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'League of Legends' a billion-dollar winner for Riot Games

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In a year's time, Riot Games' revenue swelled from approximately $624 million to a few million dollars shy of $1 billion and it's thanks in large part to the game publisher's player-centric philosophy in managing League of Legends.

Riot Games can comfortably host tournaments for a free game at a loss because the publisher has cultivated a worldwide following of game enthusiasts for its multiplayer online battle arena (Moba) game, League of Legends (LoL). In LoL, players control "champions" and minions birds-eye perspective as they use tactics to clear out each map's lanes and destroy their opponents' nexuses.

The strategic depth the game delivers and its free-to-play model keeps players coming back. Approximately 27 million individuals are said to log in to play LoL each day, and roughly 67 million join in on game at least once a month.

Marc Merrill, president and cofounder of Riot Games, said he and partner Brandon Beck originally thought the game would cost $3 million to develop, but it actually cost about $12 million to do so. It didn't take long before the hallmarks of a hit game began to emerge, according to Mitch Lasky, then a board member and a Benchmark Capital investor

"Within 90 days you could see the bone structure of a hit," said Lasky. "It was doing small numbers at first, but if you knew where to look -- how many people were coming in, how many games they played, revenue per average user -- you could see the first couple hundred million in revenue."

Riot Games has used a free-to-play formula with LoL that has made it an exception in an industry where freemium games are notorious for nickling and diming players until they've invested more into the title than they would if they'd gone the traditional, retail route.

"People told us when we started that if you don't charge up front, or if you're not selling extra power or stats, it won't work," Merrill said. "But that fails to account for the coolness factor. If you're really into cars, you don't mind spending $50,000 to soup up your Honda. That's the player we're tapping into."

LoL has earned devotion from its fans by sticking around and talking to its community -- has even been embraced as a real sport, an esport. For Beck, the inspiration to remain actively engaged with LoL's community was born of watching developers abandon games in favor of promoting newer titles.

"It was always disappointing when development teams would rush in to build the next game and neglect communities that were staying engaged with their game well after it launched," Beck said. "We wanted a company that paid attention to players like us who wanted to play competitively and cooperatively."

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