Sections

"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."

More stories

Steam Deck orders open February 25

Those with reserved units will have three days to confirm payment, consoles to ship at the end of next month

By Danielle Partis

Old games, FIFA and Switch dominated Europe in 2021 | European Market Report

PlayStation 5 and Xbox Series X/S stock shortages keep both at bay

By Christopher Dring

Latest comments (12)

"If they gave it to me, I'd 'pay to win' the entire thing and we'd be swimming in cash".... that's a wonderful message to send the customers' way... and a fantastic way to keep the eSports train rolling...
24Sign inorRegisterto rate and reply
Brian Lewis Operations Manager, PlayNext7 years ago
You may not like how he presented the facts, but he did provide good advice for new developers. LoL is just as much an anomoly as WoW. Neither one of these should be used as an example of how to monetize a game.The reality that the rest of the market has to live with is different than these extreme examples, and as such they are not good templates.
5Sign inorRegisterto rate and reply
Klaus Preisinger Freelance Writing 7 years ago
Considering how Riot is ramping up the sports broadcast aspect of its product, even hiring screenwriters, I doubt doubling profits at a 60% loss of consumerbase is an offer they are willing to take.

Also, if they let me change League of Legends, I would turn it into a sequel to Symphony of the Night.
3Sign inorRegisterto rate and reply
Show all comments (12)
For Riot, I wouldnt attempt to break the golden eggs and Golden goose...it works, it works so damn well for it, why try harder?
1Sign inorRegisterto rate and reply
"If they let me change League of Legends I could double its revenue"
and likely kill the game in a year or two.

Short thinking money grabs, is that all people think about these days?

You know what advice Riot needs from people like this? the answer is NONE

Edited 2 times. Last edit by Todd Weidner on 11th August 2014 7:37pm

26Sign inorRegisterto rate and reply
George Pigula Producer, EA Maxis7 years ago
Playing the numbers, he is correct. I don't think this would kill the game in two years. Still having 19 million users a month would keep that community chugging along just fine. He is not talking about making a better game or experience, just a more profitable one. It is interesting to highlight that the opportunity is there, and this is something Riot does know. You can infer that their priorities are the larger community/better game over the profits.
1Sign inorRegisterto rate and reply
Anthony Gowland Director, Ant Workshop7 years ago
Still having 19 million users a month would keep that community chugging along just fine.
Assuming that the game keeps that number of players. That turning the game p2w wouldn't turn people to a competing title, that the loss of non-payers wouldn't damage the game's perceived popularity and force them to start doing paid UA, that the lower player-base and p2w mechanics would still support the eSports community.

Which is a big assumption, I think.
3Sign inorRegisterto rate and reply
Klaus Preisinger Freelance Writing 7 years ago
@George
That is still assuming Riot wants to monetize its players in the future. But observing Riot, one cannot help but notice that they tend to take this sports broadcasting thing rather serious. Professional sportscasting, however, does not monetize the player, it is monetizing the audience. Football is big business, because a lot of people are willing to pay money to see it, not because they pay money to play it. Valve did the same with the International: monetize the audience. If that is your goal medium to long term, then trading part of the audience for short term profits is not an option. Especially being the top dog with the most players is hugely important, since it most likely creates the largest audience.
4Sign inorRegisterto rate and reply
George Pigula Producer, EA Maxis7 years ago
I was implying that Riot wanted to grow the community more than maximize an ARPPU with a pay to win strategy that Mr. Weidemann was proposing. They are okay with their low ARPU and aim to continue a high volume of players.
I don't know if pursuing the monetezation of an audience is the smart thing to do. They would have to compete with youtube, twitch, MLG and other places where players can just up and share their gameplay. It seems a lot to take on in a market with some pretty big players already.
0Sign inorRegisterto rate and reply
Steve Wetz Reviewer/Assistant Editor, Gamer's Glance7 years ago
@Barrie,

I think it goes deeper than that for Riot. Everything from the "Summoner's Code" and banning pro-level (but vulgar) players to the low level of monetization suggests a company with a passion project. A successful one at that. They are clearly crafting the experience with player enjoyment in mind, and putting profit as a secondary goal.

League of Legends may have a inefficient profit model. But they are gaining customers FOR LIFE. When a company creates an experience like this for their customers, the profit isn't just seen in that single game. Think of how many games you have bought based on that company's previous offerings. Blizzard made it's name this way - there isn't a Blizzard title I regret buying*. Similarly, Riot's future projects can and will be widely supported by it's current LoL players. Teut's viewpoint is too narrow for this kind of sustained profit.

*Now that the Real Money Auction House is dead and gone.
7Sign inorRegisterto rate and reply
Iain Stanford Experienced Software Engineer, Tinderstone7 years ago
People seem to be missing his point.

He says right here...
"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.
He's saying, it works for them because of their scale, but that monetisation wise they actually have a poor conversion, so if you're a team out there spending big budgets on a new F2P title, mimicking Riots model....then you better hit the large scale users otherwise you're going to struggle.
3Sign inorRegisterto rate and reply
John Kauderer Associate Creative Director, Atari7 years ago
These comments are amazing. More insightful than the article itself. I love this website!
1Sign inorRegisterto rate and reply

Sign in to contribute

Need an account? Register now.