Lemonade Stand - The Man Who Made League of Legends | Ep. 082 Lemonade Stand 🍋

Episode Date: September 30, 2026

On this week's show... Aiden fights C-long, Atrioc dives mid tier 2, and DougDoug goes fast 9. Featuring Marc Merrill, co-founder of Riot Games. We launched a Patreon! - https://www.patreon.com/lemonadestand for bonus episodes, discord access, a book club, and many more ways to interact with the show! Episode: 082 Recorded on: September 29th, 2026 Clips Channel: https://www.youtube.com/channel/UCurXaZAZPKtl8EgH1ymuZgg Follow us TikTok - https://www.tiktok.com/@thelemonadecast Instagram - https://www.instagram.com/thelemonadecast/ Twitter - https://x.com/LemonadeCast The C-suite Aiden - https://x.com/aidencalvin Atrioc - https://x.com/Atrioc DougDoug - https://x.com/DougDougFood Edited by Aedish - https://x.com/aedishedits Thumbnail by Cheyenne DeWolf - https://x.com/cheyedewolf Produced by Perry - https://x.com/perry_jh Segments 0:00 Intro 5:15 Early Mistakes 11:32 Why Marc Came Back 19:15 2XKO Expectations 26:15 Live Games Green 30:54 The State of Gaming 38:11 Scaling into Growth 41:05 Philosophy Around The MMO 50:05 F2P vs $500 Skins 54:10 Tencent Ownership 1:03:00 International Complications 1:13:39 Working At Regional Levels 1:20:35 AI Concerns 1:24:56 Esports 1:37:42 DOTA All Stars Saga 1:48:38 Outro New takes on Business, Tech, and Politics. Squeezed fresh every Wednesday. #lemonadestand #dougdoug #atrioc #aiden Learn more about your ad choices. Visit podcastchoices.com/adchoices

I'm Ina Garten, and each week on Happy Hour, I invite old and new friends for a drink and a fun conversation at my kitchen table in New York City. On this week's episode, I'm joined by Andy Baragani. We talk all about how he started his career as a teenager at Chez Pines to becoming an internet heartthrob from his cooking videos to opening his first restaurant in New York City this fall. New episodes of Happy Hour are available every Wednesday. You can watch on YouTube or listen wherever you get. your podcasts. Cheers. I'm pretty excited

about this one today. League of Legends, TFT, Vallorant. What else? Arcane. Unbelievably popular TV show. All come from where?

All these things have been popular and some of them have ruined our lives in a way. And we have got the guy at the source. One of the co-founders of Rite Game and Mark Merrill has joined us today for, I think, a pretty wide-ranging, interesting interview. The man responsible for Brandon's grades in college.

This is a wide-ranging interview talking about the building of Riot Games, the state of the current games industry, the future. It's incredibly interesting, and we hope you enjoy. Welcome back to Lemonade Stand, everybody. We have another exciting guest this week. We are joined by Mark Merrill, the co-founder of Riot Games. And I was going to attempt to read off your other titles, but I thought a good place to start was you just briefly explaining your

trajectory at the company. Because my understanding is you kind of pulled back and left for a while, came back. Can you just explain what you do at the company now and what led up to that? Sure. Yeah, well, you know, started the company back in 2006 with my business partner, Bannon Beck, and then grew it for many, many years. You know, we created League of Legends. You know, we created LCS and the OEC and a bunch of our broader e-sports leagues and arcane

and, you know, games like Valorant and Team Fight Tactics and Legend-Oterra and, now Riftbound, as well as League of Legends Wild Rift, and now 2XCO. So we got a lot of stuff that we've launched over the last 20 years. But Brandon and I stepped aside as co-CEOs at the beginning of 2018, sort of went into founder mode, you know, we're chairman as a board for a little bit, but had to come back in operationally a couple years later. First, it was to sort of try to mitigate a couple things that were going off the rails, but then I continue to get more and more sucked in. And for the last, like, five years have been sort of full time. and we had to replace part of the leadership team

and start a whole new chapter of riot to really get back to our fundamentals that really built the place and I think are really important for the long term. So can I ask, you're not CEO of the company right now, right? Correct. But you are sort of in a key executive leadership decision-making role.

Yeah, I'm the chief product officer. I'm also the co-chair. And so, you know, as Brandon and I are essentially our co-chairs, we, and one of the things that boards do is we hire and fire the CEO as well. And so it's sort of an interesting thing where, you know, essentially Dylan Jeddhedaio, a riot CEO, who's our former CFO,

and I essentially sort of co-lead the company now as well, very similar to how, you know, brand and I did, you know, for many, many years when we were operating together from 2006 to 2018. So, yeah, companies go through interesting chapters in different eras and, you know, could get into a lot of stories about that to the extent it would be fun and interesting.

We have a million questions. So thank you so much for joining, first off. Thank you. We all have a long history with Riot games and League of Legends, and it's all part of our careers from athletics. We have a lot of questions, but where do you want to start? Well, I think from what you just said, I'm curious why you want to be so involved still in a way,

because it's been so long. Like I heard from an employee that you still, there's like this thing when you got hired at Riot called D-Nube, and it's like your onboarding process, and you still go to every single one. or like you attend and introduce the new employees to the company. And I think for somebody that's like this far into it and to hear that you came back and you're describing like falling, like kind of falling back into it, why you're so engaged. Yeah.

This is sort of a long story, you know, around the why. But, you know, Riot is a mission driven company. So, you know, when Brandon and I started the company, you know, we wanted to build what we originally called was, you know, sort of the most player focused game company in the world. and because we felt underserved as players where, you know, we loved games like Starcraft and Warcraft 3 and EverQuest and, you know, all sorts of these great online games and CounterStrike and whatnot, eventually Dota.

And as players who were spending way too much time, you know, compared to other things we're probably supposed to be doing, whether it's school or work or whatnot, playing online games, talking about online games, we would often, we would care very deeply about these games that we'd play and we would want to help these games succeed. We'd evangelize to our friends. We'd go on a message boards and we'd write big posts about different ideas that they could do

or we'd try to volunteer in different ways. And the vast majority of the time, we felt that a lot of times the companies really didn't care or acknowledge the types of things we were saying or sort of perceived that we as players didn't really matter. And we really didn't understand for a long period of time sort of why that was the case. And anyway, to make it long and short, we sort of aspired to build a company that would try to put players at the center of decision-making, and that ended up becoming riot

and drove that sort of experience as players tried to really anchor a lot of the core philosophies that we think are really important in the organization. And then, you know, we started the company at 24 and 25. We were totally underqualified what we were trying to do and, you know, made tons of mistakes, of course, but we're fortunate enough to build League of Legends after raising some money from VCs.

And I asked some of those mistakes. You might have just like, what is a mistake that jumps out to you from 24, 25, starting this brand new company. What is something you remember painfully? Well, so Brandon and I didn't really even trust ourselves, you know, as sort of executives and or product leaders, in fact, and game developers, because, you know,

even though we both loved games, we had never actually, like, worked on any software. It's the first time. Yeah. And we had never started a company before. And so, you know, the guy that we had hired to, you know, sort of check the box from a credibility standpoint, because we need to put on slides, and we're going to raise money to angels and potential VCs and whatnot.

You know, they'd obviously be like, well, what do you guys know about building games? Like, how are you going to possibly do this or pull this stuff? We'd be like, great question. This guy is this expert. And we found them because everybody that we knew in the game business wouldn't join the company. So we found him through a recruiter and we did this whole process. And once we actually raised a small seed round, he agreed, oh, wow, okay, like I'll come be, you know, sort of this third, you know, sort of this first key hire to be your EP and CTO. the adult in the room or something?

He's like... More the game developer, sort of executive producer and CTO. But within three months, he literally was going behind our backs, going to EA, or sorry, to Microsoft and to PlayStation and being like,

hey, I got this little studio. And rather than doing what we had just raised money to go do, which is build league and build riot and do this thing, he's like, I will pitch you guys some Xbox Live games or some PlayStation games or whatnot. And of course, once we found that out, out, you know, we're hiring people trying to go do a thing, trying to make progress, you know,

daily on everything that we're doing. We have a fixed amount of other people's money that we have to allocate effectively to solve problems and make progress. And so we had to move in a different direction. He was trying to pitch like this studio working on something other than League of Legends. Totally. And so immediately. Yeah. And so we're like, wow. So, you know, of course, had to terminate this employee moving a different direction, right? And when that happened, of course, there's a terrible conversation with our board, which is made up of angel investors, that their number one concern was our credibility and ability to do this. And then you fired the guy.

He was supposed to be the expert. No, no, no, trust us. He's actually, he had no idea what he was doing. You know the credibility guy? No, so he's this. We're like, hmm. 20 year olds got it. Yeah, exactly.

But it was a great forcing mechanism for us to roll up our sleeves and then be like, we have to go figure out every single thing about everything or else we're going to fail. And if that lesson didn't happen so early, we absolutely would have failed. And, you know, I could get into tons of stories as to why. But that's one example. Yeah. We then, you know,

aspired to try to mitigate risk by just focusing on being a game developer because being a publisher and taking the game to market ourselves really increased scope, increased risk. We had to have a back-end technology platform, right, with an account system and chat and matchmaking services

and we had to write all this other software. We didn't want to do that. So we wanted to, we pursued this parallel financing strategy talking to VCs and talking to publishers. But every publisher, that we talked to at the time in 2006, 2007. They're like, what do you guys mean you're going to make a game that's free?

Like, that's insane. And they're like, wait, you're going to be PC only? Like, what are you talking about? They're like, 80% of all game hours are single player, you know, and like consoles the future, like look at the math, you know, all this different type of stuff. And so, and then people were like, hey, what about mobile? And, you know, and so, and these are smart people with experts

and were the newcomers to the industry, right? And so, of course, that can often shake your confidence and whatnot. But, and I could tell so many stories about this, but we then realized we had, we couldn't give the publishers the keys to the kingdom because then we would fail because they had no idea what we were talking about in terms of putting players at the center operating with sort of this direct-to-player philosophy, regular patch cadence, you know, just doing things very, very differently, free game, right? Where we'd sell virtual goods, all cosmetic.

They're like, that's dumb. And most VCs told us that was dumb also because they were like, like one VC put it pretty succinctly. They're like, wait, you're going to make a battle arena game where 19-year-old college kids are killing each other online, but the way you're going to make money is you're going to play dress-up doll? And we're like, I bet you're getting cooked when he said that. We're like, kind of not really.

And they're like, yeah, good luck with that, right? And so, you know, classic entrepreneur story, we're used to, you know, getting everybody to tell us no and why the thing doesn't make any sense and all that. But the thing that gave us conviction to continue to go and be like, we think this actually does make sense is we'd put our player hats on. And we're like, yeah, but this makes sense to us.

And so if we could solve that, and if we could do this, and if we could do that, then wouldn't that be amazing? And that orientation and perspective has always been this guiding light and North Star that I think has helped us figure out how to build a company, how to build products, how to build e-sports, how to go build arcane, how to build music, like whatever it is. We've found over and over and over in all these different areas, the things that we can't sacrifice is that passion, is that player understanding. is the immersion in our community and caring for the IP, we can augment with craft, we can augment with experience in different people, but you can't teach somebody to care. And so this...

