Riot Games, the creators behind the popular video game League of Legends (hereby shortened to LOL) has cultivated and expanded a sustainable competitive advantage. This advantage has the potential to make Riot a dominating force in the scene of the segment it has captured with LOL as well as every other segment of the gaming community.
Sustainable competitive advantage is a concept in business when one has something that can not be copied, is unique, satisfies a market desire, and is sustainable. For example, in the early days of computing, Microsoft was creating the computer, the operating system, and the internet browser. Essentially, this was a monopoly, and Bill Gates was even brought to court over the issue. However, this still applies as a sustainable competitive advantage. Because it came as a bundle and you couldn’t reverse engineer the code, it couldn’t be copied, it was unique, people wanted to buy it, and sans the arrival of a certain other tech giant (Apple) to the scene, was sustainable.
The Field of Gaming
In the world of video games, there is no shortage of fantastic games that are worth every penny. Popular gaming studio From Software released a game called Dark Souls that essentially created an entire new genre. It made a lot of money for the small studio and made it a recognizable name to video game enthusiasts. That being said, once Dark Souls came out, there was no reason that another gaming studio wouldn’t be able to make a game similar to Dark Souls and edge into the market that was captured by From Software.
It’s very difficult to create a competitive advantage in a market where products can be easily imitated. Some have tried to one extent or another and have even been modestly successful for a time. Blizzard, for example, popularized the idea of MMORPGs to the public with the creation of World of Warcraft (WOW). MMORPGs existed before, but WOW was something that everyone had heard of and everyone had tried at one point or another. Since they’re more fun when more people play, while everyone was playing WOW, WOW was the most fun game.
Almost all MMORPGs tried to scrape players away from WOW to make their game relevant. Those games fell flat on their face when they weren’t able to achieve this, and the players went right back to WOW. WOW was a titan; its competitive advantage was not sustainable because the video game market is one of constant change and evolution. Despite the fun it provided many players, more games came out and drew attention until it fizzled and desperately did its best to cling to its userbase as much as possible.
The Riot Competitive Advantage
Riot is planning its sustainable competitive advantage in an area that has been tried by almost no other. It’s made a game in LOL that is played for fun with a dedicated userbase and competitively in esports. There are millions of dollars at stake for the esport teams and millions more in sponsorships. But others have accomplished something similar and fallen out of favor just the same, like popular RTS Starcraft 2.
Oddly enough, the competitive advantage Riot is cultivating lies in its incredible world. It has a history as distinct and interesting as the one we have (with the added benefit of having magic). Out of that world, LOL has 148 playable characters, each with their own life. Everything about their characters speaks to the history and story of Runeterra and how they operate in the game. This isn’t uncommon in most other games, but Riot’s is one that is the most cohesive and downright interesting.
The World Within and Without
Despite its large cast of 148 characters, to get decent and have fun at the game, you don’t even have to know what they all do. The characters rely heavily on easily understood tropes to get the point of their playstyle across. Why can the big catfish swallow up his teammates and swim across the map into a fight? Because he’s a catfish with a big mouth. Why does the giant praying mantis monster pounce on you from where you can’t see and kill you? Because he’s a praying mantis monster. Why does the flamboyant wrestler grab you and suplex you over your entire team? You get the point. Even when the character isn’t a trope, their design inherently puts the point across of what they ought to do.
The impressive thing is that Riot is leveraging the characters and the world for use in new games. They’ve already released two games, Teamfight Tactics and Legends of Runeterra, which heavily incentivize a crossover on its player base. Do you really enjoy playing Kalista, the spear of vengeance, in LOL? Why not try her in the Collectible Playing Card Game? Do you enjoy playing as big hulking guys with lots of armor and big swords? Build a collection of bruisers over the course of a game of Teamfight Tactics. Single-player games are in the works. Are you interested in the backstory of Ekko, child of Zaun and user of the Z-drive, a device that allows him to go back in time in short increments? Play his upcoming platformer game. What about the region of the Shadow Isles? There’s a turn-based tactical game coming out that’ll cover that territory soon.
Riot has been able to do this mostly as a benefit of being immensely profitable for a very long time with a solid game whose biggest cost was footing the bill for seven other games being developed. Seriously, less than 20% of Riot’s headcount was working on LOL in the past few years. Instead of resting on its laurels, Riot reinvested its money into creating other games. They use a shared world to draw people into them with a plethora of games that reach a demographic LOL can’t while also providing more games to people who play LOL.
Other companies have tried and failed to do this. Blizzard created a variety of good games that appeal to different segments of the market. They’re the ones who created WOW. They also created First Person Shooter Overwatch, Starcraft 2, Diablo, and Hearthstone. Hearthstone and WOW actually do share a universe, but the characters within are much less accessible when compared to LOL.
In fact, Riot made an entire website dedicated to telling the lore of the universe and its characters through a variety of short stories, comics, and animations, whereas you can only read about the information about WOW characters through wikis or playing the game – and the benefits of sharing a world were not capitalized on particularly well. Not only that, Blizzard has attempted to create a game that spans all the universes, Heroes of the Storm. However, they shut down the esports section due to a lack of popularity.
The Road Ahead
The closest game studio attempting Riot’s business strategy is Games Workshop and their 40K universe. It has been applied to a great many games that draw in fanatics that consume content in that shared universe and also fans of the genre. The biggest difference between the two is that Games Workshop allows third-party studios to use only specific parts of its brand, and Riot seems to be keeping a much closer reign on their brand than Games Workshop is.
The coming years are going to be interesting for the video game market if for no other reason than to see what Riot Games is going to try to accomplish with its shared world. Fans of LOL have already taken to the game Teamfight Tactics, and Riot chose to open the Legends of Runeterra Beta up to the general public because demand from consumers to get their hands on that game was so great. If they keep up the momentum, their universe might dominate the video game world the way that Marvel dominates the cinematic world.