$1.6 Billion A Year Is No Joke: How Does Riot Games Make All That Money?

how does league of legends make money?
It isn't as easy as it looks!

League of Legends: A Legendarily Popular Esport

Did League of Legends Really make $1.6 billion in just a year?

League of Legends is currently the most-played online game in the entire world. Even as far back as late 2013 has League of Legends seen massive growth in player base. According to the Riot Games blog, there were over 67 million players competing against each other in League of Legends every month. This information translates to “more than 27 million people play[ing] at least one game of League every day” and nearly 8 million players engaging in a match during daily peak hours (RiotGames).

This number has stayed at least consistent according to their blog, but it would not be a wild guess to see if those numbers have increased since then—it has been over two years since that post, after all.

It is no surprise to see League of League of Legends is topping the charts when it comes to revenue in the PC gaming world. As we’ve seen just a few months ago, Worlds 2015 has seen venues around Paris, London, Brussels, and finally ending in Berlin. On a more consistent basis, Riot Games hosts the League Championship Series (“LCS”) for both the North American and European regions.

Even at this very moment, players are enjoying tournaments hosted by Riot. Currently, we are mid-season and six teams from each region (North America, Europe, Korea, China, and Taiwan) are duking it out in Shanghai, China, for the 2016 Mid-Season Invitational.

Counter-Logic Gaming's midlaner, Huhi, alongside the team’s support player, Aphromoo, as they are interviewed by Eefje “Sjokz” Depoortere after their surprising win against SK Telecom T1 on Day 3 of the 2016 Mid-Season Invitational. It is costly to hold formal interviews, lighting, streams, and other activities off-stream in addition to holding these events in general.

With events such as Worlds only getting bigger by the year, the question arises: How does Riot Games make all that money?

Just in case you skimmed the first two sections, that is four different countries for one championship. It doesn’t take many guesses that it was quite pricey to set up four different venues in four different countries across Europe, especially in the span of just one month for one tournament. Just a few months later, players are finding themselves in China to duke it out yet again.

A wide shot displaying the venue in Berlin. There was a unique viewer count of 36 million people watching—not including viewer counts with multiple spectators or the attendees in each venue. 

The cost for the 2015 World Championship prize pool was $2,130,000. As we all know, SK Telecom T1 walked away with a hefty one million dollar prize (as well as being the world champions, of course). However, each of the 16 teams participating in the tournament got their fair share of money. Runner-up KOO Tigers went home with $250,000 in their pocket, and semi-finalists Fnatic and Origen received $150,000.

In addition to circulating tournaments like Worlds or the LCS, Riot Games is also responsible for paying player salaries, advertising, maintaining numerous servers, general overhead, and of course, the fantastic casters and employees we see on the day-to-day. For a free-to-play game, that’s an awful lot of revenue they’re generating. 

Riot Makes $2.64 Million Per Day

Numbers and statistics on how much Riot is really making.

According to the records from SuperData Research, League of Legends earned over $1.6 billion in revenue. For comparison, the runner up for the free-to-play PC games was Crossfire, earning $1.1 billion.

Other games with a similar competitive feel and following also climbed on said list; DOTA 2 ranks at #8 with $238 million, and Counter-Strike: Global Offensive follows suit at #9 with $221 million. To put things in perspective, free-to-play titles or other freemium games on the PC earned a total of $32 billion last year, meaning League of Legends accounts for five percent (5%) of the total sales in 2015.

Of course, free-to-play games thrive on microtransactions. Microtransactions, originating as a form of “digital commerce” typically seen in mobile-apps, have long been introduced to the gaming scene.

Even as far back as early MMORPGs where private servers reigned supreme were microtransactions prevalent, though they were dubbed as “donator items” or “subscription items.” These transactions are notorious for the “pay-to-win” phenomena, but League of Legends has maintained some form of integrity with microtransactions.

A screenshot from the League of Legends’ client featuring a part of the store page. Here, users are able to purchase RP for the set prices.

Almost all of the microtransactions seen in League of Legends are either cosmetic or a short-cut to unlocking characters. The real-life currency used in League, Riot Points (“RP”) can be spent on characters in the game (“champions” or “heroes” as heard in other MOBAs), runes (stat-boosting aspects that can be changed before a game begins), and skins.

Both characters and runes are purchasable using the other currency, Influence Points (“IP”), and are completely obtainable without dropping a single cent. Skins are the only item that is purchased with solely real life money, and they have no real influence on the game.

