"If they let me change League of Legends I could double its revenue"
Ubisoft's Teut Weidemann explains why Riot's smash hit is a bad role model for good monetisation
Ubisoft Teut Weidemann has warned developers seeking to emulate League of Legends' success to look beyond its monetisation model when seeking inspiration - however large its customer-base, Riot Games' hugely popular online title is profitable mainly by virtue of its scale.
Speaking at GDC Europe in Cologne, Weidemann gave the third talk in a series in which he closely analyses the metrics, gameplay and business models of successful online products. Previously, Ubisoft's senior online game supervisor had scrutinised Puzzle & Dragons and World of Tanks. Today, it was Riot's turn.
A focal point of Weidemann's talk was League of Legends' $1.32 average revenue per user - initially taken from this SuperData report, but corroborated and justified using data for 2013 released by Riot, and the annual report of its parent company, Tencent.
"User acquisition with ARPU that low is hard," he said. "I haven't seen a League of Legends banner ad on the internet, and that's because they can't afford to. So how do they acquire users?"
Weidemann was in no hurry to answer his most pointed question right out of the gate, so the GDC crowd had to wait until the session neared its end. However, after careful dissection of the game's features, community and saleable items, Weidemann eventually circled back.
"You shouldn't look at League of Legends if you want to learn about good monetisation"
League of Legends had 32 million monthly active users at the end of calendar 2013, spending an average of $1.32 each. That gives a total of $42 million revenue every month.
Weidemann then used $35 as its average revenue per paying user; an assumption on his part, but Weidemann argued that $35 ARPPU is, "an industry standard number that most successful games actually beat."
Dividing $42 million by that $35 ARPPU suggests 1.2 million paying players per month - a conversion rate of 3.75 per cent of its total customer-base. Weidemann said that he had actually confirmed with people working inside Riot that League of Legends' conversion rate was below 5 per cent. The response? A nonchalant, "Why not?"
"Usually, conversion rates for client based games is between 15 and 25 per cent," he said. "World of Tanks has 30 per cent.
"5 per cent is pretty bad," he continued. "My conclusion was that League of Legends gives too much away for free and it doesn't sell power. Riot could sell exclusive premium champions - they could, but there would be a Riot in the customer-base... If they let me change League of Legends I could double its revenue, and they could afford to lose 60 per cent of the customer-base and still do twice as much money."
So while Riot may be able to shrug a "Why not?" in the direction of anyone questioning its conversion rate, Weidemann argued that the same wasn't true for those in the GDC crowd. League of Legends monetises through reach, and its reach is big enough to generate a whole lot of revenue - certainly enough to seduce a developer attempting to make a buck in the free-to-play space. However, that's not the same thing as being good at turning players into payers.
"With 70 million people, if 5 per cent pay, that's a whole lot of money," he said. "For Riot it's not a priority, but if you want to adopt its monetisation system you should ask yourself if can you do that successfully.
"This is my key recommendation here: League of Legends is an exception. It should not be a role model for your monetisation system... You shouldn't look at League of Legends if you want to learn about good monetisation.
"Riot can afford it. You might not."
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