RIOT "DISTRIBUTE DIGITAL PROFITS TO ALL LCK TEAMS STARTING NEXT YEAR"

Riot Games will revamp its League of Legends (LoL) esports business model starting next year.

John Needham, CEO of Riot Games' esports division, announced this change on the official website on the 14th.

In the article, CEO Needham said, “It is time to restructure the business model for sustainable LoL esports,” and “We will provide a new partnership model to LCK, LCS, and LEC”

The key to this reorganization is to distribute profits generated through digital content starting next year to teams that were unable to participate in international competitions.

Until now, only teams that participated in the international competitions hosted by Riot, such as MSI (Mid-Season Invitational) and League of Legends World Championship (Worlds), received profits from digital content sales related to those events.

The reorganization applies to the Korean league LCK (League of Legends Champions Korea), the North American league LCS, and the Europe, Middle East and Africa league LEC.

Digital content revenue, along with sponsorship, is one of the main sources of revenue for LoL esports.

It is a method of selling game items linked to e-sports and sharing the profits generated through this with the teams.

A representative example is the Worlds Championship winning team skin.

A skin can be said to be an item that can change the appearance of a game character.

The team that wins Worlds can create a skin for one of the champions they used.

And a portion of the skin sales proceeds are distributed.

Riot's latest reorganization aims to distribute profits that were previously distributed to only 20 to 30 teams participating in international competitions to all participating teams in the three leagues.

However, rather than distributing it equally to all teams, the entire Global Revenue Pool (GRP) is distributed differentially.

First, in the case of general shares, profits equivalent to 50% of GRP are allocated to teams in the tier 1 league.

In other words, half of the profits will be distributed equally to all teams in the LCK, LSC, and LEC leagues.

Subsequently, the remaining 35% of the GRP is distributed differentially based on regional league rankings and international competition rankings as a competitive allocation.

The final 15% is given to players, leagues, and teams that have built a strong fandom through fandom distribution.

Although specific criteria were not revealed, it appears that half will be distributed equally to all teams, and the other half will be distributed differentially based on competition performance and fandom building performance.

However, there are concerns that in this case, the profits of teams participating in international competitions may actually decrease.

To prevent this, Riot announced that it would increase the amount of digital content itself.

The idea is to increase the distribution by increasing the pie.

Additionally, Riot said that if it reaches the break-even point for esports investment, it will distribute 50% of direct profits (sponsorship, media, etc.) to GRP in addition to content profits.

Riot's move is an improvement measure to address the weakening profitability raised by each league team.

Meanwhile, teams from around the world have been demanding Riot take measures to ensure sustainability, saying they are too dependent on sponsorship.

This reorganization is expected to improve the profitability of mid- to lower-tier teams starting next year.

Meanwhile, regarding the claim that winter has come to e-sports, CEO Needham refuted the claim, saying, “I believe that the claim that the end is imminent is excessive.”

According to Riot, the average viewers per minute (AMA) for MSI and Worlds last year increased by 58% and 65%, respectively, compared to the previous year.

Additionally, the AMA of each regional LoL esports league increased by 16% in 2023 compared to the previous year.

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Pub: 02 Apr 2024 04:56 UTC
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