Mentioned in this article Games: League of Legends

A report this morning from PVPLive details a $500 million deal between ESPN and Riot Games, regarding the broadcasting of Riot’s League of Legends Championship Series. While details are scarce and the deal is by no means a sure thing, it raises a number of questions and concerns for the esports industry as it continues to grow bigger. This deal in itself may be nothing but a rumor, but the inevitability of Riot shipping the LCS to a television audience is undeniable.

What can we assume about the deal?

The report itself has almost no concrete details, and explicitly says as much:

[perfectpullquote align=”full” cite=”” link=”” color=”” class=”” size=””]“It is unclear at present if this will affect any of Riot’s current broadcasting agreements with Twitch, Yahoo, Azubu and other online streaming platforms, or the timeframe that the deal would encompass.”[/perfectpullquote]

$500 million dollars is a lot, and as the report explains, is comparable to ESPN’s current deal with the College Football Playoffs. But that’s only a per-year figure—what if this deal is over ten years? $50 million/year is still a lot of money, but locks Riot into a long-term partnership over a time period when esports is sure to grow exponentially.

A reasonable assumption, then, is that this is a two year deal. It gives Riot $250 million a year—definitely enough to significantly increase player and team salaries—but more on par of the value that LCS broadcasting could bring in if done right. Two years also would give Riot some room to negotiate if it wants to go in a different direction after a couple seasons.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]ESPN has no real role in broadcasting in Europe or in Asia.[/perfectpullquote]

Of course, there’s also the scope to consider. Would Riot sell all broadcasting rights League of Legends professional matches? Not likely, especially considering that ESPN has no real role in broadcasting in Europe or in Asia. While Disney (which owns ESPN) does have some television subsidiaries that do, it’s unlikely that they would be used as part of this deal.

That leaves us with just the NA LCS for consideration. Indeed, this makes sense, as the NA LCS would be perfectly marketable to the audience that ESPN seeks the most—North American millennials. Cable cutting has grown significantly in the last few years, and directly targeting that audience has a good potential for bringing some of those numbers back.

Could WatchESPN replace Twitch?

Perhaps the biggest question to ask is whether the ESPN deal will include streaming. ESPN’s digital broadcast platform, WatchESPN, has been used by esports before, notably for Blizzard’s Heroes of the Dorm tournament. So, would this (assumed) $250 million a year include the exclusive move of NA LCS broadcasts from Twitch to WatchESPN?

There’s a number of important factors to consider in order to answer that question. For one, WatchESPN is only viewable in the US, which would deny any international viewers from tuning in. Additionally, it requires a subscription to an affiliated service provider (usually a cable subscription), which would also limit viewership.

Of course, this restriction would likely see some current fans subscribing just to get their live NA LCS on. But, undoubtedly, there would be a drop in live viewers, likely a significant one.

[perfectpullquote align=”right” cite=”” link=”” color=”” class=”” size=””]The question becomes whether moving NA LCS broadcasts to WatchESPN would cause a drop in players.[/perfectpullquote]

Ultimately, it comes down to whether or not the $500 million is enough to offset the costs from losing those viewers. However, because Riot currently doesn’t make much money off the LCS, but rather uses it primarily for marketing, that loss may not cost Riot very much at all. The question becomes whether moving NA LCS broadcasts to WatchESPN would cause a drop in players, to which the answer is probably less severe.

This drop in viewers and players could additionally be offset by providing Twitch and Youtube rebroadcasts and vods. NA LCS is already at a difficult time for many Europeans to watch, and ESPN would likely be more okay with sharing replays, as long as it gets the live events.

Much still in doubt

There’s still a lot to know about this supposed deal. And, of course, it could all just be a rumor or a part of Riot’s larger plans for the LCS that could include ESPN or any number of other television networks. Notable is that ESPN did enter into a strategic agreement with Tencent, the company that owns Riot, earlier this year.

As esports and the LCS both grow bigger, television networks will want to enter the game. Turner’s ELEAGUE, starting this week, is heralding a larger change to the esports industry, one that this rumored deal follows from. When, where, and for how much are really the only questions left to answer.