At the end of October 2020, Shanghai’s newly built Pudong Football Stadium was bustling with action. A live audience of more than 6000 people had descended on the venue to watch the pinnacle event of the global esports calendar: the finals of the League of Legends (LOL) World Championships.

But those in attendance at ‘Worlds’ 2020 were the lucky ones. More than 3.2 million Chinese gamers registered for tickets to the competition’s final match, while global viewership on streaming platforms peaked at over 3.8 million.

Advertisement

“Watching gaming as a pastime is now normalised amongst younger generations,” says Remer Rietkerk, the head of esports at market intelligence firm Newzoo. “Esports provides the whole competitive aspect, with narratives, heroes and all those emotional aspects that are a draw to traditional sports.” 

The global audience for esports — which is split between enthusiasts and occasional viewers – stood at an estimated 495 million in 2020, and is forecast to grow to 646m by 2023, according to Newzoo.

A major benefactor of the rising popularity of esports has been LOL developer Riot Games. The company generated a whopping $1.75bn from its flagship title in 2020, according to SuperData, a subsidiary of market research firm Nielson.

“Riot has built the premiere global esports ecosystem, so gamers are always very curious to see what they’re going to do next,” says Mr Rietkerk. 

Nicolo Laurent, the chief executive of Riot Games, said at a press briefing ahead of the finals of Worlds 2020, that he thinks entertainment is “evolving”, believing the future will be at the “crossroads” of gaming, sports and music. He plans to focus Riot’s research and development efforts to explore this new frontier of the entertainment industry.

“We’re going to go after that world,” he added, highlighting that Riot will drive most of its innovation in the opening ceremonies of its LOL world championships. But as Riot enters its fifteenth year at the forefront of this new frontier of entertainment, how did it become the powerhouse it is today?

From great idea to global success

Riot Games was founded in 2006 by two University of Southern California graduate students, Marc Merrill and Brandon Beck, before launching LOL in 2009. Riot’s flagship title — commonly known as ‘League’ or by its acronym ‘LOL’ – has grown to become one of the most popular PC games of all time.

While LOL was not the first multiplayer online battle arena (Moba) game — which involve two teams of players competing against each other on a predetermined battlefield — Riot was one of the first developers to offer a free video game and charge players money for new characters and customisable clothing (skins). 

This ‘freemium’ model is now prevalent across the industry, and seen in rival games such as Valve’s Moba Dota 2 and Activision’s battle royale Call of Duty Warzone. Indeed, free-to-play games generated the vast majority (78%) of games revenues in 2020, according to SuperData.

Riot has leveraged the LOL community and brand by developing new games, releasing its spin-off TeamFight Tactics in June 2019, its digital collectible card game Legends of Runeterra and a mobile version of LOL called Wild Rift.

“We spend a significant amount of time, energy and resources to make sure the game is still vibrant,” Mr Laurent said ahead of Worlds 2020. “You cannot build a sport without a great game,” he added, pointing out that LOL has “hundreds” of developers who are passionate gamers who listen to the players and engage with the community.

“Most games don’t really sustain in the long-run. But at Riot, we really built the company, the DNA [and] the infrastructure to really focus on games. Not just for years, but for decades,” he added.

Asia-focus

Off the back of its success, Riot Games has grown to employ more than 3000 people — nicknamed “Rioters” — across more than 20 offices worldwide, including in Paris, Berlin, Sydney and Moscow. 

But while it has presence in the world’s most popular destinations for foreign gaming investment, including London and San Francisco, it has aggressively moved into Asia-Pacific. In 2016, Riot opened its first international game development studio in Hong Kong, later establishing a second in Singapore in 2020.

It has also built physical esports infrastructure, investing $88.9m into a LOL ‘battle arena’ in Seoul, South Korea — a country which is home to many of the world’s top esports teams.

According to data provider Statista, the Asia-Pacific gaming market was worth $84.3bn in 2020 — more than double that of North America’s, and almost half of the global total. China remains the largest market in the region, where Riot has an office in Shanghai.

Diversification

Riot Games has also diversified its game offering to include another free-to-play shooter called Valorant, which it launched in June 2020. 

“[Valorant] is drawing a lot of interest from gamers,” says Mr Rietkerk, who adds Riot had an “aggressive and impressive” launch strategy through streaming platforms such as Twitch. 

Part of its Valorant push was to enter the Middle East and North Africa (MENA) region, which posted the largest annual growth in both game revenues (14.5%) and players (8.8%) in 2020, according to Newzoo data. 

In October 2020, Riot stampeded into the MENA region by opening a new data centre in Bahrain and office in Dubai, aimed to establish a stronger Valorant community presence.

Anna Donlon, the executive producer of Valorant, said in a Twitter post to the gaming community that the company had made this push “to get players onto Riot direct” and give a “more competitive, direct connection to the Valorant servers”.

Tencent’s push

Since 2011, Riot has been part of Tencent — the Chinese tech giant best known for its ‘super app’ WeChat that offers wide ranging services, such as payments, social media and ride-hailing — after it was acquired for $400m.

Since then, Riot has been an integral part of Tencent’s broad gaming interests, which include South Korea’s Bluehole, the developer of free-to-play battle royale game PUBG, and a 40% stake in Epic Games, the US-based company behind the hugely popular battle royale game Fortnite

“We can tell that the gaming industry is still at its early stage. There’s so much room for enhancement, creation as well as exploration,” Sammy Xia, the vice president of Tencent Games said at the company’s four-day Game Developers Conference held in December 2020.

Streaming

As coronavirus lockdowns pushed consumers to seek alternative forms of entertainment, revenues generated by digital games and interactive media grew to $139.9bn in 2020, up by 12% from a year earlier, according to SuperData. Crucial to esports’ development within this has been how fans can interact directly with players by watching matches over streaming platforms around the world, with YouTube and Twitch making up 40% of revenues generated in 2020, according to SuperData. Indeed, at Worlds in Shanghai back in October, an average of more than 1.1m people tuned in during the event.

“We are leveraging streaming platforms and technology to really enable our fans to express themselves and be a part of our sport,” John Needham, the global head of LOL esports, said ahead of Worlds 2020. “That’s probably the biggest reason why the future of our sport is our young audience.” 

With gaming and esports’s popularity unlikely to wane anytime soon, Riot is positioned to continue playing a prominent role in this new frontier of entertainment. 

This article first appeared in the February/March print edition of fDi Intelligence. View a digital edition of the magazine here.