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.
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