Riot Games faces a lot more competition than it once did on the esports front, with new games such as Fortnite and PlayerUnknown’s Battlegrounds grabbing the attention of gamers. But the Los Angeles-based company believes that esports is still in its early stages, and it is moving forward in its quest to make League of Legends into a permanent esport.
The company has been operating the European League of Legends Championship Series (LCS) since 2013, and it has been investing more in the infrastructure of the league in recent months. That’s not easy, since Europe has a number of countries and languages to support and its audience is more easily splintered compared to other territories. It is also in the process of creating permanent teams in Europe, as it has done in the U.S.
I spoke with Marc Schnell, director of EU league management for Riot Games’ League of Legends operation in Europe. He said the company is ramping up both its staff and broadcast capabilities in Berlin, and it has aligned all of the incentives for its LCS teams so they are consistent with Riot Games’ own incentives for the long term.
“We’re restructuring the league, moving over to a long-term partnership model and away from the current promotion and relegation system,” Schnell said. “You might know that the North American LCS last year made a similar move.”
Here’s an edited transcript of our interview.
GamesBeat: Can you bring me up to speed on the background here? I understand you’re trying to do some things to improve the league overall. How long has this been going on?
Marc Schnell: We’ve been doing the European League of Legends championship series, the LCS, since 2013. We made the move to Berlin from Cologne back in 2014, and ever since we’ve been operating from here.
One big thing on the horizon would be that we’re restructuring the league, moving over to a long-term partnership model and away from the current promotion and relegation system. You might know that the North American LCS last year made a similar move. The application process is running right now. The other big thing is, we’re making improvements generally. We’ve seen over the last year how we can improve the viewing experience and do more on the tech side. We’re also improving our physical space here in Berlin.
GamesBeat: The goal seems to be to make League of Legends into a lasting sport.
Schnell: That’s right. We’re committed to League of Legends esports, just as much as we’re committed to the game itself. We’d like to do this forever, ideally. We consider esports to be a core part of the League of Legends player experience. We want to double down on this in Europe.
Previously, in these past years, we were in catch-up mode. We’ve built up the team here now, staffed up in all areas. We went from a lot of temporary solutions for tech and physical space to committing to permanent installations. We’ve built a massive control room at the beginning of this year, the mothership for production, where the directors and producers sit amid all the tech and monitors. It’s been a big change for us on the production side. Having that permanently set up gives us a lot more opportunities and cool things we can do with the broadcast.
For example, we now have a bunch of roving cams that we can remotely control. We don’t need as manymanual operators. It gives the producers a lot more central control, while retaining that variety of camera shots. They can just control them via joystick. That’s just one thing.
We’ve also made significant improvements to what we call the world feed. The LCS is broadcast in many languages – I think we’re up to nine now. Previously, local broadcasters would just get our feed with the commentators removed and then they’d cast over that. Now we’ve switched to a more sophisticated solution where the local casters get their individual world feed. They have more creative freedom to design their own broadcast. They don’t necessarily have to do all the same things we do on the main feed. We want to go big on making those localized version of the LCS just as good as the English version. We’ve put much more investment behind them.
Beyond that, the Berlin studio has grown considerably over the past year. We’ve made significant quality of life improvements, ranging from having a nice cafeteria and backstage area for the pros and teams, a great entrance area with a cool Baron statue and a lot of League swag, League designs all over the place, to just making this a great place to work for all of our staff. It used to be a little bare-bones. Now it’s a much better place to work at for the staff and the teams.
GamesBeat: How many people work in that facility?
Schnell: The Riot office here has around 50 full-time employees. On show dates, though, we go up over 100 staff, if you include all the additional people we need for shows. The capacity of the venue as far as fans is about 180.
GamesBeat: Does it look more like a production studio, then? Something you’d see for a TV game show?
Schnell: Yes, very similar I’d say. There’s a big stage at the front, and then there are bleachers and seating for up to 180 people.
GamesBeat: How about for the league structure? What is changing? Are you mirroring what’s happening in North America, to give teams permanent berths?
