How Does Riot Games Make Money? The Riot Games Business Model In A Nutshell

  • Riot Games is a North American video game publisher, developer, and eSports tournament organizer founded by Marc Merrill and Brandon Beck in 2006.
  • Riot Games generates the bulk of company revenue through in-game purchases, with these microtransactions earning approximately $31 per second. What’s more, the company earns advertising and sponsorship revenue from game tournaments broadcast on YouTube.
  • Riot Games also sells corporate sponsorships and streaming rights to its eSports tournaments. Lastly, the company sells a range of game-related merchandise in its online store.

Riot Games origin story

Riot Games is a North American video game publisher, developer, and eSports tournament organizer. The company was founded in September 2006 by Marc Merrill and Brandon Beck to develop the online multiplayer game League of Legends.

Merrill and Beck were college friends at the University of Southern California who bonded over their love of video games. Post-graduation, the two moved into an apartment together where they discussed the idea of creating their own game. They were particularly inspired by a popular modification of Warcraft III, which was created and maintained by fans but lacked polish and was difficult to find and set up.

Riot games opened its first office under a freeway overpass after receiving $1.5 million in funding from angel investors and family members. The co-founders then made several hires, hosting DOTA tournaments at the university to recruit students who were interested in doing game design or quality assurance work. Initial attempts to pitch League of Legends were unsuccessful because publishers were confused by the free-to-play business model and the absence of a single-player mode.

The game was finally released in October 2009 after six months of beta testing, with expansion into Europe following soon after. The company posted revenue of $85.8 million just two years later, with Chinese giant Tencent taking a 93% stake for $400 million. Merrill and Beck accepted the deal on the proviso that they could operate independently and realize their vision

In October 2019, Riot games announced several new games, including League of Legends: Wild Rift, Legends of Runeterra, and a standalone version of Teamfight Tactics from the original game. The company also operates global eSports leagues, including the League of Legends Championship Series with more than 100 teams across 14 regional leagues competing to become world champions.

In January 2021, League of Legends alone earned Riot Games revenue of $1.75 billion. The game sits firmly in the top ten most popular free-to-play non-mobile games.

Riot Games revenue generation

Riot Games generates revenue via in-game purchases, advertising, eSports tournament partnerships, and merchandise sales. 

In-game purchases

In-game purchases generate the most revenue for Riot Games. These so-called microtransactions earn the company approximately $31 a second, or $2.64 million a day.

Microtransactions are such a lucrative source of income because the company has avoided the temptation to make these purchases necessary to winning its games. Instead, microtransaction purchases allow users to cosmetically enhance game characters or unlock new ones.


League of Legends is also one of the most-watched games on YouTube, with approximately 14 million channel subscribers and billions of views. 

Though the company does not utilize YouTube ads to generate revenue, other sponsors in official game videos are clearly visible.

eSports tournaments 

Riot Games sells corporate sponsorships and streaming rights to its eSports tournaments. The company also makes money by selling tickets to individuals who are interested in watching these tournaments live.

Many League of Legends championship teams are owned by investors with significant stakes in MLB and NBA teams, with life coach Tony Robbins and AOL co-founder Steve Case also making significant investments. This franchising model encourages more investment funding in the platform and a better revenue-sharing arrangement between team owners and the company.


To promote its eSports tournaments, Riot Games has also partnered with companies such as Nike and Coca-Cola to develop a range of branded merchandise.

The Riot Games online store also sells a range of game-related merchandise, including shirts, necklaces, pendants, figurines, posters, caps, and face masks.

Connected Business Concepts

EA Sports Business Model

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Gaming Industry

The gaming industry, part of the entertainment industry, is comprised of three main types of players. From game engines, which help developers build their games. To publishing gaming houses. And gaming consoles. While the prevailing business model for decades has been that of selling the console at cost, and make money on games. Digital games changed the way games are distributed and sold, and it opened up the way to free-to-play models.

Roblox Business Model

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Tencent is a Chinese multinational conglomerate founded in 1998 by Ma Huateng, Zhang Zhidong, and Xu Chenye. Among its various global subsidiaries are companies in the online services, music, and artificial intelligence industries. But it is perhaps best known for its interest in the video game sector – both as a game developer for the Chinese market and the acquirer of several established gaming companies. Tencent is a vast company with a stake in more than 600 companies. Following is a look at some of the companies and subsidiaries it has a majority stake in.

Epic Games Business Model

Epic Games is a gaming company, that develops, publishes, and distributes games. It comprises the Unreal Engine, making money through licensing agreements with developers and creators. Its games (like Fortnite) mostly follow a free-to-play model on PC and an in-app purchase model on the digital marketplace. And its storefront Epic Games Store, taking a 12% cut on games’ sales.

Free-To Play Business Model

A free-to-play is a model that became particularly popular in gaming. Free-to-play is also commonly referred to as free-to-start. For instance, companies like Epic Games have launched popular games like Fortnite’s Battle Royale, which had ingrained a free-to-play model. This is a model that become extremely popular in the digital age of gaming.

Play-To-Earn Business Model

The play-to-earn model is a business model allowing gamers to farm or collect cryptocurrency and NFTs that can be sold on the market. This model has become a standard already in the “crypto gaming industry,” where the blockchain-based games enable token economics to kick in as an incentives mechanism at scale for users to play and be engaged.

How Does Candy Crush Make Money?

Candy Crush Saga is a match-three puzzle video game developed and published by King, a company specializing in social network-based games. Businessman Riccardo Zacconi co-founded King in 2003 after selling a subscription dating service he had also founded several years previous. The initial source of income for King was advertising revenue, but this strategy was abandoned in 2013. Today, Candy Crush Saga uses the freemium model (free to play) of revenue generation.

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