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Don't monetize like League of Legends, consultant says Exclusive
Don't monetize like  League of Legends , consultant says
August 11, 2014 | By Leigh Alexander




League of Legends has daily active users to rival Instagram and its finals broadcasts see more viewers than Game of Thrones -- across several metrics, it's the most-played game in the world.

But if you're looking at monetization systems, be warned: it's not a good idea to emulate LoL.

Ubisoft Blue Byte's Teut Weidemann has a great deal of experience consulting for online games, studying how they work -- from their metrics to their play experience to their monetization. Using public tracking tools like Comscore, Alexa or TrafficEstimate, Weidemann can crunch numbers that aren't generally publicly available. He researches press releases, conference talks and shareholder reports to get to the meat of metrics matters.

When he plays games for study, he does so at first without paying. "I measure how the game talks to me," he reflects, from measuring the sense of progress and studying the game behavior to friction points and prompts for payment, and he interviews core players. After that, he starts with a small $10 investment -- the most popular entry point -- and maximizes his rewards while buying only the most useful items, and studies how that small investment changes his experience.

League of Legends is fairly open with its numbers, Weidemann says. ComScore and Alexa implement Trojan horses into computers, to monitor users via invisible trackers -- the data isn't always perfect in a vacuum, but can be useful in big-picture studies and comparisons among games.

LoL's players

According to Alexa/ComScore data, most players of LoL are male, and most do not have a college education -- that's because many of them are too young to have earned a degree yet. Officially, over 90 percent of LoL players are male, and 85 percent of them are aged 16-30. Geographic studies and a look at server referrals helps determine the strongest geographic markets for the game (the U.S. and France).

Currently the game has 67 million players, a near doubling just over December 2013. 27 million of those are daily active users; in 2013, that was close to four times as many as the number of users Instagram gets every day.

The game has a dual currency system -- Influence Points, the "soft" currency earned by playing, and the Riot Points, a "hard" currency one pays for. There are rewards for both winning and losing games, and most items require some amount of both types of currency. Players used to be able to earn small amounts of RP through progress, but the company's reduced these giveaways since launch.

Riot releases new champions every couple of months, all available for either IP or RP, with ten of them playable for free each week. Access to a minimum set of champions is important, Weidemann says -- there are hundreds of heroes and players need to learn what each can do in order to be successful. Older champions lose value for ongoing price drops, while new champions are damaged by rebalancing.

LoL's champions

"They release a new champion that is always, always overpowered. So the people who pay for the game buy the champion immediately... and then Riot will go in and slowly devalue the champion until he is 'balanced.' In addition to damaging the goods you just bought, they also lower the price of the previous champion they released," Weidemann says. "I would feel cheated. How come LoL can actually get away with that?"

Riot has freely admitted releasing overpowered characters and adjusting them later, and the player base doesn't seem to mind, even though it makes it hard for players to choose their first champion. The game is very hard to learn organically, and on top of that, LoL's chat, populated with foul-mouthed young boys, was such a deterrent to new users that Riot had to close it.

Riot sells skills for players to customize their favorite champions -- which means until newer players learn about the skins, they might not recognize a champion even if they've already learned his behavior. In fact, even people buying skins (the best-selling item) do not know what the new skin will look like until they purchase it and are forced to research on YouTube. Fundamentally the game is very difficult to learn: "You have no idea what you're doing at first."

Yet LoL's objects for sale are not "pay to win", but mostly cosmetic items, or boosts to the experience of competition rather than the statistics of them. Players love to collect champions, cite enjoyable team play and gratifying PvP. They also find teaming up with friends to be social -- although multiplayer PvP can be inherently anti-social, players share rewards from successes, and participate in a "tribunal system" to deal with problem players together.

Giving too much away?


As of 2013, League of Legends had earned: 70 million registrations since 2009, 32 million MAU, 12 million DAU, 3 million PCU, $1.32 ARPU and $624 million in revenues. The average revenue per paying user on popular games is about $35: Crunch all these numbers and get 1.2 million paying players, a 3.75% conversion rate. That's remarkably poor as rates go.

"Usually, conversion rates for client-based games is between 15 and 25 percent," Weidemann reveals. "World of Tanks has 30 percent. It could afford to have 1/3 of the customer base and have the same amount of money as League of Legends."

LoL gives away too much for free, Weidemann suggests. The company could aggressively increase its revenues across even a smaller player base, and chooses not to.

"Riot doesn't care. Optimizing monetization is not the top priority. They monetize purely through their reach. So it only works because of the large user base, and if you don't have that user base or don't expect to, you should not adopt their monetization. It should not be a role model for your monetization system."

"But you should dig deep and learn why it works, and where the mistakes are," he suggests, "and why they can afford to let the conversion rate be so low. They can afford it; you might not."


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