Schnell: There’s definitely some similarity, but there are also differences. Currently we have 10 teams in the league, and they qualify to participate in the league through a secondary league below that. That’s the old system. We’re moving away from that to an entirely different model where we’re partnering with 10 teams. Those teams will be long-term partners with the league. The concept is that the league and the teams become business partners to build and improve on this product together. We’re collectively investing in the success of the product and sharing in the success of the product.
That basic principle is the same as the changes we’re seen in the North American LCS. The key difference is that the European market is split up in many more different ways compared to North America. We have many different countries with different languages and cultures. Our product, as I mentioned before, is broadcast in many different languages.
We’re trying to build something that’s interesting and entertaining for all of Europe, not just an English-speaking audience. When we select our 10 partners at the end of the process that’s ongoing right now, we’d ideally like to have a nice spread of times with different national affiliations, to ensure that we’re reaching an audience everywhere in Europe and have something that’s relatable, something that people can identify with no matter where they are in Europe.
Another core element of the European market is we have an extensive regional league system. Below the LCS, the top league, we have 13 national leagues, if you will, or regional leagues. We have a Spanish league, a U.K. league, a Benelux league, a Polish league. All of these leagues are thriving lower-tier leagues. On the one hand that’s a great player development platform. You often see players compete in those leagues and then get picked up by LCS teams. It’s a great place to nurture and find talent.
It’s also a great way to locally connect with fans. Not everyone always has the time or opportunity to come to Berlin to see the LCS, but with this extensive regional league system, we have a league that everyone in Europe can identify with, that’s dedicated to where they’re from. The best of these regional leagues also compete against each other in a tournament called the European Masters, which is the culmination of these semi-professional leagues.
Next year we’re basically going to have two ecosystems. On the one hand, there’s the EU LCS, the top tier of competition in Europe. It’s the place where, as a player, you want to end up if you want to advance your career. It’s an opportunity to test yourself against the best in Europe and have the opportunity to represent Europe at the world championships. At the same time, we have this extensive regional league ecosystem that can be a stepping stone toward a pro career. You can represent your country against the rest of Europe.
The regional league system we just revamped in 2018. In the summer, just a week ago, we announced that we’ve added another three regions to complete the whole map. We now have every region and country in Europe covered. 24 teams total will go to the European Masters, the best out of the 13 regions. It’s similar to the Champions League in soccer, where every country gets a certain number of slots depending on the size and maturity of their league. If you count all of the teams competing in all the regional leagues, I don’t even know. More than 100, at least.
GamesBeat: So the main difference is you’ve had to modify the structure to account for so many regions and languages?
Schnell: Yes, that’s the main difference with North America. Other than that, if you look at it from the outside, the EU LCS looks similar. We’ve also adopted the same league format. We’re playing a double round robin, best of one, leading into the playoffs.
GamesBeat: Is there some balancing going on in terms of who’s the most competitive relative to the need to represent every region?
Schnell: Right. When we make our selections for our partners, obviously we’ll look at a whole list of things. What can they contribute to the league? Do they bring some special experience or expertise that would level up everyone, including the other teams? What brands are they going to use? What story are they telling? Do they have competitive experience in esports?
Another key factor will be, do they have national affiliation? Do they resonate with a particular group in Europe? We’ll look for a lineup of 10 that we feel synergizes the best and lets us capture the biggest portion of the audience that we’d like to entertain.
GamesBeat: I saw some stories in the past where some teams have complained that it’s hard to earn money in the old structure. Is that also one of your goals here, to make it more sustainable for the individual teams to invest in League of Legends?
Schnell: Definitely. On both the league and the team side—we’ve done League of Legends esports for a decade, but we need to make sure that teams can run their businesses sustainably. It’s true that in the previous system, where the league simply paid each team participating in the LCS a fixed amount, that amount was not influenced by how much the league made, by viewership, or anything like that. It was just a fixed amount that was agreed upon. The rest of the business was left up to the teams themselves.
