noted that NFL jerseys are sold for $100 from the NFL store, and if you buy a registered product from a different store you're still forking over $50 at least; NBA jerseys are sold for $70. Now, I understand that to a largely younger, poorer demographic you would have a hard time selling the jersey's at that price. But imagine if younger kids started putting "I want a 'Faker' jersey" on their Christmas list? Riot could probably, fairly reasonably, sell jersey's for $30-$40 range under agreements with the teams, but that would more likely have to take place under a franchised agreement of some kind with the teams.
Riot has made zero effort to monetize their streams. There are still 10 minute stretches between games of just listening to music and staring at the schedule of the day. Riot also the ability to sell in-game banner space, develop a rotating advertisement over the item build, let that rotate between an advertisement, items, advertisement, gold accumulation, etc etc. The effort to sell advertisement has been very minimal.
Riot has been extremely resistant to a stable league structure. There exists no revenue sharing scheme, no stable "minor" league system, and lets not kid ourselves the CS is a total joke. They haven't even made an effort to change their streaming structure as a means of enabling advertisements or creating access for viewers, and they also haven't attempted a TV deal, like the much smaller Valve with CS:GO and Street Fighter leagues have done, and done successfully.

At the end of the day, you have 100 million players actively playing league. As the #1 Esport, #1 online game in terms of #1 for unique logins, and the best access to the 16-28 year old demographic which has shown a continued trend in moving away from more traditional sources of entertainment and towards exposure to online content and stream content. Besides, selling advertisements is the only way to offer a free product to the consumer while still making money.

It's not that Riot has made a poor effort to monetize the LCS, it's that they've made no effort to monetize the LCS. Which seems rather bizarre. Riot, with minimal effort, could deliver a better product to the viewers, a more stable environment to investors, advertisers, and teams, and generate a substantial profit all at the same time. Which begs the question, is Riot inept at running a professional league?

Edit: Weird that the format converts my 1, 2 and 3 to 1, 1, and 2.

Warlord ScrapMay 15, 20172 votes

Except they pay 70k a split to each lcs team which the nfl doesnt do. Also know one is gonna pay riot anywere near as much as the superbowl for ads. So besides ads what revenue can riot make from lcs. No were near as much as the nfl with jerseys, playing cards and other merchandise. A video game franchise which i guess you can consider esports having. Also remeber the nfl is its own business that makes it easier to judge how much theyre making from everything where as lcs is only a small portion of league.

Pippen The ShortMay 15, 20171 votes

{quoted}

Except they pay 70k a split to each lcs team which the nfl doesnt do. Also know one is gonna pay riot anywere near as much as the superbowl for ads. So besides ads what revenue can riot make from lcs. No were near as much as the nfl with jerseys, playing cards and other merchandise. A video game franchise which i guess you can consider esports having. Also remeber the nfl is its own business that makes it easier to judge how much theyre making from everything where as lcs is only a small portion of league.

Are you aware of how NFL teams make their money?

No, the NFL does not directly cut a check to teams in the amount of $70,000 a year. They cut them checks in the amount of almost $230 million as part of their revenue sharing structure as per the franchised agreements with teams. NFL split $7.2 billion last year between teams last year. Riot does not have this, at least at this level, despite supposedly having the means to have a revenue sharing structure, as disputed by Reginald, Jack, and a few Esports commentators.

Also, because Riot is not in the same atmosphere of revenue and profits, does that mean that they shouldn't try to generate a profit?

I'm not saying that Riot, under a similar more specific structure, geared towards its premier demographic, will sell advertisements at the same going rate as the NFL, because I know they won't. What I'm saying is that Riot does not have the structure or stability in the LCS to even sell these kinds of advertisements.

Warlord ScrapMay 15, 20171 votes

Uh riot has a revenue sharing structure. Each starting player and coach gets 12500 a split. Thats how i came up with 70k a year 5 starting players plus a coach. Viewership is much lower in the lcs as well as not as many lower supporting companies like minor league football and true college teams. Also while the nfl's main focus is professional football its not the main focus of riot.