Can I ask you directly, though? Doesn't that get a lot harder, the bigger you get? Absolutely, which is what the perennial challenge has been and why I came back. It's because this is like my dream company and my dream industry way beyond my wildest dreams of what we could possibly accomplish. And with scale and different challenges,

is when things start to go off the rails, you know, in different ways or there's decisions that are being made that we don't necessarily agree with what I. It's interesting to be like, well, is this just what happens as companies grow? Like, are there ways that we can solve this problem or just is the sort of slow to send

into mediocrity inevitable? Or are there things that we can do to counter it, right? And that, you know, I think that sort of anger and or frustration and sort of desire to make it better to be a player is the thing that people, you know, pulls me back in. over and over and many people, and is the engine that drives so much of so many rioters day in and day out to sort of try to solve problems, do the hard things, figure out how to, you know,

do right players despite all the challenges, despite the entropy that exists in the organization and how in the fast-moving world where the bars only going up. So I think I want to acknowledge that what you're, you seem to be successful in what you're saying through, I talked to like a handful of employees before we did this interview. And the sentiment of this like framing of, oh, look at it from the player's perspective, the player's king, like that is still holding strong now, which I think is like really impressive to hear to like be able to maintain a value for that long after you've scaled that much. But I think a sentiment also that I've got from employees is that over time internal vibes at riot have shifted. And

I can say this is somebody who worked in e-sports for a long time. time and saw riot as this crown jewel of a company and career. Not to say that it's, you know, not still a great place to work, is that this is like my forever career once I land there. Yeah. And that sentiment shifting a lot in the past like five to seven years. And it no longer feeling like it's this special place that's above all these other gaming companies. I wonder if you can do you feel like that sentiment is like fair? Do you like, because you sit at it

from a very different perspective. Totally. This is why I had to come back. You know, and because I, you know, succession planning is really hard. And,

you know, I thought we did a great job of it previously. And I thought, you know, that part of the goal was to institutionalize the things

that make the company special. And we didn't succeed at that. And, and so, you know, part of what you're talking about when you're talking about vibes is I interpret that as

culture. You know, it's sort of this invisible framework where everyone just kind of understands what's expected, what's important, where we're all aligned, you know, oftentimes where we don't need these incredibly robust processes and super detailed frameworks, those other things, because it's like, yep, like we can align quickly on what matters for players so we can go make good decisions, etc. That, to your point, is very hard to scale. And culture is an outcome of your leadership, your strategy, the structure you put in place, your systems, and of course your people. And it's about how people actually behave on the day to day and does the company incentivize the right things and do we punish the wrong things, et cetera, and how and what do we reward? And that goes to all these systems and structural designs. And when there were significant structural and systemic changes and strategy changes that were put into place, it had a tremendously negative cascading implication. Can you give an example? Yeah. Well, so just to make it a little more tangible, yes. So Riot was originally built as a matrix, right? We had a philosophy around organizing work by.

audience need. And so, you know, the principle is League of Legends player. And that means, you know, every aspect across the whole value chain, from software creation to IP development to how we build should be oriented, to publishing, to distribution, to marketing, should be like, how does this thing manifest for league players? And then the same thing would be for the Val player, right, or the TFT player or whatnot, because everything starts with them. And that, I think, is paramount and absolutely critical to remain true in order to have these dozens of teams or hundreds of people or you know, a thousand people that have all these different capabilities across marketing and publishing and e-sports and international and different languages and time zones and engineering

be able to collaborate effectively to do great things for players. And so the company changed the org structure with the goal of simplifying the org and, you know, created five, what are pillars, where is the name for it? In other word for pillar is silo. You know, so it's, it was games, it was e-sports, it was entertainment, it was publishing, and it was enterprise. And then there were presidents that were named for these business units. Those aren't business units. Those are functions, right? And that have different capabilities. And then the systems that were evolved were to create, essentially like to manage the company through budget and headcount. And with that did also was then create this system where people wanted to, they started to be rewarded for having

more scope rather than solving problems for the audience and delivering value. That is catastrophic to culture, right? And then there were distance created between, say, development and publishing, which are two sides of the exact same coin, right? Because you need to build the thing. If you're a dev and you're thinking all day long about you're obsessing over the problem and how do we go do this thing. Well, you need comms, marketing, et cetera, communication to deeply understand that, be on the same side of the table with you and help players understand what we're trying to do and why in an incredibly authentic way. And when they're, you know, they have different incentives and different goals and it's in a different building.

You don't know each other. They're working on some other campaign that has nothing to do with the thing you're doing. Right. Like that type of friction started happening all over the place, which then led to bloat, right? And then these incentives, we grew of cost 45% in one year, which is insane on a large company. The cost of the company grew 45% one year. One year. Is this COVID?

Is this? This is before COVID, right? Because the conclusion was, wow, everything we do works because it sort of was, you know, at the time. And therefore, let's go give everybody this huge amounts of budget and go. and just do more, right? And a lot of the industry, I think, was suffering from some of that same dynamic and some of this correction that's happening,

I think manifests, I'm sure, differently at different companies. But in our case, it was from this type of stuff, right? And that then caused a bunch of talent to leave. Meanwhile, in the sort of the 2020-2020 era 2, VCs pulled up a money truck outside of riot. Also, and we're like, you guys are the best company at doing one's live service stuff. Like, let's give you these massive checks,

go please start these companies. So a lot of ex-Riot companies and startups were founded, oftentimes without an incredibly compelling idea or strategy for how they would go build audience in the game that they'd even build and whatnot. And so a lot of rioters were leaving, they're sort of this dual situation. Or really three things, like leadership change, massive structural changes, you know, and then a lot of incentive for people to leave and where people are like, hey, we're making all these changes that I think are really going to fundamentally break some of the elements that are really important in the organization.

I don't believe I'm out. And so we've been working on correct. these things and we've made huge strides over the last three years in particular, but the yield on all this stuff is deferred and it takes time. But I'm incredibly confident in terms of where we're going organizationally and we can look across a lot of what's happening in our in the vast majority of our games and the direction, the quality decision making 19% of all new riders that have been hired in the last two years are boomerangs, people that have been at riot before and are coming back. So the gravitational pull rather than repelling people has actually reversed and people are coming back. And because they hear

it, they talk to people, they sort of understand, oh, we're getting our mojo back, right? Leagues up, vows crushing, riff-bound's crushing. TFT has some challenges right now with some of the real conversion, but in general is an incredible game, right? Like, I could go through the whole portfolio and there's just awesome stuff happening. We've got awesome stuff happening on the entertainment side. Our R&D pipeline is incredible, you know, which, of course, you know, people don't have exposure to, you know, But that's all happening. But again, the yield is deferred, right? And so, but those types of things, I was like, you know, riots's too cool to have these things happen.

And, you know, so, but, you know, I couldn't just criticize and, you know, on the sideline and, you know, worked with my wife and whatnot who was also an entrepreneur to be like, hey, can we, does this make sense to go back, you know, and sort of do this stuff? And when all the conditions sort of lined up on the family side and, you know, we're, able to, you know, bring Dylan in and sort of partner in the right way. You know, we've been doing a bunch of, you know, cultural and company-wide transformation stuff, which I think is having positive yield. And we got a lot of cool stuff coming. So, I mean, it's interesting. You mentioned the R&D pipeline and, like, what people don't have an eye on. Because I can understand the general sentiment of, like, you're making giant changes at the helm of a company. And it takes a long time for those things to make their way throughout the organization. I think

maybe unfortunately the big public stories around Riot right now are things like live development on 2XCO being cancelled and I did want to ask about that specifically because one one employee had talked about

the feeling of that game being held to expectations by people higher up that this needs to hit some sort of why isn't this performing in the realm of a league or a Valoran when that game, it's a fighting game at the end of the day. Totally.

And like, let's say that game, like, what we'll call the ceiling of a fighting game, street fighter. Like, let's say 2XCO is like street fighter level successful. It's nowhere near League or Valorant. So what were kind of the internal expectations for that game, the justification of like such a big budget, the long development timeline.

I would also be curious how much of the decision around sunsetting that game came from what you're talking about of needing to reset broader culture versus this in a microcosm. as a business. Yeah. So yes to both things, right? So 2X is a really interesting story, right? Because the original premise, right, for 2X was, hey, like, let's kind of take Rising

Thunder, simple controls, cool, awesome, you know, concept relating to like sort of a one-v-one fighting game that's sort of easy-ish to play, right? But still has depth and sort of mastery based on all sorts of different types of things. Let's, you know, have the League IP with the, you know, with the Canon Brothers. others and you know add a cool sort of riot style competitive ecosystem and so and let's go you know and you know we bought radiant you know back in 2015 when we started partner with the cannons and to the point around scaling and then different sort of leadership paradigms and different goals and whatnot with changes and leadership or whatever there wasn't alignment on the strategy right which then

caused managerial sort of fracturing, right, and the team to kind of be on their own and to hear from different people with the company. Should we, are we doing the, are we moving fast? Are we doing the sniper shot that needs to be incredible? You know, there were all these different statements around. And so, you know, we've got nobody to blame but ourselves, right? It was, you know, I think we had a window to do some great things to really help, you know, the fighting game community. And then Street Fighter 6 came out, right? Which was something like eight years after we started working, you know, on 2X. And so, you know, but we had an awesome development team of really talented people that did

great work that made a beautiful game, you know, and so, you know, and we'd already communicated all this stuff to players. And so we're like, you know what, let's just keep going and let's give it to the community. Let's see what happens, right? And, you know, and so one thing that's important with 2X, right, is, you know, it clearly wasn't, it resonated with some players, right? but not nearly enough players, to your point, in order to justify the type of sort of live service,

sort of long-tail approach that the game was designed to do. And so we're like, let's just pivot. Let's sort of create this box. Let's give everybody a refund and say, hey, sorry for that we weren't able to achieve the incredibly high aspirations that we're trying to do for the fighting game community. But we love you guys.

Appreciate. Hope that you'll play this game like many other sort of box games for years to come. and, you know, here you go. And sort of sorry, we let you down, right? It's sort of the orientation of what happened there. You know, and so, but again, to the point around, like, yield being deferred, the, these things, these games and whatever, like, they take a lot of time, right?

There's a lot of complexity. And, you know, just like the R&D pipeline, like, we always have to operate sort of many years ahead of sort of where, you know, what players are experiencing at any given moment in any particular game. You know, so it's really not reflective, I think, you know, of sort of where we're going and the different things that are happening, you know, or will happen in the future.

In that long trajectory of that game's development, what do you, like, if you could go back and change a couple things, what would be like the key points as you think that sent it in the wrong direction? Was it a broader company culture? Or were there a few things with how you guys approached that specifically

that just ended up going down? or was it Street Fighter 6 just banging? No, I think if we came out like, you know, an idea like we should have sort of years before Street Fighter, I think we would have really made a really significant impact, you know, on the community. But step one is we have to be aligned on the product strategy. Who's the player? What are we doing?

What are the critical choices? And then are we building, are we actually building that thing, right? So sort of really be clear. And then are all the different aspects of the company aligned is what we're doing is why, right? And then let's support the team and help him to accomplish, you know, what we're trying to accomplish. But that wasn't happening, and that's part of that fragmentation of riot broadly. It was sort of very inconsistently, right?

Because acquisitions are difficult also because there's, you know, there's expectation management and alignment. And, you know, when it's when something is more homegrown, it's sort of easier from a cultural alignment standpoint, the expectations are aligned. Whereas an acquisition, like riot hasn't been very good at acquisitions. You know, we could talk about high tail, right? And whatnot. And so, and again, a lot of this is like the, hey, wouldn't it be cool if we could, you know, manifest these incredible players. dreams, right? And they've been making it better to be a sort of a Minecraft style player, etc. And but execution is the thing. And so, you know, it's not like we have any short of

ideas. We have a throughput problem. And the whole company's focus needs to be around creating excellence because the world doesn't need more mediocre shit, right? Like to your point, there's 20 plus thousand games launched on Steam every year. There's a bajillion streaming services. There's YouTube. There's all these sports. There's incredible amounts of music. There's Netflix, etc. There's podcasts. There's podcasts. Rividing podcasts. You know, but the point is, it is a very competitive media environment, right? And so, and we need to make something so compelling, so cool, right, that like millions of people need to spend tons of time and often, like, associate their identity with loving this thing, right? Being like, I'm a League of Legislature,

I'm a Valor player. It becomes a meaningful part of their life. That is an incredibly high bar, right? We have to deliver real value. And that's what riot needs to be tuned and optimized and focused on doing. Right. So we're going to take big swings. We are taking big swings. You know, but that also doesn't mean taking forever, you know, which is a whole other thing, right? So that's why execution matters, which is why the strategy, the structure, the systems, the people, and how we operate, you know, really, really matters. And that's why cleaning up a lot of how we've been operating is so important, you know, as we continue to evolve. I want to drill into that sort of to go off of what Aiden said in your answer to the

question, which is that I think there's this perception about 2XCO that you guys would simply not be happy if it was a single rather than a home run. Like if it really delivered, but it was for a small amount of players, that that would not. And is that, you're saying that's not the case, but it's not true. Yeah. So as an example, right? So, but I understand why people perceive that because that was some of the messages that the team was getting at various points in time, right? And so the, you know, one of the things that

Dylan and I did when we sort of revised the strategy of the companies, we made it three things, right? First of all, we changed the mission to, again, get back to the simple thing around, we're here to make it better to be a player, not about us, about them, right? Then we created what we call it the evergreen strategy. It's three things. And riot should only do these three things. One, live games green. It's simple. It means every game, right? League, Val, TFT, Legends of Rinterra, rip-bound, et cetera, needs to be effective and healthy and meeting the needs of its players, right?