That system wasn’t great, because it didn’t provide anyone an incentive to work together. Everyone was trying to make ends meet on their own. We believe that with this new structure we’re introducing, where everyone is naturally incentivized to create revenue and put it in this big pool that we’re all sharing—if I see another team making a great deal and doing well, I’m happy because I know that they’ll be sharing that revenue into the pool. Similarly, if the league is doing great deals, the teams will all be happy because everyone shares.
The core strength of this system is that it allows us to partner up collectively, do business together, and win together. Previously we didn’t have that natural incentive.
GamesBeat: These teams contribute money into the pool to develop the whole league, then, and then at some point they share in the profits?
Schnell: There’s something we call the league revenue pool, the LRP. Riot will put 100 percent of any revenue we generate from sponsorships, media rights, licensing into that pool. Teams will share a portion – not 100 percent – of their individual sponsorship revenue and other side revenue, such as merchandise, into the pool. Once a year we’ll look at how much is in the pool and distribute it to all participants in the League. Riot receives 32.5 percent, the teams receive 32.5 percent collectively, and then the players receive 35 percent of the LRP. The players are employed by the teams, to be perfectly clear, and so that money will flow to the teams and they’ll pay their players accordingly.
GamesBeat: Does that show up as a bonus for the players, or is that more like a salary?
Schnell: Just to give you a disclaimer, this might get slightly complicated. [laughs] The players have a fixed salary that was agreed upon between them and the teams. At a minimum it has to be 60,000 euros a year. That’s stipulated. But beyond that they’re free to negotiate any deal according to the perceived value of the player.
The 35 percent I talked about earlier doesn’t impact that all. However, after this year, we do the accounting and we know what 35 percent will be. Then we look at how much the players in the league earned all together. If we then see that there’s a discrepancy – that the league generated more than the players received in salary – then the players would receive the difference as a bonus. If not – if the player salaries are so high that they already got paid more than that 35 percent – then the players just receive their salaries and nothing happens.
GamesBeat: If you look at the competition with things like the Overwatch League or the up-and-coming battle royale games, what do you think makes League of Legends stronger as an esport?
Schnell: For one, I would say competition is a good thing. We’re all avid gamers ourselves at Riot. We play all of the popular titles out there – Fortnite, PUBG, Overwatch. It’s interesting to see how every publisher is taking a different approach. We’ve seen Overwatch go with the global franchise model and city-based teams. We’re seeing Fortnite take the first steps along a very different route. They’ve already announced that they’re not going to franchise or allow teams to be bought and sold. We’re seeing PUBG hold their first world championships, here in Berlin.
What competition does for us, first of all, it’s a good opportunity to look at what other people are doing. Is there something we can learn? It also gives esports a lot more visibility in general. All of this helps to give all of us more traction in the mainstream. We consider ourselves pretty big in the esports space, but it’s still noticeable that, when we talk to some people, they don’t realize how big it is yet. They don’t understand it. From our point of view, there’s a lot of education to be done. Having this competition and this broader success helps the industry in general to get to the next level. Overall I’m happy to see it.
What makes League of Legends stand out compared to other games—our approach has always been that we’re going for the long term. We were one of the first to value consistent player careers and consistent team brands. It was always our hope that players could make this a living, make it a worthwhile career pursuit. To do that, that’s why we’ve always gone for league structures around the globe. We have 14 professional regions around the world with league structures. With a tournament focus, you have consistent play, but with this structure you have a secured job for the duration of the league. You have consistent pay. The teams can plan ahead.
This was always the staple of our philosophy around esports. Now we’re taking it a step further by not only having leagues, but also by entering into these long-term partnerships with teams to look much further ahead. We’re building for decades. Not every esport is taking this approach, and I’m not saying one approach is better than the other. But we feel very strongly that we’re building a system that’s based on a long-term view.
GamesBeat: One of the details I wasn’t sure about—how much are you considering teams that are established across multiple esports games, versus teams that are specifically focused on League of Legends?
Schnell: There’s no preference of one over to the other. There are pros and cons to both. We’re open to both. In a multi-game organization, usually you have a bigger footprint and bigger reach overall. On the other hand, your focus might be diluted by your interest in other games. If you’re a single-game organization, the story is different.