Pippen The ShortMay 15, 20171 votes

{quoted}

Uh riot has a revenue sharing structure. Each starting player and coach gets 12500 a split. Thats how i came up with 70k a year 5 starting players plus a coach. Viewership is much lower in the lcs as well as not as many lower supporting companies like minor league football and true college teams. Also while the nfl's main focus is professional football its not the main focus of riot.

Riot does not have a Revenue sharing structure. The player allowance is not a revenue sharing program.

Seriously, they give teams $25,000 per starting player, per split, but most teams to stay competitive are paying 4 or 5 times that to the player for ok players and 10 times that to the top tier talent, and then offering only $25,000 for coaches (first time they've offered pay for coaches starting this year), who are also making $50,000 a year at least. (They upped the player allowances to $25,000 a year starting this year, which they announced in a Reddit post of all things.)

Yes, viewership and sponsorship are low in the LCS because of the lack of structure. We know this, which is whats bizarre. You have the highest draw of any online Esport, with potential of being the next big thing in the next decade or two and Riot is taking zero steps to capitalize on its current position.

Warlord ScrapMay 15, 20171 votes

Between stipends which according to the rule book chapter 2.2 is 12500 in na but im not gonna argue that point. And yes sponsorship is low. 500 000 people watching your main event is not a lot. It might be in esports but its not in any other ratings bracket. Also startin in 2017 players started making money based on team icons.

Pippen The ShortMay 15, 20171 votes

{quoted}

Between stipends which according to the rule book chapter 2.2 is 12500 in na but im not gonna argue that point. And yes sponsorship is low. 500 000 people watching your main event is not a lot. It might be in esports but its not in any other ratings bracket. Also startin in 2017 players started making money based on team icons.

Team Icon sales have been going on since 2015. Which one team said they made $3,215 in a single split. Which, 2.2 has been updated. So you must be looking at a dated article or something citing that figure.

Also, as I've cited already once, worlds last year attracted 14.7 million viewers for the final matchup. Which is significant, that's higher than the average MLB series in the last 10 years (not including game 7 of last year, that was an anomaly) , and some recent NBA Finals games. Which unlike the two more traditional sports listed, the viewership for Worlds has been steadily growing.

TurquoiseYoshiMay 15, 20171 votes

To be fair to Riot on point 2(?), they are trying with that. They're selling skins that increase prize pools at events, actually have a main advertiser now, and they do run Twitch/YT ads during the 4 minute break between games.

Pippen The ShortMay 15, 20171 votes

{quoted}

To be fair to Riot on point 2(?), they are trying with that. They're selling skins that increase prize pools at events, actually have a main advertiser now, and they do run Twitch/YT ads during the 4 minute break between games.

I think I saw one Intel commercial during MSI thus far in the 10 minute break, which lasted all of 30 seconds, and I know I saw another commercial I just can't recall what it was.

Riot has not started to sell in game skins for teams, only teams that win Worlds.

And yes, they are selling skins to increase the winners pool which benefits the winners. But I think the team owners have made it clear that they would prefer a franchised league with revenue sharing.

TurquoiseYoshiMay 16, 20171 votes

The commercials in the 3:30 break between games are standard ads on the site, like any other streamer/video maker would use. If you have an adblocker, they would be blocked, which is why you wouldn't see them. Acer is the sponsor of Riot's international events, and they show ads during these events, being much more active at Worlds.

If you've been seeing Intel ads and 10+ minute breaks, I regret to inform you that you've been watching IEM and not a Riot event.

Pippen The ShortMay 16, 20171 votes

{quoted}

The commercials in the 3:30 break between games are standard ads on the site, like any other streamer/video maker would use. If you have an adblocker, they would be blocked, which is why you wouldn't see them. Acer is the sponsor of Riot's international events, and they show ads during these events, being much more active at Worlds.

If you've been seeing Intel ads and 10+ minute breaks, I regret to inform you that you've been watching IEM and not a Riot event.

https://www.youtube.com/watch?v=Ryz5OaXERbw

2:07 there is an ACER commercial, that features a blip about Intel i7 core and at the end of it flips over to the Intel Logo. My apology for not being entirely accurate.

