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Open Innovation for League of Legends

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Hundreds of millions of people play and watch League of Legends. Will the game will be sustainably popular (like basketball) or will it follow the path of other electronic games in the past and give away to newer concepts? In this long-term context, it is crucial that the game developer utilizes open innovation to support game updates and an ecosystem of players, teams, fans, and platform partners.

(League of Legends World Championship[1])

 

Riot Games is a rarity in the world of large video game developers – it only has one game, League of Legends (LoL). Released in 2009, League is a multiplayer online battle arena video game on the desktop gaming platform. The game resembles basketball where 2 teams of 5 players each play against each to capture the flag, with strategy, teamwork, stars, and heroics similarly at play. Riot operates a freemium model where players play the game for free but can purpose optional visual enhancements that do not affect performance. The game is easy to spectate and has attracted a sizeable e-sports following. On November 3, 2018, the Chinese team Invictus defected the European team Fnatic for the 2018 World Championship in front of a sold-out crowd of 50,000 people in Seoul, South Korea. [2] Viewership data has not been released yet for the 2018 World Finals but it is expected to surpass 2017’s worldwide viewership (47mm people) and US viewership (2mm people).[3] There is an existential question though of whether League of Legends will be sustainably popular or whether it will follow the path of other electronics games in the past and give away to newer game concepts. In this long-term context, it is crucial that Riot utilizes open innovation to support game updates and an ecosystem of players, teams, fans, and platform partners.

[4]

Open innovation has been a key part of Riot Games’ development to date. In fact, League of Legends was created as a result of open innovation, with the founders drawing inspiration from a community-created modification to the 2003 Blizzard Entertainment game Warcraft III. [5] Currently, Riot leverages open innovation through releasing data and hosting contests for the community. In 2013, Riot released its developer API program to provide game and player data, which led the community to create useful tools and websites like stats site OP.GG and video site Replay.gg. [6] In 2016, Riot launched an API challenge for the community to create projects around entertainment, usability, and creativity, some of which were then incorporated into the ecosystem. [7]

Additionally, a major contributor to League’s popularity has been the rise of live streaming platforms. Through Amazon-owned Twitch.tv and Chinese platforms like Huya and PandaTV, hundreds of thousands of gamers broadcast themselves playing League to hundreds of millions of viewers, which has dramatically enhanced the game’s popularity. [8] In fact, League has been the most watched game on these platforms, with over 1 billion hours streamed on Twitch.tv alone in 2017. [9] In the live streaming model, streamers share in the platform’s economics based on number of subscribers or viewers and thus compete against each other, allowing for broad experimentation and proliferation of content.[10] Interestingly, Riot Games does not capture any of the direct economics (subscription, advertisement, and micro-transaction revenue) from partner platforms but benefits indirectly from increased popularity of the game. Similarly, many gamers upload League tutorials, replays, or highlights on YouTube and other video channels. Riot’s willing to allow external actors to creatively use and monetize League is a strategic decision to foster content and community innovation in the ecosystem.

Currently, Riot is utilizing open innovation for the development of its ecosystem but not for the continuous improvement of the game itself. I recommend that Riot allow its community to participate in both idea generation and idea selection for game updates. On idea generation, Riot should run additional contests regarding potential innovations such as new playable characters, new rules, or even potential new spin-outs of the game. For distributed innovation systems, the more granular and diverse the tasks, the larger the pool of participants so the contests should be focused on specific ideas.[11] [12]

For idea selection, Riot should allow its community to vote on critical product changes. Companies ranging from Zara to LEGO to Walmart are already utilize polling of customers for decision making. [13] This polling would benefit Riot in two ways – giving outside perspective early in decision making and simultaneously engaging the ecosystem. On the latter, we know that a strong sense of identity and community belonging motivates distributed innovation participation. [14] The act of participating can also be empowering though and increase sense of community in a virtuous cycle.

Riot Games has successfully leveraged open innovation in ecosystem development and can complement that with open innovation in game updates. An open question is whether Riot’s focus on a single game can successfully compete in the long-term with the innovation potential of a multi-game company like Valve (which developed League’s primary competitor DOTA2 and distributes 3rd party games through its Steam platform[15])? Can any one video game, however managed, truly have the longevity of basketball?