But for us, that specific thing doesn’t matter too much. What counts is the big picture of the pitch they’re giving us. What makes them a great addition to the EU LCS? What are they bringing to the table to make the league better? That’s what we’re primarily going to look at. Being active in other games is fine with us. It has been in the past as well. We have many multi-gaming organizations in the league already, like Fnatic and others.
GamesBeat: Is Riot doing everything on its own as far as running the league, in a sort of vertical structure? Everything from broadcast to event organization? Do you have outside vendors who provide any major part of it?
Schnell: The majority of the league operations, as well as the production and broadcasting, are managed in-house. We’ve staffed up a strong team here in Berlin to take care of that. Of course we do use vendors for certain things that require specialized expertise, where we don’t feel this is something that we would want to do in-house. That includes some of the production work, very technical aspects. We’re working with a production vendor that hires, for example, cameramen or audio technicians for us. We have other event-related vendors for work like security or catering as well. But I would say the majority of league operations and production are managed in-house.
GamesBeat: I know League of Legends has been growing for a long time, but it’s also had some bumpy numbers as far as traffic goes. Some people have pointed out that traffic on Twitch has declined at certain points. Are you thinking about that as far as what the league can do to help the overall game grow its numbers?
Schnell: Sure. The EU LCS specifically, compared to 2017, we’ve seen some strong growth. We’re very happy with the results of our restructuring. Overall we’ve seen a 25 percent increase in our unique viewers for our broadcasts. We’ve had a strong social media presence. Overall engagement is up more than 180 percent, thanks to some great effort by our social media team. We had a very strong showing in Copenhagen at our final event, where we significantly outperformed year-on-year in our viewership metrics, up to 30 percent on key metrics.
We’re happy about how we’re trending right now. We’re active. We’re re-energized. We feel good about the commitment the company has put behind us. They’re providing us with the resources to do everything I’ve already mentioned, the significant improvements we’ve made to our tech. To the question of whether we have a role to play in engaging players in League of Legends, yes, for sure. It’s our hope that esports is one part of the experience for the League of Legends player. Seeing that we’re trending very positively here, we hope to have a positive impact on League of Legends as a game.
GamesBeat: There’s some interesting new technology out there in esports and streaming. A company called Genvid has an interesting one, creating more interactive streams where a viewer can follow different parts of what’s being broadcast. Are you making use of technology like that? What do you think can be useful in the future for keeping viewers happy, as well as potentially, for example, showing them different kinds of advertising.
Schnell: The thing that you mentioned, and other improvements being made on that front, it’s super cool. Our team is looking at a lot of things and brainstorming whether we can come at this in different ways. One thing we’ve introduced is POV streams, point of view. Now, as an LCS fan, you have the opportunity to just watch your favorite player and see what he sees, see exactly how he moves and where he clicks, as opposed to just seeing the spectator view that looks at the whole game.
We’re constantly on the lookout for more advancements. I’d say that the streaming experience over the past years hasn’t evolved very much. It’s still mostly non-interactive, outside of chat. We’re looking closely at new improvements in that area.
GamesBeat: Are you strongest on any particular social channels or streaming services? Do the European numbers there look different compared to a worldwide view?
Schnell: Our strongest platforms are Twitch and YouTube. Those are our two main broadcasting channels. I couldn’t honestly say if they were different around regions. As far as social media, our Instagram has really taken off. Twitch and Instagram are probably our two strongest platforms so far in terms of social.
GamesBeat: Are there any topics we haven’t hit yet?
Schnell: One interesting tip I could share—recently we went to one of the big traditional sports conferences, where different governing bodies discuss the issues they’re facing right now, the problems they’re trying to solve. The most interesting thing for me was, they’re looking at the same things we are. You would think that as an esport, we’re catching up to the places traditional sports are at. But when we look at how far we’ve come – looking at the governance of the sport, which is the core role of my team – we realized that we’re pretty much there.
We’re trying to effectively organize player trades, deal with player agents, deal with the issues around that. These are all topics discussed right now by the governing bodies of leading sports around the world. We see eye to eye on these issues. We’re able to face these things together and look for solutions.