Amid growing concerns over profitability and long-term viability and allegations of dysfunction at the highest levels, Riot Games’ esports department released an open letter to its fans Thursday promising changes for the future to ensure the future of League of Legends esports.
Over the past few months, many voices within the community have raised concern over the lack of teams currently making a profit, and the struggle many teams face to pay their players. Part of this has to do with Riot’s strict control over the league, part of it has to do with the lack of revenue options available for the professional teams.
Riot is attempting to fix some of these problems, promising increased revenue sharing and security for its professional teams.
Some of the key points of the letter:
- Plans to “share LoL esports revenue streams”
- Partners with “permanent stakes,” which could suggest the eventual end of promotion and relegation
- Plans to “restructure and expand our approach to media distribution and ad/sponsorship sales”
- More team-branded in-game purchasable content, with revenue shared with those teams
- 25% of revenue received from Championship skins (like Championship Zed) and wards will be added to the Worlds prize pool
- 25% of revenue received from Challenger Skins will be added to the MSI prize pool
- 25% of revenue received from skin sales from the winning team of Worlds’ will be shared with the players, team and league. Riot will also share revenue from past Worlds skins with those winners.
- “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”
The letter can be read in full below.
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.
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:
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.
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.
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
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!
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.
Thanks for making our sport what it is. See you at Worlds!