Rational thinking and business planning doesn’t explain Riot’s behaviors.

Edit: I’m sorry for the long text that follows, but it is a worthwhile read if you want an insight into economy, finance, and some business psychology. I tried to keep it short but there was only so much I could cut down.

“For every complex problem, there is an answer that is clear, simple, and wrong.” – H. L. Mencken While I originally intended to speak of other decisions made by Riot as well, I feel that this quote sums up Riot’s cost cutting actions quite well. Cutting off dominion and twisted treeline is the “answer that is clear, simple, and wrong.”

The removal of dominion and twisted treeline does not make sense from a business standpoint, unless they were somehow losing a substantial amount of money from them, which is and was unlikely. Even at a slight loss, these two gamemodes actually generate value for the game that is not necessarily represented by a cash flow directly from said modes.

For one, it gives the illusion of choice to players. Most players will just play the one mode they always do, but having the illusion of choice, or actually even really having a choice simply makes their satisfaction greater.

A worthwhile and easy to understand explanation on this specific topic: https://m.youtube.com/watch?v=YMPzDiraNnA The important thing to note here is that well designed psychological studies have shown and documented that being given options leads to greater satisfaction and results. Conversely, taking away options leads to learned helplessness and potentially eventual abandonment of this product.

My digression aside, there are other reasons this choice is illogical. For one, a company has much to gain when it diversifies its product.

An analogy can be drawn via Bill Gates and Warren Buffet. While Bill has almost always been richer, Warren has almost always had more power and controlled more money. Bill had all that money because of Microsoft, and he simply had no way to make a quick and easy move out of Microsoft due to laws governing majority ownership of stocks (he would have to announce 6 months in advance that he’s selling, which would lead to people selling out before him, which would in turn means he doesn’t actually have that much money he can liquidize into cash). But on the other hand, Warren actually has more influence on the market because his stock is diverse and he is the founder of a company that deals in further buying and selling of other major companies, one that is highly trusted, hence being able to affect more of the economy than just a mere Bill Gates.

Why do I mention this? I say this to point out that Riot is giving up great market control over a marginal (and temporary) increase in profit.

Now, you might point out that this is sunk cost fallacy at play. Cutting costs is necessary, right? However, for sunk cost fallacy to even come into question, there has to have been substantial investment in the gamemodes. There very clearly has not been, at least not relative to what Riot is capable of. Furthermore, it is noteworthy that the majority of companies are not met with success without a great initial sunk cost. There needs to be a good, solid investment for an ROI (return on investment) to exist.

On the other hand, the existence of similar gamemodes helps prevent burnout. If someone is getting tired of the Rift, and there were to be quality and cared for gamemodes that are substantially different from said Rift, Riot could essentially prevent burnout or have the same players who did burnout continue playing Riot’s gamemodes instead of taking breaks using other directly or indirectly competing game companies’ games.

Furthermore, there is the issue of volume of distribution. In macroeconomics any professor worth his money and time would point out that it’s worth operating at 0 profit or even a slight loss as long as it takes up a significant portion of the market. There is a lot of profit and power to be had if your game takes up more of the market. Be that both in player hours and actual player count.

There’s a substantial different between 10 million players spending 30 minutes a day on your game and the same number of players spending 3 hours a day on your game. While it may cost your servers more, you will eventually profit off of the additional volume of distribution.

All in all I think there is good reason to believe that investing in and promoting Twisted Treeline and even Dominion would have been the rational choice/s to make. There are two possibilities at play here. (A) Riot’s management and investment departments are incredibly bad at their jobs and are essentially riding the wave until it crashes (B) the infrastructure of Riot’s servers and game in general makes it prohibitively expensive to run extra servers (very, very unlikely) and their operation costs are incredibly high, meaning that Riot’s network and/or finance departments doing a bad job, (C) there is excessive interference by Riot’s investors and parent company that leads to unsavory outcomes (unlikely), and (D) some combination of the above.

Riot has a lot to gain by investing in Twisted Treeline and Dominion, and a lot to lose by removing (and having removed) the two gamemodes, even if it does not immediately and directly translate into cash flow visible on paper.

TL;DR: alternative gamemodes present benefit to Riot games in ways that the cash flow may not immediately make evident. They allow product and market differentiation, they give players the illusion and the satisfaction of choice, and they allow League to take up more of a player’s time and cognition, essentially increasing the volume of distribution of the product and taking up time slots that could have potentially went to direct or indirect competitors.