MLBAM's BAM Tech subsidiary is nearing a deal with Riot Games to stream League of Legends competitions and support Riot’s product development, according to sources, a groundbreaking partnership that gives BAM Tech an entry into competitive video gaming and instantly reshapes the economics of e-sports. The deal, not yet completed, is slated to be for two years. One source said it could be worth $90M annually, though that could not be independently confirmed. MLBAM and Riot execs have been in daily contact over the last several weeks negotiating deal points, and a formal announcement is likely within the next several weeks. Riot and MLBAM declined to comment. Riot adds to a rapidly growing BAM Tech stable of clients and partners that already includes Disney, the NHL, WWE, Discovery Communications, HBO and the PGA Tour, among others. Following BAM Tech’s recent partnership with Discovery to support Eurosport Digital’s operations in Europe, the Riot alignment also furthers BAM Tech’s global reach given the robust international popularity of League of Legends.
TRYING TO GENERATE REVENUE: Much of the recent talks between MLBAM and Riot have been focused on refining the ad model within the League of Legends content in order to generate sufficient revenue. Video gaming programming generates some of the largest audiences of any digital content, regardless of genre. However, revenue development has been comparatively slow as Riot and most e-sports publishers typically eschew exclusive media deals, prioritizing maximum reach. To that end, League of Legends content is currently available on Twitch, YouTube, and other streaming sites. It is not known whether the new alignment is fully exclusive, though one source said current streaming partners have been assured they will still have the games in '17. Turner Sports Contributing Editor Richard Lewis yesterday reported a leaked document outlining the framework of the Riot-BAM Tech partnership, which included a standalone video application for the Riot Games website and references to subscription billing. The authenticity of that document has not been independently confirmed. The deal will be watched closely by traditional sports owners and other investors as they look to acquire stakes in e-sports teams, analysts said. Future media revenue has been a difficult X-factor to account for in those negotiations. “This deal is really a watershed moment, not just for LOL e-sports, but for e-sports in general,” said Catalyst Sports & Media Exec VP Bryce Blum, a longtime e-sports attorney.
UNDER PRESSURE FROM TEAMS: The deal also arrives as Riot faces increasing pressure to expand moneymaking opportunities to its individual teams, who currently depend on merchandise, tournament prizes and their own sponsorships to survive. Riot execs in September wrote a letter to fans stating, "Media/sponsorships are a vital part of LoL esports’ economic future. We've been working for over a year to restructure and expand our approach to media distribution and ad/sponsorship sales.” Franchises will demand to know how they will benefit from the BAM Tech deal, Blum said. “It’s probably taken for granted by the traditional sports audience that revenue sharing is a fundamental part of league economics, but it’s not in most e-sports,” Blum said. “Just because this media deal comes through, there isn’t a structure in place to guarantee that the teams and players are meaningful participants in the upside of a deal they’re undoubtedly instrumental in creating.”
