'League of Legends' makes big league moves

The legend continues to grow for online computer game League of Legends.

Immensely popular, the free-to-play fantasy combat strategy game has 32 million monthly active players, numbers matched by only the most popular Facebook games.

But other successful free games such as Candy Crush Saga and FarmVille 2 do not draw millions who simply watch others play. Last year's League of Legends season championship final drew more than 8.2 million viewers of the live online broadcast. Top professional players can easily make six-figure incomes with winnings, sponsorships and other earnings.

This year, the League of Legends Oct. 4 final will move from the University of Southern California, where it attracted a sold-out crowd of 10,000, to the Staples Center. That an international video game championship will be waged in the same venue that has housed the NBA Finals and NHL Finals is another sign that professionally sanctioned video game competitions, also called eSports, have arrived.

"It has a lot of meaning," says Brandon Beck, CEO and co-founder of Riot Games, the publisher of League of Legends. "I think it is going to be really exciting for fans ... to see eSports being played on that big stage in front of a sold-out audience."

Pro video game competitions and eSports have steadily grown an audience in the millions. Last year, more than 15 million online watchers saw Major League Gaming's pro events, which featured competitions of League of Legends and other games such as Call of Duty and StarCraft II.

Last month's MLG Spring Championship drew 21,000 over three days; millions watched the matches live online. This weekend's EVO fighting game championship in Las Vegas is expected to attract more than 4,000 contestants — on games such as Street Fighter IV and Tekken — and thousands more spectators to the Paris Las Vegas hotel.

But League of Legends has forged its own path. Riot Games released the free-to-play strategy game in 2009 after a three-year development process. In the game, two teams of five players attempt to destroy the other team's nexus, or base.

After downloading the game — you can learn how to play with a tutorial level — each player on the team chooses one of more than 100 champion characters to control; each wields its own strengths, special weapons and abilities. (You can buy additional champions, as well as "skins" that change their appearance.) The game's matchmaking feature matches players with compatible opponents.

Beck, 31, and co-founder Marc Merrill, 32, are both diehard gamers. Beck is a former strategy consultant at Bain & Co. Merrill worked in the corporate marketing department at event company Advanstar.

They wanted to create a game that took the best of online games such as World of Warcraft, StarCraft and Counterstrike. The duo also wanted to create a game company that listened to its players.

"We felt that game companies weren't really engaging with us," Merrill says. "That vision around being very player-focused and connected to our players really was something that inspired a lot of what we wanted to accomplish."

GROWING THE GAME

By the time the game launched in 2009, the Santa Monica-based company had about 100 employees. The team at Riot kept tweaking and improving the game as the number of players slowly grew.

Early investors included Benchmark Capital and FirstMark Capital. Two years ago, Chinese gaming giant Tencent acquired a majority stake in the company; the game was released in China in the summer of 2011.

By then, League of Legends had more than 15 million registered players. Two years later, that has surpassed 70 million. Each month, players rack up about 1 billion hours of game play; at its highest measure of activity, 5 million were playing at the same time. "It is a true example of a global success," says analyst David Cole of DFC Intelligence.

The company has grown to 1,000 employees, with offices in Dublin, Istanbul, Moscow, São Paulo, St. Louis, Seoul and Sydney. Wedbush Securities analyst Michael Pachter estimates that Riot currently takes in about $200 million in annual revenue.

"The game didn't instantly explode or anything. It was just a slow and steady build," Beck says. "When we look back, it has kind of surprised us and has been way beyond our wildest expectations."

Meanwhile, Riot Games has increased its interest in eSports. For starters, it added a spectator mode to the game last year. Earlier this year, the company took over the official League of Legends tournaments in North America and Europe; each week, regular-season matches take place in Riot's studios in West Los Angeles and Cologne, Germany, and are broadcast online.

The top 14 teams from those regions and other global territories meet in the playoffs starting in September. A $2 million prize pool will be divvied up at the Staples Center. (Tickets for the event go on sale July 25 on lolesports.com.)

"ESports was something we were passionate about, but when the game was launched, it was kind of a niche idea," Beck says. "We committed to a live and broadcast ecosystem that helped the eSport become what it is today."

Another sign that eSports is gaining clout: Pro gamers are being granted visas that other professional athletes get. "That is a big win for the sport," Beck says.

League of Legends has a large spectator following because viewers can easily follow the action and learn strategies from the pros to deploy in their own matches, says Brian Vidovic, co-founder of the eSport-themed EXP Restaurant and Bar in Vancouver, British Columbia. "The commentators are some of the best, and you can clearly tell when a big fight is happening or about to happen," he says.

And League of Legends attracts a desirable demographic: twentysomething and thirtysomething males. The pro players who make up San Jose-based team Cloud9 range in age from 18 to 24. Pros can make anywhere from $30,000 to well above $300,000 annually, estimates Cloud9 general manager Jack Etienne.

Interest in the game continues to grow, he says. At any given time, there are tens of thousands watching pros playing practice matches on online broadcast site Twitch, which shares significant ad revenue when streaming audiences become huge.

The team he previously worked with, Team SoloMid, recently got sponsored by Qualcomm and are featured in a CBS Interactive online reality show GameCrib

League of Legends' arrival at the Staples Center marks a high point — but not a final destination — for Riot Games. "Even though we're humbled by the growth we've had so far, we are still very much of the belief that we are still getting started and there's lots more to do," Merrill says. "We are still focused on doing bigger and better things for the players."