Riot's Move To Consolidate LPL Team Apparel Rights Sparks Lively Debate
The owner of one of China’s premiere professional (LPL) League of Legends teams recently caused a stir in the League of Legends community by revealing that Riot Games designed the team’s jersey for the Summer Split. This has since been confirmed by a press release stating that WE is one of several LPL teams that will have their new jerseys designed by Riot and sold in its official merch store, with profit being shared between the teams and Riot. A similar arrangement has been discussed in NA and EU LCS for years, but these reports are the first public confirmation of a such a deal in the LPL.
While consolidating league merchandise rights is still contentious in esports, the concept of collectively sharing the risk and profits of wholesaling, retailing, distribution, etc. among teams in a league is the norm in many major traditional sports, particularly in the United States where Riot is based. LPL jerseys in particular have traditionally been fairly difficult for fans in other international markets such as the U.S. to buy, and often quite slow to arrive. Moreover, some fans have complained that existing LPL uniforms are far less professional and “sleek” than their LCS counterparts.
Assuming a reasonable revenue split (and there’s definitely been healthy debate around what that is…) there are clear potential benefits to LPL teams to be able to negotiate collectively as a bloc with apparel makers, tap into Riot’s massive global distribution pipeline, and share some of the risk of inventory costs (e.g. having to warehouse lots of unsold jerseys for an extended period of time) in exchange for sharing profits with Riot. Hypothetically, if a team shares 30% of its jersey profits with Riot but doubles their sales after being able to reach legions of new fans via the Riot distribution infrastructure (website, client, studios, roadshows, etc.) that’s probably a worthwhile trade-off, though there are other factors like gathering data on fans buying the jerseys that would matter to teams also.
On the other hand, teams that are bullish about their long term prospects can take a lesson from the Dallas Cowboys, who were the only team in the NFL to opt out of the league’s apparel licensing deal back in 2001. Owner Jerry Jones declared at the time that “I can market and sell the Dallas Cowboys better than anyone else… the franchise can promote the apparel, and the apparel can promote the franchise.” Many traditional sports observers credit this decision as a major reason for why the Dallas Cowboys, who are regularly top 5 in NFL merch sales, are considered to be the most valuable team in the NFL, if not the world.
The EDGs, SKTs, Fnatics, and TSMs of the world have carefully cultivated iconic esports brands, and it is a not insignificant risk and potential reduction of upside to hand over the keys to jersey design and sales to a third party, even if the team maintains some say in the process. The same is also probably true for ambitious up-and-coming teams.
At the end of the day however this merchandise debate is a branch of a larger conversation tree, which is how to align the interests of the haves of esports leagues with the have nots, and the interests of publishers with both.
Traditional sports leagues in the U.S. strongly emphasize revenue sharing and collective action, and esports has seen some limited movement in that direction over the last year with the creation of bodies like WESA and PEA. Implicit in the move to have all teams opt into a Riot jersey deal is that both Riot and the teams participating in its leagues can collectively negotiate for better terms with apparel makers, and perhaps more easily secure a major deal with a Nike or Adidas than if the apparel rights to pro LoL teams were scattered across a half dozen different vendors and set to expire at different times. As discussed above however, this collectivization comes at the cost of financial and creative flexibility for individual teams. To what extent will teams and Riot be willing to flex on either or both of those areas?
As revenue opportunities and demand for esports merchandise continue to climb it’ll be interesting to see how Riot and professional LoL teams balance their visions of what is best for fans and the league in the long term with what is best for their own bottom lines in the short to medium term.
Facebook Purchases Rights To Livestream ESL
Last week, Facebook struck a deal with the world’s largest esports organizer, ESL, for the right to livestream over 7,000 hours of live events and original content on its site. The deal supplements Facebook’s initial investment in esports where it brokered content partnerships with individual esports teams G2 Esports, Echo Fox and Team Dignitas.
Notably, this comes only three weeks after Facebook’s Q1 earnings call, on which CEO Mark Zuckerberg reiterated his disinterest in pursuing a relationship with any of the traditional American professional sports leagues.
This is a massive development for the esports community in both actuality and implication. In addition to serving as another accessible platform for existing esports fans, the social media king will provide vital exposure to new audiences in all parts of the globe. Facebook’s audience of 2 billion monthly users dwarfs the current reach of existing livestreaming partners, Twitch and Youtube, and includes a more diverse audience than the two.
With pervasive projections of explosive growth in esports audiences worldwide, organizers must continue to explore new channels to fulfill the gaudy forecasts. Facebook’s endorsement not only represents a meaningful step in reaching these new audiences, but also provides a glimpse into their own prognoses.
The announcement of the deal follows Zuckerberg’s reiteration that Facebook would not involve itself in rights deals for traditional sports content, a proposition they have repeatedly visited and turned down. While cost is certainly a factor, the notion that they are spurning traditional sports for esports cannot be ignored and even further legitimizes the optimistic outlook for the industry’s potential.
Esports still has a long road ahead to reach the levels of global recognition it is very capable of, but deals like this serve as the vital stepping stones in increasing its visibility and accessibility. Facebook has now solidified itself as a major player in the growth of esports, a confirmation that will certainly carry as much weight for the future as it does in the present.
Peanut Labs Study/Dot Esports: Professional esports players are inspiring the next generation
A new study from Research Now/Peanut Labs (with additional analysis from Dot Esports) included several novel esports revelations including that a large portion of players and fans aspire to become professional gamers and streamers.
- 81%/77% of League of Legends fans aspire to be professional gamers/streamers
- 76%/73% of Counterstrike fans aspire to be professional gamers/streamers
- 60%/56% of Call of Duty fans aspire to be professional gamers/streamers
- 57%/55% of Minecraft fans aspire to be professional gamers/streamers
This data bodes very well for the long term health and viability of esports. Although only very few will ever actually become professional gamers or streamers, the allure will only strengthen fans and their zealous passion for their favorite game.
Publishers will see a direct benefit from unit sales (if applicable) and in-game purchases as fans aspire to play and look like their favorite players (similar to young basketball fans purchasing the new LeBrons). These personal investments of time and money from fans will result in a deeper affinity for the product and a connection to the surrounding community.
However, publishers are not the only ones who will see a direct benefit from this. Streaming platforms like Twitch will see more users come to their platforms to watch and launch their own streams in hopes of making it big (Twitch had 2.2 million unique streamers in 2016). Ancillary equipment companies that provide streaming equipment will also benefit from their fans lofty goals and will likely foster a market for cheaper, easier to use streaming equipment to minimize barriers to entry for these first-timers.
Overall, having a fan base that believes they can personally succeed and benefit within a sport only drives engagement and loyalty. Additionally, the fact that computers and game consoles are readily available (much more than a baseball field and finding enough people to play a game) will continue to make it easier for users to play with anyone at almost any time.