Riot is losing money on LoL esports, but is that a bad thing?

League of Legends is the biggest game in all of esports, but that doesn’t mean that League of Legends esports is actually profitable for the game’s developre.

The Washington Post ran a story on the profitability of esports, with Riot Games head of esports John Needham discussing some of the numbers behind League of Legends esports in particular. Needham discussed how the game’s competitive scene loses money despite the sheer size and scope of LoL esports. Needham implied that Riot Games is taking the financial hit in order to guarantee that its partners are getting the most out of being involved in League of Legends. 

“If I can’t make esports a great business for teams and our sponsors, then we’re not going to last long…We’re very much thinking about, ‘How do we make the entire ecosystem profitable?’,” Needham said.

It’s unclear exactly how much money LoL esports is losing Riot Games and whether this is applicable to the lifetime of the game or to LoL esports’ annual bottom line. There also wasn’t any kind of breakdown of why this is the case or which regions or leagues are the most and least profitable. 

There has been a long list of big-money deals involving the game, including a $310 million deal with Huya for broadcasting rights in China. Riot has also done an exceptional job of bringing non-endemic sponsors into LoL esports, with Mastercard, State Farm, and Mercedes-Benz all appearing on the 2021 World Championship broadcast.

Why is LoL esports losing Riot Games money?

Riot Games didn’t give exact reasons for why LoL esports is losing money, but large events are a significant expense and the regional leagues require sizable studio spaces.

It’s uncertain how much these events cost, but Riot has traditionally spared few expenses with making events like Worlds 2021 a grand affair. The Worlds 2019 finals included an enormous musical performance and took place in the 20,000-seat AccorHotels Arena in Paris. Worlds 2021 will be doing the same.

This certainly isn’t to say that League of Legends isn’t profitable on the whole or that LoL esports doesn’t actually pay for itself. At its core, esports is all about marketing the game. While events like Worlds may not pay for themselves through sponsorships and ticket sales, it does keep fans engaged and gets them spending money in-game.

Spiking fan and player interest each year and maintaining enthusiasm in larger regions does help Riot Games’ bottom line, even if LoL esports is directly making money.