And that means effective team. It means, you know, serving players. That doesn't mean infinitely profitable. It means sustainable. Because the whole point is keep serving players. That's it, which means break even or better. You know, we'd like it to be better. But the point is, is keep serving players

because when you take the long-term perspective, just like with League, league didn't, it wasn't Pokemon Go. You know, like it was incrementally bigger in month two than month one. and then incrementally better in month three, right? We grew not because we're great at acquiring players. We're great at not losing them, right?

It was so much value and players believed, wow, we're adding content and these champions are cool and I'm having fun and I want to go bring in my friends and oh my God, they're doing the e-sports and these events are crazy and the April Fool's thing and, you know, and like they were having fun and pulling people in. That's what we need to do. Because once we are stable and can serve players,

we can then do lots of things. And the universe opens up for the team. Whereas if your team's massive and we're way under water and we have no chance to get to green, what are we doing? Right? And so a lot of people will be like, oh, you need no market. Marketing is irrelevant if you don't retain players. People have too many other options.

And this is a really important thing for everybody to understand just from sort of a, you know, a business product perspective, et cetera, is, you know, like there's a reason we don't go do Super Bowl ads or whatnot for league or for Valor and whatnot because those games are not for everybody. These are hardcore games, right? And if we like spend a bunch of money to go get all these random people, you know, to come try and download the game because we have some sick trailer makes it cool. They don't just bounce because, you know, you got to want to grind ranked and you got to

understand these things and you want to master these champions. But if you love mastery and you love competition and you love sort of MMO style PVP that sort of boiled down into a 30-minute session, it's the best game in the world for that and it needs to be. Right. But like that's the orientation for every product. We have to be incredible at exactly what we're trying to do, but we shouldn't try to make something for everybody. And so anyway, these are the types of things that we had to go make true within the company again because we weren't always operating consistently with these types of principles, right? And these things are becoming more true again. So I believe you, this idea of like just making a game that is sustainable, but with the amount of investment

that went into 2XCO specifically, I'm wondering what is like, like, if we could pick a number, like, what would have been the number that keeps that game alive? Well, at their cost structure, it would have been in the high hundreds of thousands, like it was, or if not millions. Like it was, it was, you know, it was, it was. The problem seems to be it was too expensive. Is it?

Too expensive, too big a team. Yeah. And so, and there's a bunch of reasons as to how to make, you know, compelling things for less, right? And like there's a whole craft and competency around that. And it's one of the reasons that there's a lot of churn in the industry, right, in a lot of ways. Like a lot of these teams are too big, you know,

and taking two biggest swings for too long with too much money. and that is a problematic challenge, right? And so a lot of, as a lot of these big efforts fail, companies are, of course, retooling and being like, all right, like, what else? What do we do from here? Anyway, we can get in all that. But like, that, but demand is still growing.

You know, and so, like, on a lot of the demand is often being captured by other great experiences. Boredogs, right? It comes out, right? Or all the other games in the indie scene or when I, like, there's, you know, or some of the big live service titles that are incredible and, you know, have a large gravitational pull, such as league and Val, and, you know, insert, you know, wow forever.

I'm playing the shit out of that again right now. You know, and anyway, all these types of things. Well, I want to dive into it. I think that's a really, I would love to hear your take on this given your position. State of the industry right now is a tumultuous time of rapid change, many, many layoffs across the industry, things moving countries, live service changing. The business model changing, give us your 1,000-foot view of the games industry right now

and what you think is happening. What is the tectonic place that are moving? Yeah, so I think a lot of companies really over-invested and really took some big bets and just weren't that effective, right? Like they, I think oftentimes lost sight of sort of, you know, who the core player is or built things, you know. Do you have an example in mind or do you want to say? You know, like a lot of the big high-profile, you know,

sort of challenges, you know, that sort of maybe sort of come out. to go to an audience or just don't, even though they cost a lot, right? Like, like, you know, those types of things are what happens when you, when you take big swings and you're just totally wrong, right? And you miss. And so that's happening all over the place, right? Which is then, of course, causing companies to pull back and to reevaluate. And then also, of course, the VC capital, which was funding a lot of the boom in and around startups, such as, like a lot of the X Riot Studios and whatnot, a lot of that capital is dried up, right? They moved on to AI and different things like this. And so therefore, you know, unfortunately, for a lot of really talented devs, right,

that have been pouring their hearts and souls into creating awesome things, or really believing what they're doing, right? Like, there's a lot of jobs being lost, right? And a lot of sort of retooling. But, you know, I think the sort of positive silver lining, right, is, again, demand is still high. And, but there's just the bar is going up for what it takes to actually deliver something that will break through. There's a lot of great games. that, you know, get made and shipped and that just can't find an audience to become sustainable or to justify the continued existence of studios, right? And so making a great game or a very good game is necessary but insufficient, right? You have to have mechanisms to sort of have enough

of an audience or to keep your room bringing people back, right? And so the, again, the silver lining on that is competition is good for the end user, for players, right? And so companies are forced to innovate, to force to think about how do we get better. And, And, you know, it's like it's going to be solved. The demand is going to be met by the indie scene or some of the big companies that can figure it out, right? Or competition from international markets. You know, there's a lot of great capabilities coming out of Asia as an example and a lot of great games. And so that's just what's happening.

It's this changing dynamic to sort of better fit the sort of supply side with the demand side. How do you think about that from a really big company, though? Because you mentioned the indie scene. It feels like it's a, well, it's still. obviously challenging for each individual developer. On the whole, Indy has taken up a larger and larger share of people's playtime. And that's going to continue. And you see games like Peak or these small teams or solo dev teams that are coming out

and getting millions overnight through word of mouth. How, you know, you're a bigger ship that's harder to steer. How do you think about this competition coming from all these angles? Yeah, I'm way more concerned about the sort of competition coming from the Indy scene than I am from, you know, the big incumbents, you know? And like, you're going to have your big GTA-6s that are going to crush and suck the light out of the universe for a while because it's going to be awesome. you know, and or the Wow Forever's, you know,

and I'm thrilled that they're, you know, having a resurgence and, you know, and stuff like this too. And so those types of things can and will happen, you know, but I think a lot of the new growth and a lot of the innovation oftentimes is going to be driven by the smaller players. And one of the things that's happening, right, is smaller teams can punch above their weight and do a lot more than ever before

because of the increase in improvements in tools and capabilities. And so, and I think that that's awesome as a developer, right? Like the small elite teams can go do it. But, right, again, that just also means increased noise. and so there's a lot more games, a lot more expectations that'll keep going up and it's hard to get noticed.

And so how do you break out, right? And that is a, that's just a really difficult thing that many companies are also going to try to really struggle, which will likely lead to new innovations in distribution, right, or some new publishing mechanisms

or interesting labels that are, like there's going to be all sorts of interesting innovation. Or, you know, again, if you build something that's so incredibly cool that it just sort of, you know, lights the internet on fire because of how, connected the world is, you know, how quickly, like, things can move incredibly fast, right? Like,

chatypte was launched with a tweet, you know, or an ex post, you know, just like out it goes, right? And then it was, you know, one of the fastest growing products in history of the world. And that's because it was mind-blowing, right? Because nobody had seen anything like that before. And it's obviously hard to hit something of that caliber, you know, but the point is, is, if you build something truly great that really resonates, it can move fast, right? And you're seeing that with arc raiders that popped or, you know, war dogs or those of things. it's very hard to sustain, you know, over the long run also. And so a lot of those games also

will pop, but then, you know, sort of fail to sustain over time. So with those games, I think they, in a way, they only need to pop at the beginning a lot of the time because they're not free to play games. Totally. And the seems like the core thesis for you guys for a long time was free to play model, cosmetic items, that is what will sustain us. It seems way harder to do that now.

Yep. Is that something you guys are considering changing for other projects? So we've never had a strategic imperative to only make free to play games. Okay. So, you know, a lot of times, like even when we're just the League of Legends company and we used to say that the S in games

for Riot Games was aspirational, we jokingly called ourselves a riot game, you know, you know, we would have these presentations internally, right, where we'd say like many companies or many other, you know, the media or whatever, they want to like brand us as, oh, it's a mobile company, right? Or we're a strategy game company,

or we're a PC game company, or a free to play company. We're like, no, we're not any, of those things. We're not defined by genre, you know, or platform or business model. We're defined by one thing, the audience that we're trying to serve, right? People who love games, who are like us, right, who want to make, who believe games are a meaningful life pursuit that want to go to these, like, awesome e-sport events, that want to go deep that are the most educated on the market. And we'll do any game, any genre, any business, any business model to serve them well. That's why

we built our cane. That's why we built e-sports. That's why we do music. That's why we're doing different genres, right? Like, it's all because, any, any, business. And it's all because, of that aspiration. And so, and we are working on things that are not free to play. And, you know, because the business model

should fit the game. And it's the type of lazy thinking that can also happen, right, at an organization that isn't, you know, incredibly tuned to the nuances of what actually matters

where, you know, that can become a meme internally. Oh, like, we have to make everything free to play. Or we have to go do X, Y, Y, it's like, no, we don't. Right? And that's where the sort of

trying to build the mechanism to really empower our teams to have great player empathy to do the thing that is great and feels great for players. That is why that matters so much. That's why I go to Denube every week and talk to every new rider. But that is also not a scalable system. I do those things for all these reasons that like to meet rioters. But we need to help build these systems and structures

and train lots of leaders to help make great decisions throughout this now 4,500 person company. you know, there's 20 offices around the world with a lot of different games. Like, and that is just, that's a challenge that, you know, we're still working on 20 years later. More for this show comes from Shopify.

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How are you thinking about game development like team size, both with the indie size, the indie competition, but then also what you're saying about 2XCO, how ultimately just with the size of the team, it needed however many more times players. Is there now a sense of shifting how you develop games of keeping the teams smaller or maybe smaller for a longer period and then you churn, you open a money funnel and pour it at them? Like, how do you do this and compete against Indies? because presumably you're not just going to break the company into a hundred, five-person teams. Totally.

All of our successful games have had like reasonable team sizes at launch and then scaled into the growth where you're trying to like hold on to the rocket ship, so to speak, right? And that's a way better approach than, you know, sort of overinvesting in advance before you really validate that the thing can sort of work and the same because then the recalibration is terrible, right? And really painful. And so, but that, of course, is a challenge for teams too, right? because launch is the start, not the end, right? And that's oftentimes after a multi-year challenge

of like painstaking, tons of work, thousands upon thousands of decisions and all these people pouring their hearts and so wanna make into thing. But you gotta have a lot of gas in the tank, you know, as a team to be like, all right, like the second we go live with players, right, which really is beta, it's go time, right?

