The definition of “gaming” altered in this decade. The purpose of gaming is now diversified when comparing to the old times. Leisure is not the only aim when playing games in the digital age, playing games can even make profits on account of the rapid development of the streaming industry and the e-sport industry. “League of Legends”, the game operated by Riot Games, has become one of the most popular online games globally.
Until 2016, the game lured 100 million active players worldwide every month. Since a massive number of players participate in it, they form a “gaming culture” that twisted the stereotypes of gaming in the early days; The online gaming culture refers to the shared identity or community that existed in the game-space. (Taylor, 2012). In the essay, Riot Games, the company as a game developer, will be introduced and analyzed, how this company performed a transformative effect to the gaming industry, the internet world, social and cultural worlds. The place of Riot Games in its industry ecology can also explain how Riot Games can become phenomenal in this decade. Besides, the business model of Riot Games is innovative; The “Freemium” business model also significantly affects the industry.
What is Riot Games and its iconic game “League of Legends”
Riot Games is a game developer best known for its iconic game, “League of Legends”.Riot Games based in Los Angeles, California, and has more than 2500 employees in more than 20 offices worldwide. Besides “League of Legends”, Riot Games started to release different types of games to satisfy various players and expand the market. For example, the First-Person Shooting game “Valorant”, the auto battler game “Teamfight Tactics”, the mobile game “League of Legends: Wild Rift”, etc. However, those projects are still in development. Riot Games still remains its focus on “League of Legends”. Moreover, Riot Games operates a list of esports tournaments for “League of Legends”, like “League of Legends World Championship”, champion series in different countries, “Mid-season Invitational”. Among these tournaments, the world championship has developed into the most viewed e-sports event in the world.
The game League of Legends is a MOBA (Multiplayer online battle arena) game, as known as the RTS (Real-Time Strategy) game. It requires players to team up with four other random players and fight with the opposite five men squad. Players have to control unique characters, cooperate with teammates, destroy the enemy’s “nexus,” and gain victory. Different strategies are involved during the game, which makes the game intense and competitive (Yang, Harrison, and Roberts 2014).
How Riot Games developed
As a game developer, Riot Games is not the pioneer, not the first company to develop a MOBA game, but Riot Games is the innovator and the facilitator in the game industry. The founders Brandon Beck and Marc Merrill received capital from their families and angel investors for around US$ 1.5 million. Then, Riot Games was founded in 2006, started their business in an old machine shop in Santa Monica. Riot Games recruited other MOBA games’ developer, even their competitors like Blizzard. As Riot Games improved and finalized their beta of League of Legends, their investors provided funding for USD 8 million based on their plan, including venture capital firms like Benchmark and FirstMark Capital. After years of development, in 2009, Riot released the free to play game “League of Legends”, and keep updating the game according to players’ feedback. Later, one of the initial investors, Tencent, had become the owner of Riot games. As mentioned above, Riot Games focuses on developing and creating games and contributing and supporting derived products in the gaming industry, like e-sports events and streaming. Riot games helped to form the gaming culture by luring the entire world to participate in this area. In this digital age, “To play video games has become the norm; to not play video games has become the exception”. (Wimmer, 2012) Since gaming has formed a culture, leisure is not the only purpose of gaming. Riot Games successfully altered the image and value of the game culture to society.
Riot Games’ business model
Initially, two founders Brandon Beck and Marc Merrill, are the largest shareholder of Riot Games. In 2011, Tencent already acquired more than 90% equity interest in Riot Games. Later in 2015, Riot Games is wholly owned by the Tencent holdings. All products of Riot Games are in the same business model, “Freemium”. What is Freemium? Freemium is an emerging business model in this decade. Freemium mostly appears on the online software market that allows users to download the software or game without cost, as known as “free to play”, then offers paid content, “in-game purchases”, like a premium version or enhanced tools of the software or game service. (Lucht, 2019) For instance, “League of Legends” is free to download. Players can fully enjoy a great gaming experience without spending a penny. However, Riot Games released multiple skins and items through updates. Although those skins and items are purely cosmetic, it attracts players to purchase to let them feel prestigious. (Wohn, 2020) However, free to play players can later become pay to players since those premium services enjoyed by the paid players are attractive. (Holm, 2017) Unlike other companies running the freemium business model, the gap between non-paying users and pay users in Riot Games’ products is narrow, or even zero. Most of the freemium companies increased the cost for non-paying users while using the services. This is an innovative and different “freemium” concept from the other companies. With this approach, vast amounts of users can be attracted. The “free to play” method allows internet users to participate in this game to expand the player base easily. Players are optional to pay real money for the game, which enhances the games’ reputation. As a result, including the earnings from skins, Riot Games made $1.8 Billion in 2016.
