League of Legends Experiences “Biggest Setback Ever”, $100 Million Investment in Fortnite
Riot games has signed a non-exclusive multi-year deal with ESPN to broadcast live League of Legends games on their OTT streaming service, ESPN+. esports reporter Travis Gafford called the development the game’s “biggest setback ever”, because the deal marks the official end of the 7-year $300 million agreement Riot Games signed with BAMTech in 2016. The North American League of Legends Championship Series Summer Split beginning on June 16, will be the first tournament to air on the streaming service; the Summer Finals and World Championships later this year, are also set to appear on ESPN+. It’s worth noting that the 2017 World Championship drew upwards of 80 million unique viewers for a single match.
Howie Long-Short: In a vacuum, there’s nothing wrong with the deal; it should be profitable and expose the game to a new audience. The deal with ESPN+ was the final nail in the coffin, but the BAMTech deal died when The Walt Disney Company (DIS) acquired a 75% of the company back in August ’17. Under the terms of the BAMTech deal, League of Legends would have had an exclusive platform to deliver content (think: Yankees and YES Network) - the 1st exclusive media rights deal in esports history - as opposed to simultaneously broadcasting streams on Twitch, YouTube and ESPN+, as they’ll do now. The deal with ESPN+ will certainly result in fewer dollars, but it’s the validation (appearance of game warranting its own broadcast platform) that the BAMTech deal brought, that they’ll miss the most.
I’m not sure I understand this deal from the ESPN perspective. While it’s logical to diversify the programming offered on ESPN+, they won’t be adding subscribers with non-exclusive content that can be watched elsewhere for free.
Riot Games is a fully-owned subsidiary of Tencent, the world’s biggest video game publisher and Asia’s 2nd most valuable publicly traded company. In addition to owning Riot Games, the company is the majority owner of Supercell (Clash of Clans and Clash Royale), they own +/- 50% of Epic Games (see Fan below) and +/- 25% of Activision Blizzard (ATVI, Call of Duty, World of Warcraft, Overwatch, and Candy Crush).
Shares of TCEHY are down 14.5% (to $50.95) since March 15th, shortly after the company reported rising expenses during its Q4 earnings report. On May 16th, the company reported Q1 ’18 earnings. Profits rose 61% YoY (to $3.6 billion) on revenue that grew 48% YoY (to $11.4 billion). Gaming revenue spurred the growth, with smartphone gaming alone bringing in $3.3 billion (+68% YoY) in revenue. Looking for a reason to believe TCEHY can continue increasing gaming revenue? They own the rights to PlayerUnknown Battlegrounds in China and have yet to begin monetizing it.
Fan Marino: Epic Games has invested $100 million to fund Fortnite tournament prize pools, with the competition set to debut later this year. At $100 million, the prize pool is more than 4x greater than the 2nd largest sum ever offered in a competitive gaming prize pool – $23 million for DotA 2’s 2017 esports tournament. Of course, $100 million is just 1/3 of a single month’s revenue for Fortnite – the game generated $296 million in April, up a staggering 134% since February.
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