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Riot Games Lays out Long Term Growth Strategy Publication date: 24 Oct 2019 Author: Omdia Analyst Riot Games Lays Out Long Term Growth Strategy Brought to you by Informa Tech Riot Games Lays Out Long Term Growth 1 Strategy During Riot Games’ League of Legends 10th anniversary celebratory stream, the company announced an unexpectedly large roster of new games and its expansion strategy for at least the next 3-5 years. For a company that has been built and focused on one title for a decade – albeit one that has generated $20 billion in revenues according to the company - this marks a major gear change in its ambitions. The list of announced games and other ‘projects’ in development were as follows: . League of Legends: Wild Rift - a mobile and console version of the world’s biggest PC online and esports game League of Legends (LoL) . Teamfight Tactics - Already available on PC, Riot confirmed that a mobile version of its LoL-based auto battler game was in the works . Legends of Runeterra – A LoL based digital card game coming to PC and mobile, which shares some similarities to Blizzard’s Hearthstone . Project A, a tactical team-based first-person shooter was confirmed to be in development. Not a lot is known about this game, but it looks to combine the aesthetic and some character-based play of Blizzard’s Overwatch with Valve’s Counter-Strike: Global Offensive . Project L, a fighting game set in the LoL universe was confirmed to be in development . Project F, confirmation of development of a 2.5D Diablo-like experience set in Runeterra and based in the LoL universe . League of Legends Esports Manager - a LoL esports management sim coming in 2020. This has been confirmed for mobile and is developed by Tencent (Riot Games’ owner) . A LoL-based animated TV series set to arrive in 2020 This flurry of activity has obviously been going on behind the scenes for some time but underlines that League of Legends on PC is no longer a growth engine for the company. Revenue from the game peaked in 2016 and while it still generates $100s of millions annually, Riot Games has laid out its product strategy for future growth across a wide number of new titles. Additionally, with the announcement of the TV series, Riot Games is shifting into adjacent entertainment areas and evolving LoL into a horizontal, umbrella franchise that works across media. All the games announced, aside from Project A, are based in the LoL universe. Riot Games’ strategy also has some other implications: . The product strategy means it will be competing more aggressively with the other competitive gaming giants including Blizzard and Valve. Multiple releases on mobile shows that Riot, probably under the influence of its parent Tencent, is now very serious about smartphones for reaching audiences especially in mobile first markets such as South Korea and mainland China. © 2020 Omdia. All rights reserved. Unauthorized reproduction prohibited. Riot Games Lays Out Long Term Growth 2 Strategy . The product strategy gives Riot’s parent company Tencent a platform for international growth. The major Chinese games publishers are looking to expand into international markets more aggressively to drive growth and this aids in that ambition. Almost all the games announced are based on competitive play. These titles are laying out Riot’s growth strategy not only for games content but esports as well. Riot Games gets serious about mobile It had been rumored for several months that a mobile version of LoL would be launched by Tencent, Riot Games’ parent company and the world’s biggest mobile games company. During LoL’s 10th anniversary celebration livestream, Riot confirmed the name of the mobile version to be Wild Rift and its launch in 2020. Tencent started immediate pre-registration of the game in mainland China via WeChat and QQ. Wild Rift is not a direct port of LoL, but a version of the title that has been adapted for the mobile platform. Some players may be resistant to an offering which does not directly replicate the PC experience, but equally, a fully-optimised smartphone version will provide a better user experience. Tencent’s PUBG Mobile is an example of a title which is separate to the PC original, and it is now one of the top-performing titles globally – building on and even furthering the PC version’s success. Given Tencent’s history in this area, there is potential for Wild Rift to do well. Riot also confirmed its auto battler Teamfight Tactics (TFT) would be coming to mobile. Earlier in October, Riot confirmed that on PC, 33 million players are active in TFT every month. TFT is the most popular autobattler to emerge from the trend, and neither Valve’s Dota Underlords nor the original Dragonest Autochess have made waves on mobile. This suggests there remains a gap in the market for a standout entry, and TFT may fit the mold. Legends of Runeterra is Riot’s new LoL-themed CCG which will also be coming to mobile as well as PC platforms. The turn structure is unique, but the visual style and animations are similar to other titles in the genre. As demonstrated by Blizzard’s Hearthstone, there is a global audience for a CCG fueled by a strong IP. However, Valve’s DOTA-based game Artefact was a high-profile failure, indicating that setting a title within a familiar and popular universe is not always enough to ensure success. Riot also announced an esports management simulation called LoL Esports Manager, developed by Tencent for mobile platforms. Pre-registrations for the game in mainland China reached 635,000 in one hour. The game partners with China’s League of Legends Pro League and thus we assume the management game will focus on mainland China only to start with. This game is the first of its kind and adds a new dimension to Riot’s esports strategy: the gamification of the esports business. This offers a new perspective to consumers, and an alternative way to engage with the LoL franchise. The importance of LoL to Tencent League of Legends is core to Tencent’s games strategy not only because of its revenue and global popularity but also due to its role in re-establishing Tencent’s reputation in China. Before LoL, Tencent’s games were well-known for their aggressive monetisation and less innovative gameplay. LoL has impressed gamers and thus enabled Tencent to come to dominate the Chinese games market gradually. The launch of a series of mobile games enables LoL to expand its ecosystem to mobile platforms and thus to reinforce its market position. However, the launch of LoL’s mobile version has raised one concern for Tencent’s mobile games revenue. It is likely there will be some cannibalisation of Tencent’s hugely popular mobile MOBA Honor of Kings considering their very similar gameplay and graphic design. However, as Tencent will be operating both © 2020 Omdia. All rights reserved. Unauthorized reproduction prohibited. Riot Games Lays Out Long Term Growth 3 Strategy games in mainland China, and the company owns 100% of Riot Games, all revenue streams from both games lead back to the parent company. Tencent’s challenge will be ensuring the vibrancy of each games’ player community and trying to position them as complimentary rather than competitive. © 2020 Omdia. All rights reserved. Unauthorized reproduction prohibited. Riot Games Lays Out Long Term Growth 4 Strategy Citation policy Request external citation and usage of Omdia research and data via [email protected]. Omdia consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Omdia’s consulting team may be able to help you. For more information about Omdia’s consulting capabilities, please contact us directly at [email protected]. Copyright notice and disclaimer The Omdia research, data and information referenced herein (the “Omdia Materials”) are the copyrighted property of Informa Tech and its subsidiaries or affiliates (together “Informa Tech”) and represent data, research, opinions or viewpoints published by Informa Tech, and are not representations of fact. The Omdia Materials reflect information and opinions from the original publication date and not from the date of this document. The information and opinions expressed in the Omdia Materials are subject to change without notice and Informa Tech does not have any duty or responsibility to update the Omdia Materials or this publication as a result. Omdia Materials are delivered on an “as-is” and “as-available” basis. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in Omdia Materials. To the maximum extent permitted by law, Informa Tech and its affiliates, officers, directors, employees and agents, disclaim any liability (including, without limitation, any liability arising from fault or negligence) as to the accuracy or completeness or use of the Omdia Materials. Informa Tech will not, under any circumstance whatsoever, be liable for any trading, investment, commercial or other decisions based on or made in reliance of the Omdia Materials. CONTACT US omdia.com [email protected] © 2020 Omdia. 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