John Needham, Riot’s President of Esports, has unveiled an extensive plan aimed at enhancing the long-term sustainability of the LCK, LEC, and LCS by restructuring the revenue streams for teams. Although not identical, this initiative closely resembles Valorant’s revenue-sharing system.
The exponential rise in Valorant’s popularity since its inception is no secret. With its esports scene flourishing as the game solidifies its position as one of the foremost competitive titles globally. Despite certain drawbacks in how Riot established franchised leagues, organizations holding spots in VCT franchised leagues receive support from Riot as they endeavor to ensure orgs receive a portion of the proceeds. For instance, followers of VCT Americas might have noticed zellsis endorsing the Sentinels bundle. Indicating that the infrastructure for LoL esports is being developed to mirror a similar setup.
John Needham disclosed Riot’s blueprint to fortify the League of Legends esports ecosystem, outlining measures such as stipends and revenue sharing for teams competing in the LCK, LCS, and LEC.
In simplifying Needham’s intricate explanation, it is evident that these modifications promise to make the League of Legends esports ecosystem more sustainable. Needham highlighted that the existing revenue-sharing model overly depends on sponsorships, with many teams struggling to sustain themselves with their 50% share of LoL esports revenue.
Consequently, a new model is being proposed to teams within the LCS, LEC, and LCK. Aiming to involve them more in Riot’s profits derived from microtransaction sales. Under this proposed model, teams will receive fixed stipends and a share of revenue from LoL Esports digital content sales. Steering away from sponsorship sales as the primary revenue source. Needham elaborated that digital content sales are typically more resilient to economic fluctuations and offer higher potential returns compared to sponsorships, which are constrained by inventory, categories, and market penetration.
These shares will be distributed evenly on a global scale across major regions, with the exception of the LPL. Although specifics regarding the exclusion of the LPL remain unconfirmed, Needham asserted ongoing collaboration to adapt its business model accordingly.
Moreover, Needham proposed a Global Revenue Pool (GRP), which encompasses all digital LoL Esports revenue, distributing it among teams with additional rewards for certain achievements. The revenue distribution operates as follows:
- General Shares: 50% of the GRP is allocated to Tier 1 teams.
- Competitive Shares: 35% of the GRP is divided into two tranches based on regional league standings and international event placements.
- Fandom Shares: The remaining 15% of the GRP rewards teams for cultivating strong fanbases.
Needham expressed eagerness to continue developing digital LoL Esports products to support the GRP, following the success of previous in-game content releases.
Considering China’s implementation of esports skins beyond conventional offerings, players may soon have more opportunities to support their favorite teams in-game. However, there’s a caveat:
“In addition to esports digital content revenue, we will contribute 50% of other direct revenues (sponsorships, media, etc.) once Riot recovers its annual investment in LoL Esports,” Needham stated. Previously unconditional, this split now hinges on LoL esports’ ability to recoup its annual investment. Implying that teams may not receive sponsor money if the investment isn’t recovered.
