At first glance, the business model sounds insane—a game that you can download and play for free. Not a free trial, not on a basic account, the game can be played forever while never spending a single penny on it. You read that right—the game is free. Anybody can play it for as long as they want and never have to spend money. While that might sound like an impossible business model, it’s the exact model of “League of Legends,” the competitive battle arena game from California based studio Riot Games.
If you have not heard of “League of Legends,” the game centers itself around two teams composed of individual champions, each with their own play style and skill set, competing in a variety of game types on a variety of maps. The standard game mode is two teams of five, fighting each other on Summoner’s Rift, a map featuring three main “lanes” surrounded by jungle. The point of the game is to fight through waves of minions and turrets to destroy the opposing team’s Nexus, a fountain-like crystalline structure that allows for champion and minion spawns. The game itself draws over 27 million users per day, and over 67 million users login on a monthly basis. The game is the king of online play in North America and Europe, logging more play hours than any other PC game.
That’s right, a free game has grown to be the most-played game on two continents. Not only that, but it has done so in a relatively short time. The game was first launched in 2009, and is currently in its fourth “season” of play. The “season” part relates to the League Championship Series, a world-wide event that pits professional teams against each other in a electronic sports league that culminates in the League World Championship. For reference, the 2013 League World Championship live event sold out Staples Center in Los Angeles, and the online broadcast was watched by 32 million people. The live viewership of 8.2 million people beat the 2013-14 college football bowl game average viewership of 5.6 million per game. The 2013 champions, South Korean team SK Telecom T1, took home a grand prize of one million dollars.
So, Riot Games took a free-to-play game and, in only five years, built it into a phenomenon that draws an audience usually reserved for sporting events, and a customer base that exceeds the population of all but 19 countries on Earth. Not only that, they give away million-dollar prizes, and they recently sold out the South Korean Olympic Stadium for the 2014 League World Championship. How did Riot do this, you ask? It’s simple: They made the addiction free.
League of Legends is free, but that doesn’t mean that you can’t spend money on the game. While a batch of champions, the user-controlled warriors in the arena, are released free each week, the vast majority of champions are not. While you can save up influence points (IP) to permanently unlock champions, it is much easier to simply purchase Riot Points (RP) to instantly unlock them, which in turn can be bought online with your credit card or in stores in the form of a gift card. Similarly, Riot Points (which translates to real-life money spent) can be used to buy skins for your champions, customizing the look of your in-game player.
While each purchase ranges between $5-$20, which is much cheaper than the average video game, these purchases can add up quickly once you are absorbed into the game. Find a champion that fits your play-style? Better buy him or her, because they will not be free for more than a week and it could be months before they are free again. Want to distinguish yourself from the hundreds of people playing your champion at any time? You’ll have to cough up the cash for a skin. Since it’s easy to make purchases while playing, and they are rarely over $10 at a time, the system enables players to make the occasional cheap purchase without even really thinking about it, which can add up to a lot of money in the long run.
That’s where the genius of Riot’s model comes into play. For a normal video game, you pay $60 up front, and then you get access to all of the game’s features. Some games, such as the ever-popular Call of Duty franchise, will eventually releases Downloadable Content (DLC) to boost the game experience, but the game does not really change over time. League of Legends, on the other hand, is constantly evolving. New champions, new game modes, new skins, and more are released all the time. The weekly patch brings a new wave of changes, both big and small, and keeps the game fresh no matter how many hours you put in. No two matches are the same. Once you become hooked on the game, it becomes easy to just spend the occasional $5 to help boost your gaming experience. While these occasional purchases are cheap compared to the $60 cost of a standard game, they do add up, especially for players who play for years. Many players end up spending hundreds of dollars on the game over time, as they amass their arsenal of champions.
This presents a very intriguing option for new businesses: the free start. Why force your potential customers to risk their hard-earned money on your product when you can let them try it, get them hooked, and then make money off of them in the long-run? This does not have to just be in free-to-play games. By giving the customer a free sample of your product, you can assure that more of them will have good will towards you. Those that like your product will likely become return customers, and you will have built up a more successful foundation for your customer base. People like free things. Give them free things, and they have higher odds of becoming repeat customers. A one-time purchase helps your company less in the long-run than a repeat customer, and giving them the product free first can lead to far more purchases, more than making back the money of the free sample.
The key is simply to build a product, or have a service, that people want more than once. Make people want to return. Make them want to keep coming to you for years to come. I have been playing League of Legends for over two years now and, despite being skeptical to start, here I am. I only downloaded the game because my friend wanted me to and, since it was free, there was no risk. I fell in love with the game, and quickly broke my promise to never spend money on it. Now I am a Riot customer (fellow summoners: I am StupidtheWise, if you’re looking for me after this) and they have earned themselves not the one-time purchase of me buying the game, but rather someone who will keep coming back and paying to improve my experience. That’s the sort of customer you should strive for. Consider the free start, and remember just how successful it can be.
Ryder Cochrane is a student at the University of Oregon and a publications intern for Palo Alto Software.
