League of Legends moves to crowdfunding prize pools

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It must be hard responding and interacting with one of the largest fan bases in the world, but somehow Riot manages to keep everyone involved and in-tune with every little change. Riot, fans, and team owners and players have been up in arms as of late over a dispute between Riot co-owner Marc Merrill and SK Gaming. Many threads popped up where loyal followers discussed their concerns about Riot Games and the future of League of Legends. The outcome was unclear, until the leaked documents subsequently ended in announcement from Riot about their future plans.

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In a lengthy blog post title “LoL Esports Now and in the Future” Riot discusses their plans for 2017. While most of this speaks about players, teams, relationships, fans, etc. the most intriguing section speaks about crowdfunding from, arguably, the biggest crowd.

  • 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.

Now, to put things in perspective: In January 2016 the Daily Dot reported that League of Legends made over $1.6 billion in revenue. The number was comprise by SuperData research “which uses digital point-of-sale data from the publishers, developers, and payment service providers, alongside qualitative consumer insight, to put together its year-end report.”

We can safely assume that a large portion of that came from digital cosmetic sales, since League of Legends is free-to-play. What’s uncertain is how much of that can be broken up into the above points to truly grasp how much each cosmetic made in that year, but we can deduce that it’s an incredibly large number.

Riot are talking about pumping millions into the eSport, and while that sounds like upward 10 million, maybe 20 million, I’m telling you to aim higher and think upwards of 50.

Economic Growth

The crowdfunding mechanism makes up a small portion of the announcement, but another retraction which I deem important is their focus on three major aspects – Fandom, Economics and Stability. It’s well know that League of Legends has the largest fanbase in eSports, and Riot’s focus on the fans is increasing tenfold in 2017.

 

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.

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The other focus of this section, Economics, aims to aid teams and players with certain strategies to increase revenue.

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.

In conclusion, it’s perhaps time to forgive Riot for their past transgressions, and work towards a better future for League of Legends. This model, while being rather old, will work for League, and I personally cannot wait to see how big the prize pool is come Worlds 2016.

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Last Updated: September 23, 2016

Kyle Wolmarans

Critical Hit's esports guy. I talk about esports and drink whiskey. I also write and cast for elsewhere - but my work here is independent of that.

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