That being said, there were 18 minutes between Games 1 and 2, 13 minutes between games 2 and 3, and the rest of the games hovered around there. 13 minutes is plenty of time to get caster analysis and break it up for some good advertisement slots. Much like every other sport or entertainment phenomena you could have "The Baron Pit sponsored by...." and go over the baron/herald plays or no plays featuring a sponsor and you could throw their banner inside the pit in game as long as the graphics didn't conflict with in game graphics. I mean seriously, in game graphic content for LCS events would be entirely acceptable and in the realm of possibility. Get a merchandise sponsor with Adidas, Reebok, or UniQlo or something.

Regardless, there is a ton of room for sponsorship and advertisements to bring in revenue for the league. But you can only do that if you fix the unstable nature of the league, ie, you can't just steal someones team on unsubstantiated claims of poaching. Some kind of meet-in-the-middle franchise agreement has to exist, you have to develop a revenue sharing agreement, and probably need a players union to bargain on player promotion for merchandise or products.

OleandervineMay 15, 20171 votes

You are assuming that a bulk of the League playerbase actually cares about eSports. I don't care about regular sports, so what makes you think I would care about eSports?

Pippen The ShortMay 15, 20171 votes

{quoted}

You are assuming that a bulk of the League playerbase actually cares about eSports. I don't care about regular sports, so what makes you think I would care about eSports?

Because you play League.

think about this MLB generates almost $10 billion a year despite recording only 300,000 active club, recreational, or semi-competitive league players playing the sport.

Riot records 100 million unique logins every month. Even if Riot only captures a fraction of their player base as viewers, what potential exists in capturing viewers and casual viewers to the sport if they actually decided to pitch the LCS as a spectator Esport?

OleandervineMay 16, 20171 votes

[{quoted}](name=Pippen The Short,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=00020000,timestamp=2017-05-15T22:35:14.548+0000)

Because you play League.

think about this MLB generates almost $10 billion a year despite recording only 300,000 active club, recreational, or semi-competitive league players playing the sport.

Riot records 100 million unique logins every month. Even if Riot only captures a fraction of their player base as viewers, what potential exists in capturing viewers and casual viewers to the sport if they actually decided to pitch the LCS as a spectator Esport?

What you are failing to calculate is how many people watching and investing in MLB were involved in the sport in some way in the past either through schooling or outside of school - what you listed is their current, present involvement records, but you don't account for at least 2-3 generations of mostly men who have been watching the sport for decades. League doesn't have that kind of cross-generational loyalty, and it probably won't unless it blows up even bigger than it is now, and maintains it for another few decades. Most people playing League are younger, in school, and likely don't care or don't have time to invest in watching eSports, especially considering how much other media is out there that is so much more interesting to this same crowd of people. Professional sports don't have to contend with their viewer base being more interested in other videogames, cartoons, anime, and comic books, and they certainly don't have to deal with the fact that most of the geeky/gamer culture often has so much media to consume that they are unwilling to waste their time watching "professionals" play they same game they play at a much more boring, slow pace.

Pippen The ShortMay 16, 20171 votes

{quoted}

What you are failing to calculate is how many people watching and investing in MLB were involved in the sport in some way in the past either through schooling or outside of school - what you listed is their current, present involvement records, but you don't account for at least 2-3 generations of mostly men who have been watching the sport for decades. League doesn't have that kind of cross-generational loyalty, and it probably won't unless it blows up even bigger than it is now, and maintains it for another few decades. Most people playing League are younger, in school, and likely don't care or don't have time to invest in watching eSports, especially considering how much other media is out there that is so much more interesting to this same crowd of people. Professional sports don't have to contend with their viewer base being more interested in other videogames, cartoons, anime, and comic books, and they certainly don't have to deal with the fact that most of the geeky/gamer culture often has so much media to consume that they are unwilling to waste their time watching "professionals" play they same game they play at a much more boring, slow pace.

Which totally explains why the Worlds final viewership grew to normal levels already seen at the NBA and MLB levels, and has been steadily growing, unlike traditional sports.

