In its quest to ensure long-term sustainability and financial stability for franchised teams, Riot Games has announced a sweeping reform of the League of Legends Esports business model. According to John Needham, President of the company’s esports division, the emphasis will shift from distributing sponsorship revenue to distributing digital revenues from in-game purchases.
Global Revenue Pool: Key to the New Paradigm
At the core of these transformations will be the establishment of the Global Revenue Pool (GRP), which will accumulate revenues from digital content in League of Legends Esports and distribute them among teams based on several factors. 50% of GRP revenues will be evenly distributed among top-tier global franchised teams, providing a stable baseline income.
35% of the pool will be allocated based on competition results, with one pool designated for the regional league standings and another for international tournaments. This will create additional financial incentives for teams demonstrating high performance in prestigious competitions.
Rewarding Fanbase Development
The remaining 15% of GRP revenue will be allocated to an initiative called “Fan Engagement Shares,” aimed at rewarding teams for “building strong fanbases” for their team, players, and league. While Riot Games has not yet disclosed the criteria for measuring fandom, this concept demonstrates the company’s commitment to incentivizing teams to build strong bonds with their fans and expanding their loyal fan base.
In addition to GRP revenues, franchised teams will also receive a fixed stipend from Riot Games. The company plans to gradually phase out the distribution of sponsorship revenues, although once Riot “recoups its annual investments in League of Legends Esports,” teams will still receive 50% of other direct revenues, such as sponsorship and media rights.
Inspiration from VALORANT and Promise of Growth
One of the sources of inspiration for this reform is the successful esports model of VALORANT, where partner teams receive a share of sales from in-game esports items. In 2023, these sales brought teams an impressive $33 million, demonstrating the potential of digital revenues.
Needham acknowledged the challenges faced by teams, including significant costs of acquiring a League of Legends franchise, reaching around $10 million. However, he refuted claims of the “imminent demise” of esports, pointing to the growth of the League of Legends Esports viewership in previous seasons.
According to Needham, Riot Games intends to strengthen its position as a leader in the esports industry, ensuring sustainability for the entire ecosystem, including players, teams, and partners. He emphasized the company’s unwavering commitment to providing an unforgettable gaming experience and unprecedented investments in esports.
Evolution Continues
The announced changes in the League of Legends Esports business model are part of Riot Games’ broader strategy to transform the esports industry. The company promises to continue releasing digital products related to League of Legends Esports, stating that content released over the past two seasons has “set new records for engagement and revenue.”
Needham also hinted at possible further changes and adjustments in the future, as Riot Games strives to “improve our games, enhance our player service, and achieve sustainability for the entire Riot Games ecosystem and our partners.”
This statement comes 10 months after Needham’s publication of the “One Shot” series of posts, in which he delved into Riot Games’ philosophy and approach to esports. It is evident that the company is in the process of transforming its business model, adapting to the changing realities of the industry, and aiming to create a more stable and prosperous ecosystem for all participants.
While the path to sustainable growth may not be easy, Riot Games demonstrates a readiness for innovation and bold steps to maintain its leading position in League of Legends Esports and ensure the prosperity of the esports community for years to come. And if you’re knowledgeable about esports and into betting, you can Melbet Apk download and install it on your mobile device to take your esports betting to the next level. It’s a mobile application from a reliable bookmaker with a wide variety of bets and competitive odds. New users can also enjoy a generous welcome bonus.