Riot Games’ internet ecology
Internet ecology mirrors the relationships between companies in different places. They mainly rely on information technologies to affect and assist each other in order to operate the entities. (Looi, 2001) Riot Games is one of the giants in the entire gaming industry since “League of Legends” is a big hit. “League of Legends” is not only competing with the other MOBA games; it also competes with other categories of games.
Companies like Blizzard and Valve are the direct competitors of Riot Games since the most popular games among these three companies are also MOBA games. For example, “Heroes of the Storm” and “World of Warcraft” from Blizzard, “Dota 2” from Valve. Indirect competitors refer to those other game developer companies like EA, Ubisoft, and Epic Games. They produce e-sports or online games as well but not famous for making MOBA games.
For regulators, Tencent is not the only regulator of Riot Games, although Tencent is now the owner of it. Governments in different countries are also able to regulate the operation of gaming companies. For example, the United Kingdom’s National Health Service (NHS) has declared that drawing loot boxes in virtual games is classified as gambling and contributes to youth gambling addiction.
Here shows the diagram of Riot Games’ ecology:
Riot Games Ecosystem map
How is Riot Games innovative? What are the transformative effects?
- Impact on Gaming Culture:
There is no denying that gaming culture is shaping our society and emerging us into the digital age. In this era, the gap between virtual and reality has become vague. As Pesce mentioned, our daily lives are fused with the digital world and the internet. (Pesce, 2017)
People were first convinced that Internet culture was only focusing on the social media platform. (Massanari, 2017) However, society’s atmosphere has indirectly persuaded or encouraged us that gaming culture is the current trend and part of the internet culture. Riot Games created and promoted an in-game money spending culture. The money spending behavior was first recognized as a naïve and immature doing. (Wohn, 2020) Yet, culture can be acknowledged as the structure and mechanism of a society’s thoughts and ideology (Mäyrä, 2006), which means culture is conducted and formed by the majority of society. Since League of Legends has a massive amount and young user base, when young generations conquered the internet, they will have the ability to form this culture. As mentioned, Riot Games released skins and items to attract players to purchase. However, the game application is free to download, allowing internet users to join the gaming culture easily. Also, the updates of the game keep improving the gaming experience and quality of users. Users can feel the sincerity of Riot Games. Hence they are willing to pay for the game as an act of supporting the game developer. Thus, the money spending behavior has become a norm and formed the modern game culture. (Wohn, 2020)
Moreover, League of Legends as Riot Games’ most popular game, at the same time, it is one of the most popular game in the entire game industry, Riot Games has encouraged players themselves to form a community. Referring to Abbate’s view, the action of this gamer- based community constructed a place for social interaction. (Abbate, 2017) Riot Games is hugely supportive in building the gaming community, they frequently release content and noises apart from the gaming aspect. For example, Riot Games created a virtual female idol group called K/DA which is formed by the game characters and released albums.
Furthermore, the company held cosplay events to support the cosplayers in this game’s fan base. By developing the gaming community with the players, Riot Games successfully hooked the people onto their screens. In addition, the company also changed the way people like to play games and the way they treat the gaming community.
- Impact on Business of the gaming industry:
Besides the “freemium” business model that inspired lots of other gaming companies, Riot Games boosted e-sports and the streaming industry.
-E-sports: Riot Games put efforts on the E-sports industry. As games under Riot Games are all competitive games, Riot Games aims to enhance the rewards of E-sports players’ events and salaries. In League of Legends World Championship 2020, there is a minimum of 2.5 million prize pools for the winning teams. Besides, referring to Taylor’s work, the most successful e-sports player has his career aspects, contracts, sponsorships, etc. (Taylor, 2012). For example, one of the well-known players in “League of Legends,” Lee Sang Hyeok, as known as Faker, is overall earning USD 1,193,853.15.
-Streaming: Streaming is a derived industry that initially takes advantage of the big hit of League of Legends. Besides being an e-sports player, being a game streamer on TwitchTV, or even becoming a caster can also make a living (Peša, 2017). Streamers like Tyler1, Pokimane, or even Faker, the e-sports player, can earn about $3000-$5000 per week.
The revolution of the digital world has re-defined the meaning of gaming. It is no longer a leisure only, but also a culture, a business, and an industry. In this digital era, our lives have been immersed in the screens; everything has become virtualized and digitalized. (Jones, 2019) In this essay, Riot Games and its iconic game League of Legends has been introduced. As a giant of the gaming industry, Riot Games impacts the entire ecology by the business model. The innovative “Freemium” business model benefits its operation and gives illustration to other gaming companies.
Furthermore, through the ecology map of Riot Games, the relationship between Riot Games and its derived industry can be discovered and analyzed. Last but not least, Riot Games transformed the understanding of gaming of the public. For example, playing games is the norm, paying for games is acceptable, and gaming is a business.
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