And so the muscle also of deploying internally and getting play tests and constantly patching and validation and like, feature development velocity goes to near zero the second you have real players because bugs show up right it's like running through the pipes you know water through the pipes the first time and shit starts to break everywhere you know and everybody's got to respond and all this and so so I think it's really important that teams are thoughtful about what does it actually take to build something that is truly great that adds a lot of eye to players that will make it better to be a player in a particular genre

but don't get too over their skis where it becomes like this impossibly high hurdle you know, before you can really sort of lean into hitting green, hitting sustainability, and then continuing to invest and grow and evolve. Like all of our games are like the biggest they've been like after year five, right? Like they keep growing and growing, you're growing. That's why the whole point is like if you do a good job of retention, that's what really makes the business work in a live service business model, right? And if we had a box model, as an example, it's totally okay again to sort of have a big spike,

like balder skate three or whatever. sort of play the story or, you know, several times or whatnot, and then you're done. But that's just a very different sort of content type, very different development challenge. And of course, can, you know, make incredible products, right? And I think one of the things you're seeing as the market is also kind of retooling on the supply side is there's going to be fewer games that are trying to take those incredibly huge swings on the live service side. And I think that's good. How do you justify an MMO that?

I know you can't talk too much about an MMO, but there's no way to launch an MMO with a small team, and then that's the starting line, right? I don't know if that's true. Okay. Okay. And so, you know, but yes, player expectations are incredibly high. And so it's why we have to be excellent.

You know, and that's a hard problem, you know, but we got to be really smart and really thoughtful and really effective. And, you know, fortunately I think we have an incredible team that is building something that, you know, I think has a real shot of, of, you know, of adding real value to the community. You know, but all these things that I'm saying, you know, need to be true for that team also.

And so, you know, I can't wait to show and share how we're thinking about this and what everybody's cooking on, you know, when the time's right. Right here on this show. I do. The time in about 40 minutes from now. I do, unfortunately, have a follow-up question about the MMO. Not about the game itself. You don't need to, like, reveal anything. More about the philosophy behind an MMO.

itself. Because this is something I've been thinking about a lot over this year. Because we've talked about Roblox a lot. Yeah. And I've been learning a lot about the Roblox like ecosystem this year. Yep. And how dev teams work within it, how like trends pop up within that community, the scale of the user base, the way everything is monetized. He's been grinding

Roblox game. There's kind of like, I'm dressed to impress everything. Yeah. Hitting people bats jumping around. Yes, sir. I'm about the hours. There you go, there you go. But this general idea of like these like flash in the pan games, which kind of aligns with the broader indie market in a way too. Yeah. Or this trend of friend slop, if you want to call it.

And in this kind of like attention deficit economy where you're competing with trendy games like that and TikTok and Instagram Reels, the idea of launching an MMO. that isn't hedged by nostalgia like wow is. Totally. Because I think part of the reason, I would say maybe all of the reason Wow Forever can really be successful is how many people are hopping on Wow forever that never played wow growing up.

Shut your fucking mouth, it's a great game. I think a fair amount actually, but the lion's share for sure is, you know, people that are in their mid-30s. Yeah, and I think like... Get in there. That's us. I think the argument I'm trying to make is like the

The crowd that seems particularly primed for the MMO experience Is older now And inherently has less time to spend on these things And already has wow Sure so and then for the younger newer generation They are less primed for the inherent game experience of what an MMO is So when you consider the fact that you're launching an MMO into that market,

why do you believe it will be successful? Because you obviously do. Totally. So, you know, I, the good answer to this question I can't get into, right? Because, you know, in terms of all the details, you know, but I don't disagree with a bunch of your concerns, right? There's all sorts of smart reasons as to why we shouldn't do what we're doing. But there's a lot of stuff that we're doing that nobody knows also that I think, you know, when, you know, when you and we're able to share, you know, I think has some good answers to what you're talking about. But other things that I think are important to is, and to your point, like, MMOs are insane, right? Like the scope, the expectations, the challenge, right?

Like the argument that they're niche, all these different types of things, et cetera. But there's lots of decisions you can make, you know, to, you know, in terms of how to approach it. And so one thing, right, is we've been building this world of Rune Terra for 20 years, right? and sort of pour in our hearts and so on it. And there's an awful lot of players around the world that have developed deep affinity and love for these characters, for this world, for our factions, right? And that fandom is expressed in so many ways

through league and through Riftbound and through all these other things that we're doing, all of our great games. Arcane. Arcane. And people want to live in that world, right? And we want to deliver the ability for people to do that. But there's more, right? And so, you know, it's like we didn't want to even try to go take on this sort of insane space until we had a global fan base, right, of hundreds of millions of people and a big balance sheet and great revenue streams and an incredible team and great technical capabilities.

And, and, and, and, and, and, and I could go on the list and whatever. And so the challenge is around can we do justice, right? And if so, how, right? And it's a mistake to try to make absolutely something for everybody, right? Because, like we just talked about, you often end up making something for nobody by trying to sort of make it too watered down, right? And so there's some really hard problems. But, you know, but again, I'm, that's the type of stuff that is worth getting out of

every day and sort of, you know, going and trying to tackle these really hard problems. And in every single situation, building league, building riot, building Val, building TFT, building Eastpores, building Arcane. They all felt crazy and stupid in a bunch of ways. People internally were like, what are we doing trying to go make a,

like an animated show, right? Why are we trying to go Hollywood? We're like, we're not trying to go, what are you talking about? Like, it'll be awesome for league players, right? Like, you know, and but it has to be great, right? The bar is incredibly high because we're not just competing

with, you know, our own stuff, right? Or our trailers that we make, right? Or other gaming adaptations and whatnot. We're competing with the best shows in the world, right? So we had to do something that's really compelling. Like, but we did. And, you know, if we want to sort of unpack, like, what it takes to do that, it's the type of things that have to be true for us to do it again in this different way.

You know, and then same thing with e-sports, right? Where people internally were like, this is a distraction. Why are we doing this stuff? Oh, really? Oh, yeah. Yeah, because, but we're like, but it elevates the game. It's, we thought about e-sports as a feature. It's like it makes it so much better to be a league player. There's always stuff to talk.

about there's an aspirational path you can go pro there's organized play as an ecosystem there's stuff happening at the collegial level like of course this is awesome right like and but anytime you do something new anytime you do something risky lots of really smart people can point out all sorts of reasons is why the thing doesn't make sense or shouldn't happen and oftentimes they're correct about their critiques and criticisms but then that's part of the fun and the challenge right which is like cool how do we figure it out and win anyway you know and like we need people who are who want to go do that. And that's what the team is made of. And that's what rioters

have in their DNA and need to have in their DNA. I have the opposite question about the MMO, which is that we're both in our 30s, right? Or mid-30s and we grew up with... Did you play a wild club? I can't wait for a while. So here's my opposite question is that wow hit our group like cracker.

Are you worried you're going to ruin lives if this is successful? Yes. Actually, my son is 13. Yeah. And he loves league and he loves Val. He loves her IP. And like my wife, my wife is like, you know, like, yeah, it is a, you know, appropriately, right? And, you know, it's like, it's why parental controls matter. And it's why we got to empower people. You know, it's like, that it can go through all sorts of things, right? Like, and it's why making it better be a player. It also means respecting players and respecting players, right? And like, you know, do what else can we do? Do we need more reminders? Be like, hey, time to go touch grass, right? Or different things. Like, you know, we don't want to be, you know, this sort of. of overly parental person trying to tell players how to do, you know, but when you're not 18 or whatever, right, like, you know, some mechanisms to help make good decisions or even when

you're 18, right, little minors or nuds is maybe important, right? And so we don't, like, we're not a social media company, right, that like optimizes every single component of what their company is to engagement, right? That's like, if that number doesn't go up, we are failing, right? There's no God metric. Right? We're like, well, how many hours in a month is optimizes. right for a league player or a valpair to play right if it goes up is that good maybe right it's like here's what the baseline is right and we can sort of look at over time but we got to look at all sorts of stuff right and it's like if it starts to be too high for too many people and there's obviously a bell curve or distribution it's like is there something we can do is there a problem right that could

be happening and then what's our role right in engaging in that but like it's very important that we ask ourselves those questions and we're not always trying to extract and like drive Arpoo up, which is average revenue per user or whatever, drive, you know, you know, game hours up, right? It's a got to be like, hey, like let's be long term. We want a long term relationship of players, right? Like most our players never spent a dime. Remember, like all of our games we have now, except riffbound, which is physical cards, are completely free, right? So nobody has to spend a dime ever to get all this insane value that we deliver. All these patches, all this content, all these incredible games, all these incredible servers,

you know, all this stuff, all these people to play with your, and all this. But if you happen to like our stuff, maybe you'll like this different outfit, you know, for a character. Or maybe you'll like this gunskin or whatever. And like, but if you don't, that's cool. Maybe you like this other one, right? Or if you can't afford it, too, like this. You know, I spoke at UCLA one time and this student came up to me after.

And she's like, you know, was very excited to talk to me and just said, hey, I'm a poor college student. I've been playing league for five years. This is, you know, back in like 2013 or 2014. And she's like, never spent a dime in your games. and I love them and I met all my friends at UCLA here because of the league and all this stuff. And so I made this Ash and Trinnamar doll just to say thank you for you.

Because I got to go by Trinemaer. My wife is sort of known as Ash. And it's like that's what we're doing. And like people who do spend, you know, thank you, high five, right? Like glad we're meeting your needs. We want to keep making it better replay. We want to keep doing stuff like our camp. We want to find ways to sort of, you know,

take this trust you're having an investment to do all these other cool things. Right. And it's just really hard. but like that's also the sort of virtuous cycle that can happen when you have a great company full of great people that are mission driven that want to make a better player that want to go through the pain if we do a great job with a business model that aligns our interests with that of our players it can create this really positive virtuous cycle you know but that thing is fragile right and so as a founder yeah like when it's when there's entropy and it starts afraid it's like god damn it guys like we got to fix this you know because it's too cool juxtaposing league against other large games like take counterstrikes monetization, take a gotcha game monetization. Like, I believe that sentiment, but I'll take the, the hater tweet response I can envision in my head. He's like, you, you fucking sold a $500 R-a-skin.

Yeah. So how is that, you know, within the structure that you just laid out, how is something like that justified? Yeah. So the philosophy, right, on that is there's price discrimination, right? Which essentially means, it's just a basic economic concept, which means that there's value all across the pricing curve. So most of our players will never spend a dime.

awesome high five there's all this value right you can unlock stuff you get skins all these other things you know but then some players right actually want to spend a bunch of money and some stuff you know that can be quite exclusive you know like we'll have higher price points and whatnot and if that's if like the reason people are pissed all the same is because one some people are like hey that precedent is a problem and I just want to be opposed to it philosophically right which we totally understand other people are like I think it's super cool and I want that and like that's crazy I can't afford it totally we get that but it's totally optional, right? It's like you don't need to go buy the like Louis Vuitton purse,

you know, or bag or shoes or whatever. Like all this stuff's optional. If I don't have the $500 faker are you skin, I'll get bullied at school. I will lose mid-mark Merrill. People talk trash in lane, right? You know, but like, you know, some people may be funny if you have the skin, right?

I have the skin, you know, and, you know, some people have been like, you know, yeah. But also people, you know, some people jock it and whatever. But like, it's just, you know, not everybody needs to love everything. It's just a really important concept, both from a game perspective or from a content perspective, right? And so it's just like a league, right?

We want to make a champion that like resonates with, like every champion should resonate with somebody, right? But not every champion will resonate with everybody. Some people love to play Riven, right? Some people love to play Alistock, right? Or example. Yeah, exactly. Like we could go through the list.

Maybe some like really like the fucked up guys you'd never hang out with play singed. Totally. Yeah, don't chase. And maybe we should hardware ban them. Yes, that's the appropriate response. Yeah. I think maybe get me in there. Get me in that.

Yeah. Get that anti-cheat on the root level to brick their piece. Yeah, we'll go into Freaks basement. We'll tell them to, you know. Okay, great. Okay, this is a big, this is a big topic.

I kind of, I wanted to get to kind of your guys' relationship with Tencent and mobile games. I want to start with Wild Rift. Sure. And I would say the streets, the narrative that I have been told, is that a long time ago, Tencent, who is this giant Chinese gaming company that is a majority owner of right games?

