Finally.
In the wake of the mounting criticism levied at Riot’s esports department from every corner (including this one), Riot’s finally ready to make a move and address their critics. An internal message was sent out to the company admitting shortcomings in the department’s messaging – and offering a glimpse of what is to come:
Over the past few months, we’ve heard loud and clear feedback that we haven’t done a great job explaining our long-term vision to players – leading to players confusing our motives and others filling the void. This post is designed to tackle that head-on by giving visibility into our long-term motives/goals and how we’re going to get there – as well as some specific tactics for 2017 around in-game content that are designed to help teams bridge the current economic gap that exists in many of our leagues around the world. Our goal isn’t to make everyone love us immediately – rather, this is the start of an on-going conversation where we are more transparent and open with players (and over time, build a ton of trust).
Much of the announcement was specifically to address the economic concerns levied against the company in recent months – not just that teams weren’t able to make ends meet, but that the esports scene as a whole has come to look uniquely miserly among the greater competitive community. Whereas DOTA 2’s compendium was heavily bolstering its fan engagement, and skin sales were making CS:GO arguably the most profitable of the major esports, the $2 million prize pool at League of Legends’ World Championship seemed inadequate for an event of its prestige and fame.
No longer.
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)
But there is one sore point in an otherwise promising vision of Riot’s future: the stability issue brought up by its most ardent critics remains largely unaddressed. Though Riot’s signaled a greater willingness to work with sponsors and advertisers in the future, its leadership’s also implicitly admitted that the groundwork hasn’t even been started – but they’ll get to it now:
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.
UPDATE: Riot’s confirmed the statements in their official announcement.
The full text of the internal announcement is as below:
Tomorrow (Sept 22) at 12:00 PM PT we’re going to be putting out one of our most personal and forward-thinking letters to players yet, and we wanted to give you a preview before we share this publicly.
Over the past few months, we’ve heard loud and clear feedback that we haven’t done a great job explaining our long-term vision to players – leading to players confusing our motives and others filling the void. This post is designed to tackle that head-on by giving visibility into our long-term motives/goals and how we’re going to get there – as well as some specific tactics for 2017 around in-game content that are designed to help teams bridge the current economic gap that exists in many of our leagues around the world. Our goal isn’t to make everyone love us immediately – rather, this is the start of an on-going conversation where we are more transparent and open with players (and over time, build a ton of trust).
Getting alignment across 13 leagues is no easy task, so a huge thanks to Rioters across the globe who came together to work on this.
Please don’t share this with anyone outside of Riot until the post goes live. We want Rioters to feel confident about the long-term vision we’re sharing with players so please read the post below and ask us questions via the #fb-esports_feedback Slack channel.
TL;DR / Background
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.
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.
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.
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.
