Riot Games – How Two Business Majors Changed An Industry

Love it or hate it, League of Legends is one of the biggest games to date. It's been out since 2009 and can still hold its own, with a steady player base, coupled with new players trying the game for the first time every month.

Here, I'm going to tell you the story of how League of Legends became the biggest multiplayer game of all time, and why it still attracts so many people.

Two Visionaries With A Fresh Idea

It all started with Brandon Beck and Marc Merrill, who were college roommates in 2006 and bonded over a specific game. It was Warcraft 3, specifically the Defense of the Ancients mod.

DotA was not the first MOBA, but it shaped the genre into what we know today. The problem was, back then, DotA was inaccessible to a larger player base.

First, you had to pay full price for Warcraft 3. Then you had to navigate the custom browser inside the game to play DotA, which was a handful. And lastly, you had to find matches across an online forum, since the mod didn't involve automatic matchmaking.

Merrill and Beck saw huge potential in the game, but also acknowledged its flaws in its inaccessibility. They wanted to make a game out of it that worked much better, the issue was that neither one of them was a game designer.

They were business majors at USC with a huge passion for gaming, therefore, they had to hire staff. So, in September 2006, in an old converted machine shop, Riot Games was founded.

The company immediately started working on the game, which was then still called Onslaught. They wanted to show the game off at the 2007 game developers conference in San Francisco.

The game itself wasn't their only hook, however. Merrill and Beck, being business majors, had the idea to make the game free-to-play. The strategy behind this, was to minimize the price, to maximize demand.

They knew that in Asia, the model had already proven to be successful, but most of the Western gaming industry did not think free-to-play was a profitable model.

Regardless, Merrill and Beck held on to their vision, which resulted in none of the industry's publishers wanting to work with them. So, they decided to release the game themselves.

After going straight to some investors, Merrill and Beck managed to find people who would back them up financially, since they believed that their business model could work.

The game, now called League of Legends: Clash of Fates, wasn't even ready yet, but the investors remained on board, because of the vision.

Riot's Competitor

Another issue arose in the form of Heroes of Newerth, or HoN.

S2 Games saw the potential of DotA as well, and started making their own MOBA. The company had much more experience in making video games than Riot, and it was clear, which game looked better.

The two MOBA's launched a free pre-release at the same time, and HoN managed to pull in double the player numbers than Riot. What gave Riot the upper hand, though, was that S2 Games announced that HoN will be a full price game.

This resulted in half of HoN's player base immediately leaving to play League of Legends. It was so uncommon to see a free-to-play game in the western hemisphere that upon launch, League of Legends exploded in popularity. Everyone wanted to try this new game.

In its first year, LoL made $1.3 million, following with $17 million in the next and $85 million in the third year. The game was a massive success.

So, what set Riot and League of Legends apart from other developers and games, was that Merrill and Beck understood something others didn't – the free-to-play model.

They released skins and new champions regularly, which brought in a lot of money, but what really changed everything, was a certain game mode.

Ranked Play ELO System

No other game used this system up until then. Riot always had a hand for knowing, why people play video games. It was about being competitive.

With 'Ranked', the gameplay loop of LoL, became even more addicting, giving players an opportunity to progress, while comparing themselves to other players.

This was also the birth of League of Legends pro play. By investing huge amounts of money into esports, Riot managed to skyrocket the game's appeal.

At this point, it was, again, their understanding of the financial model, what made competitive League of Legends work. They knew that they wouldn't make direct profit off of these huge events. They deliberately lost money, but kept building the brand of League of Legends, which resulted in higher profits from skins.

This is also why these tournaments are so well-organized and have gigantic prize-pools, because Riot invests huge amounts of money in them.

So, in a nutshell, Marc Merrill and Brandon Beck had a vision, not only of a game, but also of a business model. What made them successful was that they stuck to their idea, betting everything on that one card: Free-to-play.

They continued to build their brand with in dozens of creative new ways, like collaborations with musicians for the yearly Worlds song, or Netflix's Arcane. All this is what makes Riot and League of Legends so successful.

They weren't building a game, they built a brand.

Huge credit goes to Going Indie, whose video inspired this love letter to LoL.