 

Word Count: 781 words

 

 

[1] Riot Games, cited in Goslin, Austin, “League of Legends…”, August 23, 2018, https://www.riftherald.com/lol-worlds/2018/8/23/17718838/worlds-2018-league-qualified-teams-seeds, accessed Nov 2018.

[2] Chen, Celia, “League of Legends World…,” Oct 26, 2017, https://www.scmp.com/tech/china-tech/article/2117163/league-legends-world-finals-tickets-gone-seconds-showing-how-e, accessed Nov 2018.

[3] Erzberger, Tyler, “Which League…,” Nov 1, 2018, http://www.espn.com/esports/story/_/id/25143635/ranking-league-legends-world-championship-final, accessed Nov 2018.

[4] Source via Statista, accessed Nov 2018.

[5] Atkinson, Ryan, “How Warcraft 3 Mods Paved the Way for League of Legends and Dota 2,” https://www.pcgamesn.com/warcraft-iii/warcraft-3-mods-dota-league-of-legends, accessed Nov 2018.

[6] Riot Games, “The Riot Games API: Goals and Design,” April 11, 2016, https://engineering.riotgames.com/news/riot-games-api-goals-and-design, accessed Nov 2018.

[7] Riot Games, “API Challenge 2016 Winners,” https://na.leagueoflegends.com/en/news/community/contests/riot-games-api-challenge-2016-winners, accessed Nov 2018.

[8] Huya, “Huya Reports Second Quarter,” August 13, 2018, http://ir.huya.com/2018-08-13-Huya-Reports-Second-Quarter-2018-Unaudited-Financial-Results, accessed Nov 2018.

[9] Source via Statista, accessed Nov 2018.

[10] K. Boudreau and K. Lakhani, “How to manage outside innovation,” MIT Sloan Management Review 50, no. 4 (Summer 2009): 68–76.

[11]  K. Lakhani and J. Panetta, “The principles of distributed innovation,” Innovations: Technology, Governance, Globalization 2, no. 3 (Summer 2007): 97–112.

[12] K. Boudreau and K. Lakhani, “Using the crowd as an innovation partner,” Harvard Business Review 91, no. 4 (April 2013): 61–69.

[13] A. King and K. Lakhani, “Using open innovation to identify the best ideas,” MIT Sloan Management Review 55, no. 1 (Fall 2013): 41–48.

[14] K. Lakhani and J. Panetta, “The principles of distributed innovation,” Innovations: Technology, Governance, Globalization 2, no. 3 (Summer 2007): 97–112.

[15] Ethan Bernstein, Francesca Gino, and Bradley Staats, “Opening the Valve: From Software to Hardware (A),” HBS No. 9-415-015 (Boston: Harvard Business School Publishing, 2015).

11 thoughts on “Open Innovation for League of Legends

  1. Very well written — I enjoyed learning about how Riot Games is utilizing open innovation to develop it’s game ecosystem. I very much agree with your future-looking suggestions that Riot should also capitalize on open innovation to improve the games themselves — through contests among users to generate & vote on new ideas. This reminds me of the HBS case on Valve Software, in which Valve hired two hackers that had developed a new version of Half-Life, in which multiple players compete in the same arena. Valve saw this as a great source of innovation and brought the two developers in-house, rather than pursuing a legal challenge. This tactic has proven successful for Valve, and I agree it could work very well for Riot Games as well.

    Source: Bernstein, Ethan, Francesca Gino, Bradley Stats, “Opening the Valve: From Hardware to Software (A).” HBS No. 9-415-015. Boston: Harvard Business School Publishing, 2015.

  2. Since its release in 2009, it seems that the global popularity of the game itself has only increased. It also appears that founders have been iterating the end product successfully while also using various marketing channels. What leads you to believe that the game will follow the typical drop off trends of other electronic games? Is there data to support these drop off trends and are the games themselves actually comparable to a game that has scaled so rapidly like League of Legend?

