The gigantic broadcast rights deals that fueled an explosion in salaries for traditional athletes are making their first appearance in e-sports.
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New York City technology firm BAMTech is paying the guaranteed sum to Los Angeles gamemaker Riot Games for the rights to distribute "League of Legends" matches in an app and across other services. BAMTech will attempt to make its money back — and more — through ads on the streams, though Riot Games will get an undisclosed portion of the profits.
It's unclear whether the guarantees could escalate based on performance and whether payments will be made in equal or varying installments through 2023. The broad terms of the agreement were not announced, but confirmed by people close to the deal.
Riot Games operates 13 tournaments for its game around the world, with weekly matches running most of the year followed by regional and international playoffs. About 100 million amateurs and professionals play "League of Legends," with tens of millions regularly tuning in to watch the pros.
Starting next year, matches will be broadcast on an app usable across devices. It will be a one-stop shop for data about "League of Legends" leagues. BAMTech also has the rights to include "League of Legends" videos in a multi-sport app the firm expects to launch next year. The app will roll out slowly across the world.
BAMTech plans to work on reaching financial agreements with Twitch, YouTube and other video streaming services for them to simulcast matches and help broaden viewership. Twitch and YouTube have paid Riot Games a few million dollars for streaming rights in the past.
How lucrative the new deal will be for the young adults who dot rosters around the world could become known as early as next week when Riot Games officials meet with team executives. But the effects will almost certainly take at least a year to sink in. Owners of teams, including former Laker Shaquille O'Neal, longtime Hollywood executive Rob Moore and several European soccer teams, have entered e-sports in part because of the anticipated swelling of licensing fees.
"This is a game changer for our sport," Riot Games e-sports directors Whalen Rozelle and Jarred Kennedy said in a statement. "True economic sustainability is a critical means to ensuring a sport that lasts, and this represents a major step towards that goal."
The app is expected to be free to use, consistent with Riot Games' strategy of maximizing viewership. But it could make optional features exclusive to paying subscribers.
BAMTech also handles streaming distribution for sports leagues PGA, NHL and WWE and media companies the Blaze and HBO. Major League Baseball holds a majority stake in the company, while Disney and NHL hold smaller stakes.
Sports media industry experts said last month that MLB could boost its own sport by using "League of Legends" to understand how millennials consume online content. Riot Games could find it easier to work with advertisers now that it has MLB's backing.
"We think the world is ready for e-sports," Bob Bowman, MLB president for business, told Yahoo. "The sponsors are ready for it, dying for it. Every deal has a little bit of risk, but this is the best in the business and we always like partnering with the best in the business."