Yes. They ask you guys to make a mobile game a long time ago. And you guys said no. Like we didn't want to focus or work on that. So they're like, all right. and then they green light Honor of Kings and now for people who don't know

especially if you I mean if you don't live in China Honor of Kings is gigantic I think like by yearly revenue it's like the largest game in the world down in the world totally and I think also known as Arena Valor yeah it's got too it's kind of weird it's so so now

seeing that that game got so big and then you guys try to take on Wild Rift years later are there any like regrets or... I think it's worth thing for the audience that honor of kings

is essentially League of Legend. Right. From a site perspective you couldn't tell the difference. Yeah. Yeah. And it's like it's our exact same

mechanics. Like all the design innovation and the exact same lane spacing and like we can go into the math. It's the exact same. Right. So they basically...

But it's hard to change a little bit over time because, you know, some stuff I can get into, but yeah. They greenlight a mobile game that they also own...

Well, they asked us. They, they asked for permission. To make it. Because when we said no. Because just to jump in on that, Yes, they said, hey, there's this whole trend in China, right, where like these successful PC games, you know, sort of this mobile market is exploding. We think it's important to try to find a way to go do this and, you know, like, will you guys do it? And we suck at mobile. We don't know anything about it. Right. And, you know, so totally understand the sort of opportunity in the trend line. But like, that's not us, right? We will not do a good job at solving that problem. Right. And they're like, we respect that. It makes sense. And by the way, we had tons of cool stuff in the pipe like Val and all these other things. You know, and so. So, you know, and again, like there's only so much capacity that we can go take on.

And again, you know, like, Riot doesn't make decisions about what to go work on based on like some charts or trend. You know, it needs to be like we actually think we have a deep understanding of a player need and whatnot. And so it needs to be a little more organic. But anyway, so we say all that, right? And they're like totally respected. And they're like, can we go build some mobile mobas, right? And we're like, yes. And so then they're going to nine of them.

And all of them failed. And then one, as it was already live. sort of feeling and said, well, let's just, let's just copy leak. You know, and so they released a patch a live one that was that. Right, and that was other kings, right? And then that started to be like, the word on the street. Oh my God, like, league is now, but we're like, and then it, you know,

and so that was the like, wait, what's happening? What, you know, and so anyway, that was, that became a whole thing. Yeah, what is the, what is the whole thing look like? Yeah. Can I keep it, can I keep it 100 with you? Because from my perspective, it's like, it's like, it's like, it's like, it's, like you're in this weird spot where the gigantic, I cannot express to people how large this company is.

The gigantic. Right, they're the largest tech company in China. Yeah. And so they're the majority owner of riot. And so the quick background and context on how we got in touch with tents in the first place, right, was they found us when we were a startup in 2008. Right.

So when I was talking about how Brandon and I were idiots and running around and making every mistake and didn't know anything, all of a sudden out of the blue comes this massive Chinese company. At the time, they were like 50 billion, which is still huge. Now they're like 700 billion or 600 billion or something insane.

you know and um they're like hey uh you know like we heard about you guys we're like how you know because you know we were sort of their ear to the street small start yeah they really were they're they were scouring the world looking for titles to license to try to bring to the chinese market right and most of the content that was developed in the west right wasn't built as a live service for online play free to play etc the reason free to play took off in Asia was because piracy was so efficient right like you couldn't have a box product right and so you couldn't have a box product right and so So all the box games, but all the content from the West was built as a box, right, for console and for PC and sold at retail and whatnot.

And so that's also why they were interested in us. They're like, well, it's just like very cheap to acquire the rights to publish this in China. So if it becomes a thing, like, yay. And but that was great for us because we're like, wow, momentum. Hey, hey, bored. Look, China thinks we're going to be successful, right? And so we're like, you know, and they gave us a little advance on future revenues. And that was very helpful, right?

Because every little bit of momentum sort of helps you survive and fight another day. And that was the original relationship, right, a publishing deal in China. Then, fast forward to 2011, right, were venture majority controlled at the time. Branden and I, first how much entrepreneurs, you know, had to sell a majority of equity in the company in order to raise enough funds to try to get the product to market. And we had to raise a second round because we also had to be our own publisher because we talked about in terms of couldn't give our keys of the kingdom to publishers. And so we had to build our own platform. We did that, took it to market.

Right. League is growing and doing really well. and VCs go, well, I think it's time to sell the company, right? And we're like, well, we think we're just getting started, you know, but VCs are measured on investor rate of return, right? The denominator in that equation of IRL, right, is years since the investment, right? That's very sensitive. So the faster they make a good return, the better the IRA looks, right? And so the, you know, so the VCs were like, this is great. Who knows what this thing's going to happen? But this is pre-Korea, pre-China, pre-E-sports, pre-all sorts of stuff, right? and um but brandon i always had the philosophy too that like if there are other people that are better

than us to do anything we're you know that we're here to do awesome right like because it's it's fiduciary we're shareholders we got to do the right thing for players and you know we always assume that like there's got to be people better than us because we don't know what the hell we're talking we're doing you know from day one and um so anyway so but 10 cent at the time like we go to this road show they're like they actually got a board observer seat um in our second institutional round where they invested alongside our vCs, because our vCs actually, you know, had done some work with Tencent before and dug them. They had a relationship. And then they're like, wait, what are you guys doing trying to sell this company? Like, we think you're just getting started.

And so Tencent actually bid to try to acquire a majority of riot to prevent us from being acquired by an EA and Activision, a Western media company, et cetera, to be like, they're going to screw you up. And we want to keep you guys independent in arm's length and keep a board structure and and not have you come report to VP of such and such, right? And we were always like, but that's super unusual. Like nobody does that. Right. And fast forward, like where our founder's still here, you know, et cetera, 15 years post

transaction because that's been true. And so it's been this really interesting sort of hands off like arm's length relationship for long part of time. And that has enabled us to also remain private to not have all these incredibly short-term pressures to do things that don't make sense for players, et cetera. and that has helped riot really evolve the way that it has, but to the point around Honor King, et cetera, like any sort of long-term relationship, right,

there's challenges that can emerge from time to time. And, you know, when challenges emerge in any important relationship, right, you have lots of different options in terms of how you react to that dynamic, right? And it was an opportunity for us to kind of realign on all sorts of things, you know, and, you know, so, but yeah, that's, And so now, you know, even though it's sort of strange that there's this derivative version of league that is, you know, super massive on mobile and all that, in aggregate, right, for Riot and for Tencent and all that is, of course, growing the pie in a great way.

They did a better job, of course, of actually meeting players' needs than we would have because we weren't doing anything. So long-witted way to say, so why Wildrift? Right? Because one of the things that we also did is part of this whole negotiation discussion, alignment about how. how do we, where do we go from here and what that was we need to really diverge the products over time, right? And so, um, so we wanted to deliver two players and more authentic league of legends type experience on mobile, which is what Wildrift was, right? Um, we could actually use our champions. We could actually use our IP. We could, uh, make kits that were more

specific. And so vein felt like vein and, you know, all these other things. And so, uh, so that's where wildrift came from. I, because, uh, it's not law. of me that you're, you know, you're using some very polite language to describe the situation. And I'm not saying that these aren't the right decisions of the right call or something like that. I think, do you have any thoughts on this dynamic of Chinese game companies seemingly being able to get away with an aspect of like copyright infringement that let's, let's step away from riot and tense it entirely. Let's go to a game like Crossfire. Crossfire for those people who don't know is an incredibly popular game in China that's basically

Counterstrike. It's very similar to the same style style of game and there is like there's a map in Crossfire that's just re-skinned dust too. And you know Valve doesn't strike me as the company, the type of company that's going to spend a bunch of time trying to like take legal action but particularly against like an American company taking legal action against a Chinese company is very unlikely to be successful in the first place. Well one thing on that just as a quick aside and then I definitely keep going to the question. And also interesting enough, like, you have to get approval as a non-Chinese company, right? And you need to partner with the Chinese company to even launch your game in China, which is the whole thing, right? And so, like,

it's a quite very protectionist system, except Steam somehow circumvents this entire process. And so, you know, Valve is sort of benefiting from this interestingly weird thing, too, where, like, players install Steam all over China and all these games that are sort of to launch on the scene, whenever, they can sort of go to China and get a bunch of Chinese players and circumvent this whole process in a really interesting way. So, yeah, so there's sort of this dynamic where, yes, there's that, but there's also this. They might not want to upset that. That's right. That carve out. Interesting. Okay. I see. I guess it's funny because I have a small tangent of my own is like I got really curious about the way you published League in different regions

when I was a kid. And I made accounts on like the Guerrina S-C-A server. and I made, I like fake to Chinese passport to make a Chinese league account like when I was like 13. Legit. Because I wanted to see what the player experience was like on these other places. I'm like,

see, that's entrepreneur type stuff, right? Like, you can't help. Seriously, but I mean like, when you have high 80s. Thank you. And you can't help yourself and be like, ah, like, because you're curious about a thing.

I think that's cool. I think what made me so curious is like, it's not lost to me as a league. league player is like, oh, millions and millions of people play this game in these other countries that I don't see listed on the region list in my client. How do they play the game? Right. And how big is league? Yeah. And by the way, the green and Southeast Asia thing, that's a whole other story. Yeah, I think it's crazy. Yeah. But this is also just the craziness of being an entrepreneur

in the first place, right? Like, Brandon and I were just trying to make a small game company to build games, right? And then next thing you know, problem after problem, after opportunity after, like every new success or hurdle or challenge we go where creates, it's like we crest the hill, and then there's 10 more, right? And it's every single time over and over and over. And like, we never imagined we'd be sitting in these seats doing this different type of stuff too, right? Like, you know, and like building arcane,

you know, having players mad at us for, you know, all sorts of different types of stuff. Like becoming the NCAA, we're at the sanctioned teams all around the world. We're like, we had to figure out how to build sports league. Anyway, but like, yeah, there's all just craziness on that. Right. But even the greener thing or with South Asia or all this complexity internationally, right?

It's like we had to figure out how to go deliver this, these products and this, value to players and there's lots of different decision-making frameworks that different leadership teams and different parts of the world have, right? And I think what's crazy, for those people that don't understand is like, for these other regions, there was basically different clients for their version of League of Legends. And in the China one, I thought it was so crazy. One, when you boot it up, it's not like the other ones where you, oh, you connect to the North American server and you're just in. On the China one, you pick from 30 different Chinese servers to connect to.

Right. And then what I thought was crazy at the time, that I didn't understand was, oh, so many of the characters have different artwork to, like, meet different Chinese laws and publishing standards. Yeah. And I thought that was so crazy. Yeah, so like Carthus has gloves, right? And the collar pulled up, his face is really dark, right? You know, because Carthus is a lich, right? And skeletons are one of, like, the band content types for by the Ministry of Culture in China. Right. So, yeah, there's all sorts of localization requirements and challenges, whether it's language, you know, and, uh, You know, there's just a lot of complexity.

It oftentimes, to your point, is sort of very hidden from, you know, how players experience the game. That, of course, can increase cost and complexity and sort of reduce market footprint size, which is also where, as there's more connected systems and it's sort of easier to do broader distribution, you know, and like different companies solve different parts of the value chain, like a good payment system or different metalware or awesome engines, where it reduces complexity for the developers, which makes it easier to build higher quality content, do more things, deliver more for players. And that's where, like, that trend is just continuing.

Like, it's way easier to build and puts up online now than it was when we were starting the company. And we had to, like, ride our own services on hardware that we ran our own, like, we had our own data centers that we'd rent, you know, space in. And we had our own ops team as management. Because pre-cloud, you know? And so, anyway.

I guess to close the loop on my question from earlier is, like, how do you feel about this, seeming environment to me where these giant, like, giant Chinese games can, it's more than just, like, like, Valerent is a tax shooter that is heavily inspired by Counterstrike.

I wouldn't say it's copying Counterstrike. Totally. But there are a lot of Chinese games that I've seen that like, oh, that's League, that's Valorant, that's Counterstrike, and it's like one to one. Wait, I want out on that because it's not just China now. It's like Roblox games will come out that's perfectly copy.