    Also, do you think its possible for Riot Games to control the gaming environment if they incite open innovation from their users? Will this ultimately distract Riot Games from putting out the best end product possible and ultimately cause them to contract their user base due to the perception that the company itself cannot innovate in the future.

  3. This is a very interesting article on a very cool company. It is amazing how the growth of League of Legends has resulted in a popular game that may even rival traditional sports. You summarize well how Riot has used open innovation successfully to produce the game from its Blizzard roots. In the long term, I feel like Riot Games should apply its experience with open innovation into new game development and develop other games so that it can better diversify its portfolio of offerings and continue to be a strong competitor to Valve, Blizzard, and Epic Games in the long term. I am also very curious to see how League of Legends’ reliance on live streaming systems will develop and whether there is the opportunity for vertical integration for Riot in this respect.

  4. Very nice article on open innovation in esports. There’s an obvious parallel to be drawn to “mods” (modifications) in single player games as well; Valve’s Steam workshop encourages open innovation by providing a platform for people to submit game modifications.

    For idea selection, I think allowing the community to vote on product changes is actually not a great idea as-is. There are quite a number of early-access games on Steam that changed some features in response to user feedback, only to find that users didn’t quite know what they really wanted (similar to how people will respond to marketing surveys). In my opinion, the best way to do this is let users “vote with their feet” – release potential product updates as mods/on trial servers and see which ones become the most popular.

    I believe an esports game can have the staying power of a sport like basketball. Looking at similarities, rules/mechanics of basketball have never (significantly) changed, and games usually only improve on this front. The existence of star players and teams is the same. The most notable difference is the existence of a “home team”, where any given basketball audience member is linked to a particular team simply based on their hometown. Esports teams don’t yet have such an easy way for fans to affiliate with and feel close to their teams, but I think this is something which can happen and would cement esports as a ‘sport’.

  5. I have never been much of a gamer, so I found this article incredibly enlightening! Do you think there should be any other incentives for the users whose ideas are chosen for implementation? How often and quickly do you think these changes be made?

    I agree with the previous comment that community voting may present a challenge. I would be curious to see if there would be any other methods to gain user consensus.

    Great article!

  6. Open innovation is a great way to draw engagement from an otherwise very fickle userbase. As the author noted, video game fanatics are a notoriously fast-shifting group, with game allegiances, and the game’s popularity, seemingly changing overnight. One common complaint around the traditional video game model is how protective most gaming companies are of its IP, wanting to maintain direct and complete control over user engagement, monetization, and other aspects of the ecosystem. I think Riot Games is really staying ahead of the curve by not telling users how exactly to engage with the game (whether it be replays, game mods, training, etc.), but by letting them vet each other for the best ideas. After all, the users are ultimately the ones who will purchase the product. A major benefit of this approach is that Riot Games also assumes very low tech debt, by not having to explicitly support any large, cumbersome, user engagement-centric platforms that it rolls out. This allows them to focus primarily on the game, and not have to commit significant resources to developing and maintaining ancillary and unsustainable products.

    One large limitation to this approach, however, would be the scale at which users can contribute their own additions to the game. Something relatively straightforward, like live streaming and game training, can be done on a single user basis. However, more complex additions, such as actual game modifications (which the author suggested) might be untenable for an open source solution, since the amount of work, detail, and coordination required to keep the updated version of the game balanced could be far beyond the abilities of individual users. Open innovation is great for generating large volumes of ideas and smaller implementations, but Riot Games cannot rely on it to boost its core product offering, which still has to be carefully maintained by dedicated teams.

    Additionally, one concern for open source might the maintenance of crowdsourced solutions going forward. Open source projects are very easy to start, but the more difficult task is finding the right administrators to ensure the code is updated for usability and security for a sustained period. For example, a quick search through the first two repos of open sourced League of Legends projects on Github1,2 yielded repos that have not been updated for more than a year, which is problematic given the official game is updated on a monthly cycle3. Open innovation in this case can be great for creating novel approaches to the game, but unless Riot Games wants to dedicate significant resources, it might be costly to ensure that these ideas are not just implemented, but maintained for the foreseeable future.

