Even if the news reports that surfaced about the possibility of Riot selling ESPN broadcasting rights to the LCS for $500 million were unfounded, the situation raised a number of questions about how Riot will proceed with the LCS in the upcoming years. When the LCS began Brandon Beck was interviewed about the league. His statement about the LCS is something that still pertains to the organization three seasons later. “It’s a significant investment that we’re not making money from. It’s an investment into the game, for our fans, just like we’d invest in any other feature within the game. It’s a worthwhile thing for us to do because it’s such a high quality, engaging experience for our fans.”
With such a large investment, one might assume that Riot would have a plan to generate revenue to recap the expense. In the same interview Beck was asked about broadcasting the LCS on television. He stated that the Riot team were “not focused on broadcast TV for the time being. We think our fans and our demographic consumes content via the internet,” he said. “TV might naturally evolve into something that does happen as a byproduct of how many people are watching it. But our fans aren’t concerned with consuming content via television; even if they are, they doing it through Netflix… not through traditional cable media.” While the leadership at Riot has changed drastically since the interview, this statement still rings true. The number of households without television service is greater than ever, and the demographic cutting cable access at the highest rate is young adults.
Riot leadership could decide to treat the cost of the LCS as a marketing expense, but with its similarity to traditional sports leagues that can produce astronomical profits, the LCS is a prime target for monetization. If selling broadcasting rights to the LCS is not a viable revenue model, what other system could Riot implement to negate costs or possibly even profit from the LCS?
The answer seems to lie with sponsorship and marketing, but there are currently a few issues preventing this plan of action. The first issue is that sponsors are hesitant to enter an emerging market. Most current esports sponsors are endemic to the scene. Whether it be computer manufactures or peripheral producers, the majority of sponsors are embedded in the industry. If Riot leadership wants to entice non endemic brands to spend marketing resources through their channels, two things must occur. The first is that the League needs to show continued viewership growth with the mainstream audience, and the second is that the LCS system needs to appear stable and attractive to marketing executives.
The only way to stabilize the league to appeal to larger investors not directly related to the industry is to implement a franchise system. This would eliminate the possibility for teams to be relegated from the league, which has a detrimental impact on multiple facets of the system. The first is that investors and sponsors are wary to invest money into teams that may be removed from the league within the year. Team infrastructure and support systems cannot expand without owners with greater resources or sponsorship revenue from outside sources. Another impact is that potential non endemic sponsors of the league may see the turnover of teams as detrimental to their interests and different from traditional sports leagues companies have invested in in the past.
The franchise model may open the possibility of growth and outside investment, but implementation of the system will have a number of negative effects on the scene. The first is that there will never be the opportunity for an amateur team to rise through the ranks, secure a spot in the league, and prove themselves to be a regional powerhouse like Clould 9 did in the past. Players will lose the opportunity, no matter how small, to compete with a group of like minded individuals and progress from the amateur scene to the professional level of play as a group. Aside from this process, the development, growth, and exposure of teams that provided entertainment off the rift, such as TSM and CLG, was an important part of the progression of the western League of Legends scene and helped fuel interest in the game in its formative years. Switching to a franchise model diverges from this history to a more corporate identity that may disaffect some fans.
Riot has received a larger than normal level of criticism this year over decisions like the removal of solo queue and the existence of a large numbers of scripters investing dynamic queue on the Korean server. Making another substantial move by franchising the LCS may not be the best decision in the short term because of another possible backlash. If long time fan favorite teams or individuals associated with the league are not happy with the maneuver over possible concerns such as the removal of the seasonal player stipend or the implementation of forced buy out clauses in franchise contracts, Riot could face harsh criticism from the community. Resolving the existing issues to ensure the satisfaction of players and fans before attempting to implement a franchise system, is probably the best move for Riot at the moment.
Any decision with such a large impact on the professional scene would likely need to be announced and executed during the off season anyway, so when season six winds down later this year, Riot would need to act then. If all of the pieces are not in place or the community climate is not hospitable to such a maneuver, Riot will be forced to wait at least another year before implementing the model. With rumors like internal franchising discussions and the ESPN deal emerging, it is likely Riot leadership will decide to act sooner rather than later, so whether you are an esports advocate that would like to see competitive gaming mimic the infrastructure of traditional sports or a veteran of the scene who would rather keep the established system in place, you may have to learn to accept a franchised league as early as this year.
*Brandon Beck Interview (http://www.pcgamesn.com/leagueoflegends/lcs-significant-investment-we-re-not-making-money-riot-love-it-anyway)