With the prevalence of microtransactions, money is flowing literally all the time for mobile apps or online games. Every second, Japan spends an average of $58 in said transactions for apps on their phone. In comparison, League of Legends earns an average of $31 a second in microtransactions, or $2.64 million per day on average (WebpageFX).

Two "skins" from League of Legends featuring Teemo and Ezreal. On the left is Teemo who has the most skins in the entire game (alongside another character, Annie). Right features Ezreal's "Pulsefire" skin, costing 3250 RP, or roughly $25.

…Free-to-play game, right?

After all, you don’t really need skins.

According to a thread on reddit.com, some users have reported to spent $1,000 or more. Using an “amount spent checker” by Riot Games, players were able to figure out how much have they truly spent on League. Higher numbers reported in the thread exceed $5,000, but most users (21% of this poll from the thread) tallied in amounts between $250 to $500.

Most skins in League fall between 750 and 975 RP. This translates to $6–$8 per skin, but there are a handful of skins that are cheaper (390, 520 RP) or more expensive (1350, 1820 RP) based on how fancy the skins are. Recently, Riot released palette swaps of champions’ default skin, or an already paid-for skin.

Luckily, Riot holds sales on occasion for users on a budget.

How Did League Get So Big in the First Place?

Riot has been incredibly successful engaging with both the community online and having outreach support from businesses offline.

Even now, League still tops SuperData Research’s lists. As recent as February 2016 is League the top grossing “free-to-play” game by revenue.

Revenue is not solely generated from their sales in-game, however. In their July 2015 Market Brief, SuperData Research analyzes how video content revolving gaming is shaping social media as a whole; this is especially notable with advertisements seen on YouTube and other video-sharing or streaming platforms. League of Legends ranked #7 for “Digital Revenue for Top Viewed Games” on YouTube in 2014 with nearly four billion views on their YouTube channel.

 Fast forward a year to June 2015, Riot Games’s YouTube channel (RiotGamesInc) has 1.6 million followers; many popular League players or former pros also have over half a million followers as well. Riot Games and pro players of their game boast huge numbers that bolster the game’s popularity.

Thanks to ever-popular streamers such as imaqtpie for the North American region, new players will continue to grow. Streamers that play multiple games end up “advertising” different games; for instance, if a popular CS:GO streamer were to play League and enjoy it, then who knows how many people will join League after that one instance.

While Riot does not formally put advertisements on their YouTube channel, their sponsors are clearly visible. Riot Games avoids placing blatant advertisements in-between matches during their live streams, but they still subtly promote companies for additional revenue.

On the other hand, Riot is advertised by other companies as well.

As I mentioned the Mid-Season split previously, Riot is advertising during the stream here as well. Riot advertises merchandise on stream, and one item in particular was seen on the May 8th game: a MSI 2016 shirt.

Again, the advertisement was small and subtle, but these subtle pushes keep generating Riot money. Riot has been giving in to a lot of demand by the players by releasing official merchandise as of late as well, such as their stuffed animals or figurines.

The shirt being sold for MSI and one of the stuffed animals being sold in the Riot shop. I will say that I have a Tibbers doll myself, and it is dang fluffy!

There are sinking costs to these goods or advertisements, but it seems to be paying off extremely well. Coca-Cola has been an avid supporter of eSports, and they have partnered with Riot Games to advertise for League on their products.

Some advertisements from Coca-Cola's blog showcasing their League of Legends advertisements on their products.

While both companies are giants in their industry, their partnership has been found to be extremely effective. The pair’s partnership has been in effect since 2014, and their goal is to continue their current success with community engagement and “increasing the amount of opportunities fans will have to experience the partnership at live events and through social media.”

So what does Riot Games do that isn’t explicitly about the money?

Look at the World Championship 2015: There’s no way a performance like that was just “for the money!”

League of Legends is famous for having such an interactive community—perhaps infamous for its toxicity rather than player engagement. Regardless of how the average player acts, it is ultimately the pro players and casters that make League of Legends shine. The interaction between pro teams and employees of Riot Games is astounding, and fans keep coming back for more quirks from Riot Games.

Again, it’s no surprise to see that Riot Games can afford such lucrative venues and events for their players. While they are constantly under fire for miscellaneous reasons, it is clear that Riot wants to give their viewers and players quite the show. 

If you are still interested in reading about the League of Legends's popularity, pro scene, or simply want to learn more about the game, check out these articles:

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