Riot Games had no idea if people would want to watch gamers play video games when the company hosted its first championship tournament in Jonkoping, Sweden in 2011.
But it's a gamble that paid off for the game development company. Hundreds of thousands of people tuned in online to watch that first tournament, and today the most popular eSports game in the world is Riot Games’ League of Legends, which has over 85 million players and attracts hundreds of millions of viewers.
And the eSports business continues to grow. By the end of 2015, video game research firm Newzoo forecasts there will be 113 million global eSports enthusiasts and an additional 147 million fans watching occasionally—comparable to traditional sports viewers who only tune in for a national or world championship.
Once Riot Games realized there was a global interest in competition, it established the League of Legends Championship Series (LCS), which is currently in its fifth season. The 2014 world championship tournament, which spanned competitions from Taipei, Taiwan, to Seoul, Korea, generated 288 million cumulative daily unique impressions. The world championship finals attracted 27 million viewers, who tuned in for an average of online view time of 67 minutes.
Just like real sports, LCS has hosted competitions in major sports venues such as the Staples Center for the 2013 finals and the Seoul World Cup Stadium in 2014. This August, League of Legends will be the first video game ever played inside Madison Square Garden in New York for the North American LCS Summer Finals. This fall, gamers will compete at Wembley Arena in London for quarterfinals, and at Brussels Expo for semifinals before the 2015 finals at Mercedes-Benz Arena in Berlin.
“There’s a lot of criteria that goes into choosing locations for big events,” says Dustin Beck, vice president of eSports at Riot Games. “It’s always tough finding venues because we produce technologically complex shows and we’re limited by infrastructure that’s available. We try to spread around the love for a lot of our major markets. In the coming years, hopefully we can get to more locations.”
According to Beck, Riot cherry-picked elements from a variety of real sports from European soccer to the NFL and NBA to the Olympics to create LCS. League of Legends has its own minor league system, an All-Star Game, and an annual North American Collegiate Championship, which offers $100,000 in scholarships. The company also hired stage, broadcast, and events experts who also are gamers from around the world to ensure that all of the drama of the season, as well as the personal stories of the players and teams, are brought to life for fans, similar to any major sport.
Despite attracting big mainstream sponsors like Coca-Cola and American Express, Beck says Riot Games does not make money from LCS. Instead, the company invests in eSports just as it does in creating new champions for the free-to-play game. Whether its investment in eSports ever does generate profits is immaterial according to Beck, who says the company wants to focus on eSports because it’s what fans want.
But thanks to Chinese Internet company Tencent Holdings buying a majority stake of Riot Games in Feb. 2011 for a reported $400 million, Riot Games can fine-tune its LCS experience without worrying about costs. League of Legends generated over $1.3 billion in 2014 in revenue through in-game micro transactions, according to SuperData Research CEO Joost van Dreunen.