The facts contradict your opinion on the matter. Will the LCS ever reach Superbowl numbers for its viewership, maybe not. But the fact that its already at levels of the NBA Finals and MLB World series and they are not generating revenue anywhere near the level of these events is whats crazy.

Wifi the RouterMay 15, 20171 votes

You do realize the only sources of revenue for LCS are the store icons and ads during the game (and the skins during MSI and Worlds). Most of the potential revenue for esports, at least in league, is going to the teams who can sell merch and gain corporate sponsors.

Pippen The ShortMay 16, 20171 votes

[{quoted}](name=Wifi the Router,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=0004,timestamp=2017-05-15T23:58:22.135+0000)

You do realize the only sources of revenue for LCS are the store icons and ads during the game (and the skins during MSI and Worlds). Most of the potential revenue for esports, at least in league, is going to the teams who can sell merch and gain corporate sponsors.

I am aware of that. Which that structure is asinine and flies in the face of proven structures of leagues all around the world.

As I've stated, Riot has ample opportunity to create a stable, functioning LCS and even a CS league, which they could in turn garner major, long term sponsorship and advertisement agreements which they could use to generate revenue for the League.

xJLx MCHammerMay 16, 20171 votes

Esports is still growing

If Riot tries to monetize or even charge a premium, they risk ruining Esports in general. Unfortunately for riot, LoL may not be played anymore when esports finally grows into a market that can truly be have huge investments that major sports have

Riot will undoubtedly be considered one of the founders who made developed esports to what it is today and will be in the future. Just looking at the production is evident of that.

Pippen The ShortMay 16, 20171 votes

[{quoted}](name=xJLx MCHammer,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=0005,timestamp=2017-05-16T22:55:05.278+0000)

Esports is still growing

If Riot tries to monetize or even charge a premium, they risk ruining Esports in general. Unfortunately for riot, LoL may not be played anymore when esports finally grows into a market that can truly be have huge investments that major sports have

Riot will undoubtedly be considered one of the founders who made developed esports to what it is today and will be in the future. Just looking at the production is evident of that.

But they don't need to charge a premium? They simply have to create a stable league environment for teams that reduces the risk for advertisers.

xJLx MCHammerMay 17, 20171 votes

[{quoted}](name=Pippen The Short,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=00050000,timestamp=2017-05-16T22:57:56.658+0000)

But they don't need to charge a premium? They simply have to create a stable league environment for teams that reduces the risk for advertisers.

I think Riot did create it

Teams get paid every split just being in the LCS It's much harder to get relagated now They allow teams to pick up advertisers

Pippen The ShortMay 17, 20171 votes

[{quoted}](name=xJLx MCHammer,realm=NA,application-id=9hBQwnEU,discussion-id=TYObbqWf,comment-id=000500000000,timestamp=2017-05-17T11:53:16.033+0000)

I think Riot did create it

Teams get paid every split just being in the LCS It's much harder to get relagated now They allow teams to pick up advertisers

No, Riot has not. You are clearly not up to date on the current opinions of teams on Riot games.

Teams receive $150,000, which wouldn't even get you a decent star player in the league right now. So are we really going to conflate that as a serious and sustainable "Revenue sharing" platform?

Riot has not reconciled the lack of structure that caused Misfits and Renegades to lose their LCS spots, which neither team was relegated, so I don't know why you brought that up.

They have always allowed teams to pick up sponsors; not advertisers, there is a difference. Which short term sponsors don't pay as well as long term, league affiliated advertisement deals.

http://www.itechpost.com/articles/53698/20161114/league-legends-teams-quit-riot-games-doesn-t-give-more.htm

https://slingshotesports.com/2016/11/12/riot-games-lett-lcs-owners-league-of-legends-concerns-relegation-financial-stability/

Sports industry standards that exist in other sports and are slowly being developed in CS:GO and DOTA are not even on the discussion table with Riot.

Which, none of the major concerns that LCS owners laid out in their letter to Riot have been met with any level of acceptable satisfaction. Riot, or "Tryndamere's", response basically opens up by saying that current LCS owners may not be suitable partners for Riot Games in establishing a franchised league.