New Business Model Announced for League of Legends Esports Leagues
Riot Games has revealed a new business model for tier-one League of Legends leagues worldwide. This model, similar to the one implemented in the VALORANT Champions Tour, aims to strengthen the revenue streams of League esports and ensure the game’s long-term sustainability.
The announcement was made by John Needham, Riot’s president of esports, in a blog post. Needham emphasized the need to adapt the business model to the evolving needs and dynamics of the esports ecosystem for the benefit of all stakeholders, including the organizations.
The existing partnership model required teams to pay around $10 million to participate in a league like the LCS and receive 50 percent of certain revenues from sponsorships. However, Needham acknowledged that the model needed updating due to limited access to capital, slow revenue growth, and depleted team cash reserves.
Contrary to claims about the decline of esports, Needham highlighted the record-breaking viewership of the LEC in early 2024, emphasizing the importance of addressing the business challenges faced by companies in the industry. He introduced the new changes in the League esports business model as a way to ensure the industry’s strongest path forward.
The new model will enable teams in the LCK, LCS, and LEC to maintain their slots, while Riot works alongside the Chinese league, LPL, to understand how its business model may evolve. For the other three major leagues, the new model aims to provide teams with stable revenue streams and opportunities in the esports industry.
Under the new model, teams will transition to a fixed stipend and revenue sharing from digital content sales, reducing reliance on sponsorships. This strategic shift focuses on maximizing revenue and driving growth in the digital content market. Within this model, a Global Revenue Pool (GRP) will be established to distribute revenue across the four major leagues.
The GRP will be allocated through three key channels: general shares, competitive shares, and fandom shares. General shares will go to tier-one teams, competitive shares will be based on performance in regional and international events, and fandom shares will reward teams for building strong fan bases.
This approach aims to encourage collaboration between teams and leagues, promote competitiveness, and foster fan engagement. Riot will also increase the standard esports revenue share percentage and release more digital content throughout the competitive season to support the GRP.
As Riot continues discussions with organizations and teams, fans can expect significant changes in the future of League esports.
