Riot makes $1 billion from free-to-play MOBA

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They say making the first million is hard, but what about your first billion dollars? How difficult is that to make? Well, in just a year’s time Riot Games’ revenue boomed from a mere (and I’m using that term loosely) $624 million to just a few million shy of $1 billion. Thanks in large part to the focused player-centered philosophy in managing League of Legends.

As a free-to-play model, League offers a depth of strategy that keeps players coming back. An estimated 27 million individuals are said to log into League every day, and if that wasn’t shocking enough, nearly 67 million joined in at least one game a month.

Riot Games has always used the free-to-play model, and has made a big impact on in an industry where freemium games are notorious for nickel and diming players to death, or at least until they have invested more into said title than they would have if they had gone for the more traditional route of retail gaming.

Merrill and Beck league of legends riot

Marc Merrill, president and co-founder of Riot Games explained, “People told us when we started that if you don’t charge up front, or if you’re not selling extra power or stats, it won’t work… [b]ut that fails to account for the coolness factor. If you’re really into cars, you don’t mind spending $50,000 to soup up your Honda. That’s the player we’re tapping into.”

League of Legends has earned a solid commitment from its fans by remaining around and talking to its community – it is this devoted commitment to the community that allows League to be embraced as a real sport, eSport. For co-founder Brandon Beck, the need and inspiration to stay actively engaged with League’s community was born out of necessity, from watching developers abandon games in order to move on to newer titles.

LCS league of legends

“It was always disappointing when development teams would rush in to build the next game and neglect communities that were staying engaged with their game well after it launched,” Beck said. “We wanted a company that paid attention to players like us who wanted to play competitively and cooperatively.”

Merrill and Beck originally thought League would have cost $3 million to develop, but the turnout was four times are much, around the $12 million mark. Mitch Lasky, then a board member and a Benchmark Capital investor said after the initial development it didn’t take long before the hallmarks of a great game began to unfold.

“Within 90 days you could see the bone structure of a hit,” said Lasky. “It was doing small numbers at first, but if you knew where to look — how many people were coming in, how many games they played, revenue per average user — you could see the first couple hundred million in revenue

With such big revenue, especially for a free-to-play game in a booming industry, Riot Games can easily host tournaments for a loss because the publisher has been able to cultivate a worldwide following of gaming enthusiasts for its MOBA game.

Of course, I don’t see League of Legends or Riot Games slowing down anytime soon. Catch you on the Rift.

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