Esports Industry Bets Millions on League of Legends Success
Published: Nov 19, 2019 - Last Updated: Nov 21, 2019
League of Legends Championship Series (LCS) franchisees are investing millions, Riot Games earned well over a billion dollars in 2018 in revenue from the title, and yearly media rights are worth over $150 million.
Will Hershey, co-founder and CEO of Roundhill Investments told the Wall Street Journal recently:
“If you’re going to bet on a single game, [League] is probably the one that makes the most sense right now.”
Hershey says the game has “longevity,” and:
“It’s a game that’s still making a ton of money for the publisher, and that’s probably the single most important factor in terms of whether you want to make an investment.”
Indeed, as per the WSJ report, organisations are paying more and more, and even looking to mergers, in order to gain a slice of the League of Legends pie.
The most sustainable Esport
Dignitas was not accepted to LCS after it adopted a franchise model in 2017. New CEO Michael Prindiville appears to have led a merger with Clutch Gaming worth $20 million which puts Dignitas back in LCS. Prindiville says the esport “is showing no signs of slowing down,” and adds:
“I think it’s by far the most sustainable esport in North America, if not the globe. We really wanted to be a part of that, secure that franchise going forward. It’s a game we believe in.”
Immortals Gaming Club has also bought Infinite Esports & Entertainment to take OpTic Gaming’s LCS position.
What’s more, Evil Geniuses bought Echo Fox’s place at auction, reportedly paying $33 million. Echo Fox paid just $10 million for the slot. Evil Geniuses CEO Nicole LaPointe Jameson says an investor wants “something that’s going to last.” She says:
“How Riot structures not only engaging new fans to the core game, but also fans into the esports scene, is very intelligent. They focus on putting the player first, inspiring joy in the community, and ensuring it’s truly multi-generational, which resonated with Evil Geniuses.”
WSJ adds that nine out of the top 13 companies on Forbes “World’s Most Valuable Esports Companies,” are League of Legends franchisees. Each is worth over $120 million.
Experts say it is both the long-term prospects of a game that will deliver profits, and the prospective revenue from media rights. Josh Chapman, co-founder of Konvoy Ventures, calculates yearly media rights for League of Legends at a value of $154.5 million based on Riot Games and Activision Blizzard’s Overwatch previous media deals.
Chapman also believes, based on an advert revenue model, that 10% of Twitch’s one billion per year earnings come from League of Legends alone. As well as media rights and direct revenues, League of Legends franchisees benefit from sponsorship deals and media sales. But Chapman adds that leagues will need to “figure out” how to manage earnings and consumer expectations of free access to esports. This compared with how consumers have traditionally had to pay to access conventional sports. And, he adds, that the esports industry as a whole is just figuring out “monetization.”
Read also: Esports Sees Investment Growth and Expanding Revenue
Chapman says investing franchisees need to be looking long-term for return on their investments. A similar sentiment was expressed by Activision Blizzard recently, it is looking at a ten-year horizon for esports returns. Dignitas CEO Prindiville also confirmed he was looking long term saying of League of Legends and Riot Games:
“We think they have 50 more years of this particular esport left in the tank.”
Prindiville believes the LCS slot itself has “long term asset value,” too.
Currently League of Legends sees around 8 million concurrent players each day and averages around 116,000 monthly Twitch viewers, the recent Worlds championship achieved record audience figures.
It’s not just franchise investors that are betting big on esports titles. There is a growing convergence of gaming and gambling which is seeing esports betting on the rise with everyday consumers.
Image courtesy of LoL Esports