Or there'll be an indie version or, because the tools are so cheap that anything innovative can get copied instantly and it's like Powell World right whatever they're like oh thanks Pokemon you know like let's just go like launch a game but I mean like Blizzard did this at games workshop

right like it's like you know anyway it's right in Games Workshop was like thanks Tolkien you know like so you know it's there's just and again I don't actually want to equate the Games Workshop to Tolkien or Blizzard to Games Workshop to China to

sort of one-to-one copies because there's there's a range of inspired by and sort of building a product which is different you know but Starcraft is pretty inspired by 40K right and and sorenids and whatever and like but it's to your point sufficiently differentiated right like copyright law you know has sort of two main tests right it's like a substantially similar you know test and you know uh you know and then there's like audience confusion there's there's a couple different tests that are sort of relevant on that and so by those measures of course, yeah, there are a bunch of products in particular markets that really would fail those tasks, but it's expensive to go litigate and, well, what's the core system? And are you actually

going to be able to do anything about it, right? And, you know, in certain markets, that's difficult, right? Or in certain platforms, right, like, what are you going to go after the 14-year-old that's, like, building the Roblox thing? That's like, you know, and what it's like, yeah, like, you take one down, 100 pop up anyway. That's right. And or like, there's a bejillion, like, you go to Etsy, right? And or all these different, you know, stores are red bubble, right? And there's 20,000, like, legal legends vendors that are selling stuff, right? And my fish. shirts. I'm making a lot of money on those. So, and, you know, on the one hand, it's like, look, you know, we also want to empower our

community, right? And creators. And so we, you know, we create all this like, uh, creator safe music for people to be able to make content on and or, you know, try to empower the community to go, we're like, look, we're not, we don't care if you make some fucking bracelets or different things or go sell at an event. Like, in fact, we have halls, you know, filled with, like, player vendors at our esports events, whatever, too, you know, but we'll also have, you know, some official stuff. Like, you go to a Dodger game, you want to get the Dodger hat. You know, we want to provide that stuff, too. But, but, like, like, Again, that's kind of like this whole range of different experiences,

sort of like price discrimination, right? And Riot thinks about what's our role in the community, right? We don't own the community. We're part of it. And we have it in role to play to help nurture it and to help create these opportunities for different creators and members to be part of it to help enrich it in a way that hopefully the whole is greater in the sum of its parts.

And that's how we add value, you know, and that's how the community can add value to each other. And, you know, but like how that manifests may be different per game, you know, but that's anyway. you know, there's just a lot of complexity across all these things, you know, but we don't want to be the music industry, right, going crazy and DMCA takedowns and blah, blah, blah, but we do need to enforce RIP because we don't, right? We can actually lose our rights, you know, in different jurisdictions and things. And so, like, there's this, it's just another example of, like, all of this complexity we've got to figure out now to make, you know, make good decisions on. But the thing that really matters is making great games and great. experiences for players, right? And that philosophy of trying to make it better to be a player, right? And then it's how to build all these different capabilities all across the organization, again, which is why the like structure and system stuff I talked about, like the good decisions are relative to who the player is, right? And whatever their context is. Like the league player in Korea has a bit of a different experience than in China or in L.A. or in Europe because in Korea, there's 25,000 PC bongs just in Seoul, you know? And so people like half the game hours are played, you know, at some PC bong in different machines and whatnot. And so we have to navigate all that stuff to actually create a global title

that resonates all around the world and crosses cultures. But when we do, it's freaking awesome because it brings everybody together, right? And you can wear a Timo hat and go to Shanghai or go to Seoul or New York and whatever. And people be like, yo, and like, and you got this instant bond like that woman,

you know, who I met at UCLA said, right? And so that's like when people go back to the, oh, we're this evil company trying to extract from my perspective, right? again, not to say we've made every perfect decision or whatever, but like nothing could be further from the truth from what rioters are trying to do every day. You know, like it is a service-oriented.

We're here to do awesome stuff. And yes, if we do awesome stuff with a smart business model, hopefully players will reward us with money. But like people don't get out of bed, you know, to go try to tackle like, say, this MMO problem or all these different types of things. If they're not incredibly passionate about trying to solve those really hard problems, right? Or if they do, they don't last.

Right? You guys have probably heard the expression around like missionaries outlast mercenaries. Absolutely true. Right. And when somebody's like coming to riot because it's good for their resume, you know, it's often not the great fit. And, you know, as we are really great organizationally, you know, and all that, uh, our teams will keep improving as more and more people that have that passion are sort of

of then learning the craft and making great decisions and all that different type of stuff. And so that's the journey that we're always always on. and hopefully we'll always continue to do. AI panic is everywhere. We do not want a data center in this county. AI models are becoming superhuman in their ability to break in and out of computer systems. Fri-de-flock, damn Rosebara, I hate those things.

But where is that panic really coming from? According to a poll from the New York Times and Sienna, less than 1% of voters listed artificial intelligence or data centers as their top. priority in this year's midterms. I'm an old school person. I don't care about AI. He's saying that doesn't register for you.

And sometimes I wonder, do they care about AI in so-called real America? What people in my district are saying is we think the risks outweigh the benefits. This week on America, actually, I'm talking to Michigan congressional candidate Will Lawrence, on why he shaped his entire campaign around confronting the AI revolution. Really, it's about control, I think above all. Who decides? Because people feel like they just are not really given any say-so in the whole matter. Catch us every Saturday on YouTube or wherever you get your podcast.

I'm curious, there's so much of a different culture in gaming in China or Asia or name whatever country, right? And the most obvious one is what you just said, mobile, right? Or PC bongs, which are like PC cafes. Or versus, you know, American gamers seem to be very different. Is that affecting how you guys design games when you say we want to make something the player absolutely loves? Well, that's going to be very different per person. So how do you navigate that? So generally no.

So we think, you know, chess is chess is chess, right? You don't make a global e-sport by changing the game, you know, to accommodate local tastes and nuances and all that. And like these American-made IPs resonate pretty darn well all around the world. You know, and so but how a player gets into the game, the around game does need to change, right? Because the local distribution, the language, the how we service, the laws, right? like we need a Korean social security number to make a league account, or a valid account or whatnot, right? And so there's all,

like we had to build custom PC bong software to help PC bong owners administer like land events, right? And we changed our business model, right? We're going to go into a land cafe, you know, and all the champs are unlocked and different things, right? And so because we have to figure out how to align everybody's incentives and all this other stuff too. And because the PC bong owner is paid per hour by people who are renting the machine, right?

And then whatever game they're playing, like we'll get a cut of that. And so, you know, we got to figure out all these interesting things that we had no idea about, right, when we were, you know, just getting started. But what we don't compromise on is the game. But we do need to ask ourselves, right? And we try to test and validate, you know, are there really significant regional differences? But a lot of people and a lot of publishers in different regions will tell you Chinese players are super different. And it's, we totally disagree.

Hell yeah. Like, we think people dramatically overestimate that player motivations are the same, you know, exploration. and mastery or progression or competition or whatever it is. You know, they may be different populations. They may have slightly different aesthetic tastes or art tastes or like, you know, different things too. But like, the core. The core, yeah, is, you know, it's the same stuff.

There may just be, you know, cultural nuances in a particular market, right, as to like why a particular sport took off in one region and sort of not another and all this. But like, say, you know, soccer versus baseball versus whatever. And it's like games are the same thing. And so, but you got to navigate all those and you got to be curious. You got to ask yourselves those questions. But like, you know, and again, there can be some regional differences. Well, can I tell by what?

Because this is a question. There's like Mahjong culture in China, right? And so like a lot of people are sort of used to playing strategy games, right? And like there's a lot of women who are in these mahjong clubs, right? That it's like pretty adjacent to TFT, you know? And so like, like seriously, you know, like so. Majong club women into TFT. Literally.

Like, seriously. Like, that's a thing in China. And so that's fascinating, right? But TFT's still TFT. You know? And so, but it's the, what makes Mahjong cool is the strategy and the social aspect and sort of what's happening and the decision making. Just like what makes TFT cool.

You know, and so, but that preexisting affinity for something similar can help, you know, but like if there's a market or a region that hasn't sort of caught on to a particular game type, it doesn't mean that. it won't. It just maybe means that it hasn't for various reasons. It didn't have the right product or the distribution wasn't right or whatever. Like card games, physical card games are sort of a nascent market in China. Right?

And obviously they're massive in Japan. They're massive all the world, right? Magic and all this. Do we think that card games won't become successful as like in sort of gain share compared to the small basis of now? Like I think card games are going to likely grow in size in China over time because card games are freaking awesome. Right.

You need to package with cigarettes. Because when we went to China, I would go running along the river. And it was just Majong clubs of men smoking cigarettes and playing Majan just as far as the eye could see. Right. But so, but it's kind of like, well, what's the right distribution mechanism, right? And so, and like, how do we go connect culturally in a way that people go, oh, this is awesome and cool. Right. But like, the league IP is huge in China.

But like, and so you think Riftbound would, you know, have a bunch of opportunities and all this. But we think long term, right, we got to figure out a bunch of these things. but like some short-term lack of it blowing up doesn't mean it doesn't have potential to, you know, over time, right? This kind of, again, goes to how we think about green and long-term being sustainable and all that, you know, and why it's so important to like keep trying and keep improving the product and all this.

And by the way, Riftbound was derived from like all the learning that we had in Legends of Rintera, you know, and so Legends Runtara, by the way, is sustainable and cool and doing great, you know, for what it is now. Path of Champions Pivot, all this other stuff. You know, the community stable. And, you know, it obviously inspired where we learned a ton about what we could do ever found. And that's another way we sort of think about this type of stuff, right?

Like, no, that's a good example of a game that is like a single or a double that you've kept going. I forgot about Dr. Runtair. It's actually crazy. I thought Legends of Routera was, got canceled at some point. I didn't realize that it is going. Because people freak out, right? And they go, ah, you know, and even we say, here's what's going on and da-da-da, people, you know. Guys falling.

It's over. Yeah. Right. And it's like, okay. Maybe, you know, we'll see over time. Right. And that's where we just have to take our. lumps, right? And a lot of times when people are angry and they're shouting at us in social media

and or tweets and or Reddit and whatever, it's actually because they care, right? It's like, it's me and Brandon back in the day in college and or when we're in a 20s and we're like, what the fuck is this company doing, you idiots, right? Ah, like, don't you know I love this game? You know what? And so we're like, we know dudes. We're sorry, right? Like, we're trying, right? We're working on it, right? Like that is the feedback loop and how rioters feel, right? And it's like another way that I talk about social media

is it's kind of like a microphone to a mob, right? It's like you go to the Coliseum, I went to USC, and you watch a USC football game and somebody throws a pass and a guy's about, you know, in the open in the end zone and drops it. Right? A bunch of players, oh, you know, they'll be like, F that guy, you know, and they say, well, social media now lets you tell that person directly

how you feel about them in that moment but you go see that player at a bar later on, 95% of the people that like send that to you would be like, yo, what's up? And like, want to give a high five and be like, dude, yeah, well, you know, and be like, hey man, like, well, next time. So, you know, humans in person way different, right? Then, and so, and that's a thing that we try to remind ourselves, right?

Because again, we've gotten lots of death threats and so if I'm many writers and all and the stuff and the internet can do the internet thing. But like, it's, it often comes from a place of passion, you know, and not all, of course, because people can very much cross a line and have and do sometimes, you know, but not most. You know, the vast majority of people are, are, you know, super reasonable

and just sometimes they're super frustrated, right? And that's where we just think, if, like, if they could walk around, ride and talk to rioters and see all the stuff that everybody's doing, and, you know, I think they would feel good about, about what's in everybody's heart. So, well, speaking of the online mob

and speaking of regional differences, I do have a more challenging question for you, which I want to ask about, which is gamer attitudes towards, AI in development, which is like the big question in game development right now. The technologies are so new. No one knows how it's going to impact gaming. Obviously, there's a huge, we went to China recently. Massive regional differences in how they approach it. In China, it seemed to be... They're going ham. They're going ham. It's everywhere. And then we saw the gamescom or something recently. So many Chinese developed games at AI in the trailer. So I mean, you know, you don't have to be your official position here, but I want to hear a sort of riot at a high level how they're thinking about this technology and what it means for gaming going forward. Yeah. So, you know, I think a lot of people's concerns, are sort of appropriately focused on two main concerns, right? One is like, hey, we don't want bullshit, right?

