League of Legends is so lucrative, its maker is in no rush to release another game

LoL has more than 103 million active players and a rumoured US$1 billion in annual revenues, allowing Riot Games, its Chinese-owned, Los Angeles-based creator, to take its time to find its next project

PUBLISHED : Thursday, 22 September, 2016, 3:03pm
UPDATED : Thursday, 22 September, 2016, 3:20pm

More than 100 million people play League of Legends each month, making it the world’s top PC game.

But the milestone, which was reached sometime in the last year and announced earlier this month, does little to settle questions about developer Riot Games’ pace of growth and when it might finally launch a second game.

The 10-year-old Los Angeles company continues to scuttle ideas for a follow-up to the hit, a multiplayer online battle arena game in which two opposing teams compete. Riot also is considering transforming its role at the centre of e-sports – a position it has described as “awkward”.

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League of Legends for so many people has become a shared language and passion and that to us is really motivating,” says co-founder Marc Merrill, Riot’s president. “The next 10 years, we want to do more of the same, make other interesting games and continue to grow and invest in League.”

Merrill and Riot chief executive Brandon Beck say it is for others to judge if the company’s growth has been satisfactory. Last month, 103 million people played League of Legends; the last time the company disclosed player numbers, in January 2014, that figure was 67 million.

They also declined to comment on sales and profits. Outside estimates have the company easily seeing US$1 billion in annual revenue, mostly from selling cosmetic upgrades to virtual characters in League of Legends.

Now fully owned by Chinese gaming giant Tencent, Riot has both the independence and financial flexibility to chart its own course. Riot wants to end up with “a few games” over the next decade, says Beck. But there’s no rush.

Regardless of what lies ahead, Riot will be remembered for unusual strategies and for taking e-sports from “a cult segment to a huge stature”, says Lisa Cosmas Hanson, managing partner of gaming industry consultancy Niko Partners.

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NBA stars and media moguls are spending millions of dollars to field top-tier League of Legends teams and thrust them into tournaments with many more millions in prize and sponsor money at stake. How the competition grew so fierce – to the point that millions of fans stream professional League games each week – is a testament to how Beck and Merrill deviated from industry norms, according to analysts and early Riot investors.

Unlike big gaming companies that had to sell a new game every year, Riot launched League of Legends in 2009 as a free online download. Updates are free as well, with the company reliant on in-game transactions for revenue. The set-up enables players to go much deeper into a single virtual universe, as Merrill and Beck longed to do as gaming-obsessed teenagers.

The game lacks a single-player mode. And though the goal of destroying the enemy’s base is easy to follow, getting a grip on how to succeed is difficult. The decisions emphasised League as a community, where even just being a spectator was okay.

Rick Heitzmann, managing director at FirstMark Capital and an early Riot investor, recalled how Merrill compared big gaming publishers to Disneyland. They could afford to develop a crazier roller coaster, or game, every year.

With much less cash, Riot had to be “pickup basketball or soccer, where it’s not about the field or court, it’s about the social interactions and competitiveness and community”, Heitzmann says.

Though the strategy worked, the laser focus on League of Legends has invited scrutiny about whether Riot left money on the table by not using its popularity to market additional games.

“It’s very rare to see a company focus on one game for such a long time and not introduce any sequels, spin-offs or even brand new [titles],” Niko Partners analyst Daniel Ahmad says.

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Beck says it comes down to valuing long-term potential over short-term gains and that development of League of Legends is far from done.

Teut Weidemann, a long-time gaming executive and consultant, says looking elsewhere too soon would have distracted Riot. But he notes that the company could be challenged if players shift attention to similar smartphone and virtual-reality games, two growing areas where Riot hasn’t carved out a big spot. Tencent’s King of Glory – regarded as a League-like mobile game – has hit 30 million daily users already in China, according to Niko Partners.

A cautious approach to developing a new game gives Riot time and space to fit its core value – doing right by its players – into a larger ecosystem. “We feel comfortable doing R&D on big, risky, crazy ideas and failing internally multiple times before shipping to players,” Beck says.

Players have stuck with the company through its growing pains, but releasing more games increases the chances of unsettling the strong relationship.

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“Our intentions haven’t changed but the quality of execution has,” Merrill says of the player-first mentality, with Riot now employing about 2,000 people worldwide. “Often, our biggest mistakes are where we lose sight of how players are perceiving things.”

Operating 13 tournaments for its game across the world has placed Riot in an “awkward” spot, having to balance the interests of multiple parties, Beck says. “We wish we didn’t have to be in the middle of all that, and in the long term, we hope we won’t have to be,” he says.

Asked how the company might relinquish control, he says, “You tell me.”

The co-founders recognise that a fresh set of game-changing ideas is needed to take its sport to another level.

“One of my favourite quotes is from Bruce Lee,” Merrill says. “‘There are no limits, only plateaus,’ and we’ve hit this interesting plateau. What will get us to this next plateau? The solutions that got us here won’t necessarily be the ones that get us to the next one, and that’s the ground we’re going to explore.”

Los Angeles Times