    1. Coutin, N. (2018, January 12). League of Legends developers [Computer software]. Retrieved from https://github.com/league-of-legends-devs
    2. Coimbra, S. (2017, September 1). LoL Open Source Developers [Computer software]. Retrieved from https://github.com/LeagueDevelopers
    3. Most recent patch news. (n.d.). Retrieved from https://na.leagueoflegends.com/en/news/game-updates/patch

  7. In order to assess what are the main elements that need to be changed for the game to remain relevant for years and years, I would look further in traditional sports and see what are the main elements that constantly change and what are the ones that don’t. From my perception, I would argue that the rules of the game hardly change. I believe the key to League of Legends to become a traditional game is less on design, rules, innovation but more on the ecosystem itself: Promoting iconic players, creating habit of watching the sports between kids that could be passed on to other generations, etc. As mentioned by the author, when it comes about creating new products and new experiences, there are firms like Valve that can better manage this process than Riot Games.

  8. I think e-sports in aggregate has the potential to be larger than most other professional sport leagues in the world. I agree that in order to stay relevant and keep users engaged, Riot needs to enhance its open innovation in regards to League of Legends. As we saw with the Valve case in LEAD, Counter-Strike was essentially created and continuously improved by some of its most active and die-hard players. In the tactical and MMORPG segment, games are experiencing longer shelf lives, but the proliferation of mobile, connectivity, compute technology, and so forth is enabling competition in the space. Riot would be wise to adopt your recommendation.

  9. League of Legends is a fascinating lens to view the rise of e-sports. I think League not only has the potential to have the staying power of basketball but to be far bigger than any-other traditional sport. The logic is two-fold. First, League is not tied to one specific culture and you don’t have to have a particular cultural upbringing to be exposed to League. It is not like Cricket and England nor is it like Basketball and the United States. Anyone with a computer can participate in the League world, and as the developing world continues to develop the number of potential League players develops along with it. Second, League fans have unique fan loyalty because anyone can download and play the game at any skill-level at any moment of the day. Basically, every fan is also a user. It would be analogous to every football fan also playing amateur football. This intimate relationship with the sport creates a unique level of by-in and fan loyalty. In 20 years, parents will excitedly be teaching their kids League strategies and be comparing KDAs (Kill, Death, Assist) ratios rather than shooting hoops. Open Innovation will be a plus if League can deploy it in a way that excites and engages its fan base without tarnishing the soul of the game or the basic structure the fans grew up with.

  10. Great
    -Clearly explained how open innovation is contributing to the development of LOL’s ecosystem. It was interesting to know that there is positive spiral between the Riot and the media by increasing the population through open innovation.
    -Unique point of view to diagnose the company’s possible problem.

    Response to the question
    -I think the Riot still can focus only on LOL because the game has the essence of the sports. By watching the LOL game, I felt that LOL is similar to sports, in that every year has a championship and it is really difficult to continue winning because there is no one formula to win every game in LOL. One small mistake by the defending champions led them to lose. They get excited or become sad when champion loses. There are star players and many players become fan and cheer for their favorite players. These characteristics are similar to sports. As sports such as NBA, NFL are succeeding with effective marketing, the Riot should focus on marketing to continue its success with LOL.
    -I would argue that the company can use open innovation to collect the users’ opinions but should not let them decide what updates should be made because the more complicated the game become, the less new entry. I believe with the ecosystem the Riot has created, the game does not need the drastic changes. One the other hand, the wrong update could lead to its failure, so I would like to reduce the risk, keeping the decision making power inside the company.

  11. Insightful piece that explains the growth and appeal of e-sports. Very creative to compare the e-sports industry to other traditional sports leagues to illustrate the relative viewership and significance of the industry. I find your thesis of breaking open innovation into two parts: tangential ecosystem & actual game design to be a great framework of thinking about Riot’s future strategy. You make a strong point that while Riot doesn’t profit directly from open innovation happening in the League surrounding ecosystem (streaming, subscriptions..ec), there are indirect benefits for sustaining the relevance of the game. I wonder however, of the side effects of opening up game design decisions to an crowdsourced model. In that case, how will Riot sustain its competitive advantage given all of its nuanced design decisions are made in full transparency to competing game design firms?

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