We don't want AI slop. Like, we want quality, right? And we value the art, right? And the sort of human decision making in terms of all these taste calls and all those other things, right? And by the way, we care about the developers, right? We want these awesome people

to be able to continue to make these things that we love and whatnot. And we are completely aligned with those two concerns. And so, and, right, like, also to your point around we'll look at what China's doing all this stuff. The world's expectations like we talked about before are going to keep going up, right? Because the world is not dynamic and whatever we're doing today may not be sufficient for us to surprise and delight and meet player expectations tomorrow. So it's a really interesting challenge for the whole company and the whole industry to think

about what are the implications and what do we do with it and how do we continue to make it better to be a player. And, you know, I think it's a complicated issue across all those dimensions. but I think, you know, ultimately, you know, I fundamentally believe that like AI is is going to empower great creators to do incredible things. And so like the taste piece and the creativity piece and whatnot is not going to go away, right? And so I think a lot of the concerns relating to that that a lot of people have, I think are a little, they're warranted. when companies take the knee-jerk reaction of being like, we have an opportunity to improve our margins

and cut a bunch of costs and make our team tiny, you know, whatever it is. You know, but like I think pretty quickly people are going to figure out that like, oh, there's like the human taste and judgment and artistry or whatever is, is absolutely priceless and can't be,

you know, sort of substituted. How do you actually incorporate it into the company? Because there's, as you just pointed out, a wide range in many, most people listening, I'm sure, have experienced a company, whether they're at it or, you know, it's a product they're using where it's just kind of become AI-ified and everything is AI and it's

clearly being forced on everybody from top down versus letting people find it in their own ways and, you know, where are the ethical limits for certain areas? How do you, you know, day to day? How do you decide how this thing is actually being disseminated? Yeah. So one, we don't force it, you know? So I think that's already sort of differentiates us. But two, right? Like, it's trying to create mechanisms for learning. And this goes back to the philosophy around make it better to be a player and create. So, oh, I never finished my description

of our Evergreen strategy, the three things. Number one was live games green. Number two is create new genre defining games and experiences. Really hard, right? But that's the aspiration of what we should do. And number three is build the best place in the world to make the best games. That's what the company's all about, right?

And so if we want the world's best creators to make the best games, right? Like, well, we need to explore and have tools and have freedom. And so we need to have some data architecture and frameworks. And people to be like, what's appropriate for us in our team in particular areas? And so there's a lot of curiosity, there's a lot of exploration. There's a lot of stuff like that that's happening.

And then, of course, there's also a lot of like nice stuff that, you know, where like people can set little reminders to go through your G Suite and whatnot and like automate some shit that you hate to do or whatever. And so like, but those are not the types of things that I think are actually, you know, really concerning people. But again, one is, you know, a lot of people are exploring and there are sort of playing around with different things and all this. But, you know, we're not shipping stuff to players, you know, and, you know, at the end of the day, we're not forcing anybody to use it. But I think the world is going to keep evolving in different ways.

And I think everybody in the industry is exploring into ways, even if they're not really talking about it. Sure. Just given our time, I really think we should talk about esports something. Yeah. Our background is all so intertwined with e-sports. And I think even with league esports and how that all ties together. Again, I first met you.

You don't remember this. But at 2011, I was working for Team Liquid, covering StarCraft. And there was a tiny little booth in the corner, which is your guys's first world championship. And you had freak, I don't know at the time, giving piggyback rides. And you guys were so excited over there that I was,

you know, I walked over with some StarCraft pros. We watched. And that got me into league. I mean, I literally was that day. I was there. It made it such a big deal. And so it grew from that to an extremely big thing. But the esports industry in the interim has become various levels of catastrophe,

up and down and up and down. And so I want to hear your POV on the ESports industry. as it stands now, not only from what riot sees, but what you see of the broader industry, because it feels like it's in a lull. It's a downward post-COVID situation. And what are your top three favorite things about Overwatch League?

Yeah, I'll start with your question. So, you know, I think the reason it feels like a lull, right, is because the hype train got way ahead of where it was. You know, the COVID problem for a lot of industries, right? Yeah, well, somewhat, but also just like a lot of, like in advance, right? And like, Brandon and I were always trying to pump the brakes for different people. And, you know, various other companies were always trying to sort of pump up expectations and investors and all that and, you know, different approaches. And I think Riot,

some extent, benefited from other companies making big investments and, you know, having a very commercial lens to it to sort of elevate the awareness to advertisers and sponsors and potential team owners and whatnot. But, you know, our focus was always like, let's nurture. And I use that were deliberately because it has to be an ecosystem where all of the key stakeholders have a mechanism that works and is sustainable for them. It's sort of like the live game screen concept, where it's players need to be able to quit school or their job or whatnot and have a full-time career. So they need some amount of stability, right, which means that they need teams that they can join that are sufficiently capitalized that can afford to pay them a living wage, you know,

or better, you know, to compete for talent to then have it be something. that is real. And in order for that to happen, right, those team owners need to be able to have a revenue stream, right? And so is it tournament, tournament winnings or sponsorships or what's the right? But in order to do that, right, we had to, number one, priority always is make a sport that's so cool that people want to watch, you know, because it all, that viewer, that watch and, you know, how many people are into it, et cetera, is what then is a starting point to attract the sponsors who want to go reach those people who can then go help fund the esports teams

who then can fund the players to then join the team, et cetera, and or riot can subsidize, right, which you've done for many years and all this other stuff. But our, you know, league and Val in particular have become very sustainable

over time as a result of this. But many, many years ago, right, we used to joke that it was sort of the black hole of money vortex or all that, but we were investing for the long term, right? And so, but as League, you know, and world started taking off

and all those stuff and numbers started to get, you know, pretty big and all this. A lot of the people were observing that, right? And then investors were rushing in and throwing a lot of capital around, which then it would flate a lot of valuations, right? And then as teams are flushed or cash, what do they do? Right? They, of course, went to go compete with each other to get the best players. Insane salaries. Right? Which then made salaries go through the roof and all that, right? And then that became sort of the new normal, but it was funded not by revenues that were

necessarily sustainable, but it was funded by investment dollars. And that wasn't the best ROI. Players did well, right, for that window and all this. I mean, Pierksson got a Honda. it was crazy. Well, Faker One makes, I know he is. Yeah, he totally is,

right? And he got a G-wagon and other stuff. Like people, you know, they gave him all sorts of stuff, right? But like he's got a building

named after him, you know, and he's amazing, as are, you know, many other players too. But like, but that was sort of this bubble

that existed. And it was driven just like any type of bubble that happens by over-inflated expectations for growth, you know, and sort of revenues over a particular period of time.

And so, So as that rate of growth didn't manifest to those investor expectations, the investment dollars then dried up, which then had the net effect of having teams pull back and reducing salaries and different things and less events and, you know, yada, yada, yada. And so that's what happened. But there's still a bunch of stuff and a bunch of activities and bunch of healthy leagues that are happening and all this too. And there's, you know, EWC coming involved. There's other sort of groups that are trying to add some dollars and add the ecosystem. but it's normalized more for what is actually more sustainable.

And so I just think it's important for anybody to recognize that like sometimes, and we could again debate whether like AI as an example is going to hit these insane growth rates that are justifying these multi-trillion dollar valuations or whatnot, right? You know, just like the 2008 bubble and all those of stuff. It's like sometimes a lot of these economic resets, right, again, they're driven by overinflated investor expectations, right? but it doesn't mean that the underlying fundamentals the dot-com bubble for example, right?

That's right. And so that's just something for everybody to be aware of, right? Especially as you're doing investments. I'll maybe push back or clarify about the sustainability part. When you say sustainable, do you mean for riot or for the teams? Because as the ecosystem has kind of changed

and maybe receded in the case. I think I understand League, the landscape of league like a bit better right now. the teams in like an NALCS or an EULCS, forgive me, I know the names, have adjusted, are not doing very well now. These spots, like some teams are forfeiting their spots or trying to give away the spots because they're not performing well. So when you say sustainability, I'm just curious what you mean.

Yeah, well, so this goes to, well, how much are they spending? Right? And versus how much are they bringing in, right? That's his basic business 101, right? like are you making more, right, to be able to be profitable at all, to be sustainable or not? And sometimes if teams have gotten to ahead of themselves from a cost perspective and sometimes, right, like they signed deals or done various things where they can have commitments that are, you know, unsustainable for them, right?

Then that can, you know, have this sort of impact. But the demand is there, right? Both in terms of other teams and or lower. But it's like, it's kind of like what's happening across the game industry in general. There's sort of this reset and recalibration of like what's the appropriate size and what's the appropriate types of payroll that can, that teams can actually afford based on where they're at. And there's, you know, there's sort of the entrepreneurship where certain teams are doing much better than other teams. Well, why? You know, a lot of, some teams are way better at marketing and building a brand and differentiating

and creating content and, you know, all sorts of things, right? Like, 100 Thieves built, you know, whole clothing line and a bunch of content. Like, there's all these different things that different teams are exploring. But like, that's the type of stuff that is being explored, right? And, you know, if you look at like Major League Baseball is an example too, right? And so I'm an owner of the LAFC, you know, which is a major league franchise. You know, and like in all these major sports leagues, NFL, NBA, MLS, etc., there is a significant differentiation between the top teams and the bottom teams and sort of the median or sort of, you know, in the middle and whatnot.

And like that seems, it's a very similar dynamic of what is happening in, you know, the various esports league. They all have that TV revenue buffer that allows, it doesn't exist really in Well, it does in Korea, right, for us with LCK and whatnot and other things. And as the global distribution market for content continues to get more competitive and whatnot, too, like I think the long-term trend is good because what is the type of thing that actually helps drive people to actually watch at a particular moment in time? Well, sports, right? Like, it continues to demonstrate that like, when you have a good sport and good product, people will

come and watch. In the West, in particular, right, like there is a, a, sort of TV and or distribution broadcast gap relative to say what's happened in China or Korea currently, but that doesn't mean that that will always be the case, you know, as well. And the, you know, YouTube versus, you know, Twitch versus Netflix versus other distribution providers, as those ecosystems continue to evolve and their strategies evolve and their content acquisition strategy to evolve, right? So too may, you know, these different types of dynamics. You're setting up for a big bidding war with Netflix. No, I'm just, it's still the leather helmet days, right? Like, in terms of like, what is esports going to look like over the 21st century,

you know, and how it's going to manifest, right? And so, but I also believe that there aren't going to be tons of them, right? Just like there aren't that many big sports leagues, right? I believe that part. Like, the era of every game trying to turn their game into an esport is like, nonsensical to begin with. But it was, yeah, it was just never going to be that way. But the community needs to this. I think what I'm wondering is when you talk like Korea and China make sense to me

but I look at something like NALCS and what and I this is the lowest viewership year I think ever right now and I'm wondering what realistic path the team in that league has to any revenue at all because not saying they can't do anything right

totally but if I could give you the example is like yeah if you're a C S-S team. I think you have a pretty reasonable path to how you can monetize within just the scope of that game's ecosystem. You can make a team that's good enough. You can

qualify for the major and if you're good enough you get to a certain stage of that tournament and you get sticker revenue. Well it's feast or famine, right? If you qualify. Yes. Right. And then if you place well, right, you can get a bunch, right? Whereas like if you're part of the LCS, right, or part of the LECK or whatnot, you also get game revenue, right? You know, like we sell digital content that we split a lot with

the teams and like those things are starting to do incredibly well you know so there's all sorts of other different revenue streams and just sort of distribution and broadcast right and riot right like we obviously have an important role to play to your point to find the right mechanisms to help our teams you know sustain and survive and it's not our entire responsibility to solve all of their problems though right like that's kind of the point around you know like a t1 right that one has nurtured you know faker and has this you know an incredible track record and all these are the things, right? And it happens to be in Korea, you know, compared to some teams in the West,

what not like, but even in the West, right, there's high differentiation between like a cloud nine, you know, compared to, you know, well, insert whatever. Yeah, yeah, yeah. Insert, you know, whatever team that you think may be having some challenges. You know, and like, you know, part of how we think about it is we tried to help them learn also how to, from best practice standpoint, apply some things that can also help them make good decisions from an operating perspective and or grow their own fan base and different things I got too but like sometimes and this is one of the healthy things about competition right like if a team just like if a company or a game right isn't able to sort of you know sustain maybe a different company or team or a game or whatever will do a better job right and so that's why there's also I think some amount of turn is healthy but I totally recognize your point right where different esports ecosystems have different dynamics and what? one of the sort of philosophies that we've chosen as compared to a Dota, you know, to or a CS, right,

is sort of when you're in our ecosystem, you know, sort of a larger sort of guaranteed floor compared to what you would have in CS and with still incredibly high upside, you know, but, you know, it's that, like achieving that high upside often is a longer term thing from building like a real brand franchise. Yeah. Yeah. I think for what it's worth, I always really respected your guys's decision to not follow the inflation of like TI's approach.

Right. Where like it obviously had to go down at some point. And I think for the broader non, like, TI is the world championship for Dota. They had a system that allowed their prize pool to get to like $30, $40 million. And a lot of the hype behind that tournament, especially if you weren't a hardcore Dota fan

was just the amount of money that was at stake. Right. And players fund it. But as soon as that money evaporated, it changed the whole ecosystem of that game. Totally. Or Fortnite, which had a huge, that $100 million tournament for a while that eventually had to go down.

Right, but those are marketing events, right? Like essentially, which is just not the way to do esports from my perspective. You know, like, you can't force an esport, right? And like, Riot made some of this mistake, you know, when we're launching Wildrift, right? You know, which endlessly fresh... You guys tried to force an Eastport for Wildrift?

Dude, yeah. Yeah. We made that mistake. Everyone's throwing a million money at a tournament and never works. I know. Okay, I have a question that I would be remissed if I did not ask.

My e-sports career, I came up around a lot of, lot of Dota guys. I'm trying to get signed. I'm trying to get signed. He's very good at Mario. We're scouting you. I worked around, I worked around Dota guys a lot. I worked at Beyond the Summit. I worked on Dota events.

Worked on other games. But something that they, not my coworkers necessarily, I would say like people in the Dota space would bring up all the time when League came up. Yeah. Was that you and Brandon, a long time ago took down, the Dota Forum, I think maybe play Dota and like had the person who runs that or he was working

with you. Yeah. It all of the like data. It was Dota allsters.com. And it wasn't play Dota. So Dota all stars.com. All of the forum and player data about like characters and all these things that the community had access to at the time went away and was replaced by like an advertisement for League of Legends. And so there was this simultaneous loss of like community data. and also like a forcing upon of like this new game. Yeah. This is the story as it's been presented to me. Right.

And I would love to hear your perspective, correct the record, or how you feel about that decision at the time. Yeah. So first of all, that's not exactly at all what happened. But I thought, exactly as I suspected. Totally.

Exactly as I suspected. The Jada donated players who gave me their perspective. Totally. Well, and here's the thing, right? Like, the thing about the internet also

is sometimes when you repeat a story enough, right, it's like the legend grows in the telling and or the meme or whatever, especially if it's premised upon some false premise in the first place, if it's not corrected, right, ever, too, and even if it is corrected, people just believe

whatever they want to believe, it'll just keep going. It becomes reality. I would say, as three influencers, I am a, I hate this phenomenon. Totally. Like, it is, it is an infection in social media now, like particularly. Well, it's the same thing that happens in politics. Yeah.

Yeah. You know, like it's the world in 26. It's, well, and again, like, and even the early internet, right? Like, we were all members of the early internet and things like this, I guess, and Dota and League and all this stuff, like it was, had some of these different dynamics and all this, but, but your point. So, you know, so Pendragon, right? Steve Mascone, right?

It was known as Pen Dragon, right? And he was the, you know, back at the time, like the 16, 15 year old, you know, who built Dota, all-sars.com, right? And, you know, he was this passionate community member, right? He met first Steve Feeke, right, who was Ginston. you know, who was the mod author of Dota All-Stars, who was the guy who created Dota All-Stars and sort of evolved it from Uel's Dota, you know, back in the day by increasing the item, uh,

or sort of created the item combination system, right, increased the level cap from 10 to 25, you know, his bowling ball was named Roshan, which is where Roshan came from, all this stuff, you know, and so, um, anyway, Mascone hit up Penn Dragon, right, hit up Fik, Gensu at one point and it was like, hey, dude, like, this game's awesome, whatever, like, let's build a website, I can help you with it and all this. And so he was like, cool. So Mescon starts building this website and all this. It's dot all starts to come, you know, this community site. And he's volunteering, you know, dozens of hours a week. He's, you know, there's this community members that are showing up.

He's getting servers donated from like a guy that works at Google and all this other places. And again, it's like a teenager, you know, and then Gintu transitions the map to Ice Frog, you know, who does an incredible job of taking, you know, Dota to higher and higher heights. And, you know, and this is sort of the dynamic. And then, you know, Pen Dragon and, and, and, uh, Ice Frog. sort of work together to sort of helps share the community. And this is all like 2007, six maybe?

This would have been, yeah, between 2004, five, six, you know, up this probably seven, like all around and there. It's sort of depending on what era, you know,

sort of talking about there. And anyway, that was a dynamic for a while, right? And like Dota was this cool mod, of course, of Warcraft 3 that was growing virally

that, you know, Brandon and I played and so many other people played were like, oh, this game's awesome, right? And, but it was,

this was part of the thing. We were like, wow, this is this awesome. game that we think is like this birth of this new genre. You know, we called it MoBA, which is kind of stupid, you know, it's in it for multiplayer online battle arena, whatever, but like, we were like, this thing needs to become its own game, you know, and that was sort of, you know, part of the product inspiration to help inform League of Legends, you know, and, and of course, it's sort of the first product

that Riot was aspiring to build to sort of be the sort of validation point around, you know, a great company that could put players at the center and do these things, right? And so, so the, the, the myths around, you know, Ice Frog, Penn Dragon, etc. are pretty interesting, right? And I've, and I've never corrected the record, despite the fact that it burns me up inside because Pendragon is totally wrongfully branded as doing this. And that's not how it went down. The reality was, so Mescon, who also then later on was working its out. Right, which for those, remember, it's this online shoe company, which was renowned for their customer centricity. He's a true believer.

Like he is a community serve, do the right thing for customers. And later when he came to riot, became one of our critical employees that helped really drive and cement and codify this insane passion and mission that we all have for doing the right thing for players. Like he was instrumental. And, you know, I could go on and on about some of these incredible things that Steve Pet Dragon did for players. And so, but, right, as Dota became more and more successful, right? Like, there were always discussions and these guys would be getting hit up by different developers at different points of time to potentially go try to commercialize Dota, right? And so not a novel idea, right?

And so, you know, there was DemiGod, you know, and then there was S2 games that was making Han and whatnot. Yeah. Here's the New Earth, right? And so what happened, right, was I met, so once we, so we hired Gensu back in like late 2006. He was one of the first guys. Like, and after I tracked him down online, like we'd already started the company, already raised money and all this. And, you know, it was a third ginsu, you know, that I sort of tracked down the right person. There was a guy impersonating him in Brazil, you know, all sorts of big things. And, but he was a student at the University of Wisconsin. And, and, um, and, um, Anyway, you know, he just one day, he was just like, I'm, I'm kind of done doing this Dota thing and, you know, moved on and was just like dabbling on games on the side and all this. But, you know, amazing human. But he ended up as like, wait, like actually want to give me a job as an associate designer to come work on. Okay, that sounds cool. You know, and so, so Gintz you join. You know, and then we were talking about it. He's like, dude, like this, you know, pen dragon's amazing. We should chat with him. And so we got in touch a pen dragon, right? And he's like, yo, guys, like, this is not cool. Like, you can't just like, have. that go make a game inspired by Dota, like, what the heck? And we're like, well, we're trying to respect Dota. We think it's awesome and all this stuff. We think it's this whole genre, right?

And he was like, really uncomfortable the whole thing. And so meanwhile, he hits up Ice Frog and they have some conversations and not going to get into all the different details. But long so short, it turns out Ice Frog is working at S2, right? Working on Hahn. And so when Pendragon found that out, right? We were trying to get him to join Riot. And he was telling us no and turning us down.

You know, they were having a bunch of discussion. Icerog tried to go buy the website from him, you know, and said, oh, my grandma left me some money. And so here's 25 grand, let me go buy the website from you. And he was like, yo dude, like, we agreed, we're not going to do this whole thing, you know, and what do you, like, why? Like, where'd you get the money? Like, you sure? And that's what he said, right? And he wouldn't acknowledge that he was from. Okay, yeah. I don't know. You don't know, but the idea is that he's, okay. Right. But either way, when Pendragon found it out, he was like, you know, and sort of validated that it was there. He's like, the I feel betrayed, you know, and so then, uh,

you know, was like, no, I don't want to say the website. So Ice Rock built his own website, right? And then said the whole positioning of this guy's bad and doing this thing. And Penn Dragon went, okay, right, I'll join you. You know, and then came. And then, you know, it was sort of this obviously fracturing the community. And the positioning was the Penn Dragon is a guy who sort of did all this stuff. And that's not how it went down. And so, you know, he's obviously gotten lots of hate and lots of death threats and all sorts of stuff for many, many years. And, you know, in reality, like, he's this super player-focused customer-centric guy, right, who was pouring his heart and soul and building his website and really believed in the, like,

you know, we should not commercialize thing. And then, you know, everybody, you know, the incentive and temptation of sort of, you know, people getting jobs and, you know, evolving, I think was sort of a thing. And, but his whole frame was when he was getting assassinated, you know, character-wise, by this framing of what didn't actually happen. He said, you know, told me, he's like, let them have their hero. You know, and I was like, dude,

like, it's full on dark night. He's fucking bad. He's doing the bad. Like, seriously. Like, I even wrote a letter at one point, all this stuff that I was like, I really wanted to publish it back in like 2010 or whatever. You know, and I felt like,

uh, what, Commissioner Gordon or whatnot where I'm like, this is so effed up. need this. You know, and like, but, you know, he's just, that's his deal. He's like, it's better for Dota for them. To believe. For it just to be what it is and for me to like just move on and whatever and not,

like, not do the thing. So I'm just going to just going to take the site down and we're just going to move. And we're just going to move on. And so that was, that's what he did. I mean, in the long way it worked out for everybody, right? Like the both games are successful. And that's why like, you know, I'm, actually saying this now 20 years later or whatever because um you know it's just i think pen dragon's an

awesome person he's done an incredible thing for you know league players and for riot and for i think for dota actually he was you know really an awesome pioneer around community and helped inform a lot of this incredible like incredible frameworks you know that still inform riots thinking today and anyway now he's actually building this medical company and he's like this awesome guy yeah he's and he's just like his mission in life is to go help people and build community these. He's trying to actually take on the FDA and not take on, but like help create mechanisms where a lot of great things that could help lots of people are not able to get to people for reasons that are not awesome. And he's trying to find ways to get those things to people that would

benefit from those things. So, Mark, you've been incredibly generous with your time. We could probably talk about esports for five more hours easily, but I do have more sports questions. Yeah. Yeah, We can talk all sorts of stuff. You know, I am, I do have a level 20, because it's currently level capped in Wow Forever, Druid. Okay. On PVP. We're back in.

I've got, we'll lose our wives again. I got five on five set of the fang so I can actually turn into a snake, which is kind of cool and a little bit crazy. Like they're doing some fun stuff. And, you know, having a blast. You're doing some fun stuff. Not like Armummo is good. Well, they're doing some cool stuff.

But no, I'm glad that, you know, that Blizzard's having the success they're having with Wow Forever, and there's momentum and the community's viving again. And I hope it's really successful for them. And I would definitely play it on launch. Well, thank you so much. Yeah, thank you guys. Thanks for having me.

Thank you, Mark Merrill. And we'll see y'all next week. Bye, everybody. Peace.