9 -4 1 6 -0 1 6

AUGUST 20, 2015

BORIS GROYSBERG

MICHAEL NORRIS

Riot Games: Can Culture Survive Growth?

In April 2015, Riot Games cofounders Brandon Beck and Marc Merrill, CEO and president,
respectively, sat together in a booth in the Bilgewater Brew watching fellow Rioters a play games—
everything from basketball to chess—in the courtyard of the company’s brand new headquarters
campus in Los Angeles (LA), California. Meanwhile, dozens of Rioters sat in the company’s cafeteria
and watched on four massive screens as their colleagues battled each other in games of League of
Legends (LoL), Riot’s first (and so far only) published videogame (see Exhibit 1), the most popular
online personal computer (PC) game in the world in 2015. Bilgewater Brew, a coffee bar with a theme
based on some of the characters (called “champions”) in LoL, ranked among Rioters’ favorite parts of
their new campus, custom-built to accommodate and encourage the creative, collaborative, and
sometimes chaotic work that the 1,100 people working there did each day.

Beck and Merrill were proud of the strong culture that had developed in the company. While a
love of gaming was the shared passion that tied everyone together, Beck and Merrill’s leadership had
instilled a common set of beliefs across Rioters. Rioters strove to be player-focused, to be skeptical of
the status quo, to be focused on hiring, mentoring, and coaching each other well, and to be
“humbitious”—a combination of humble and ambitious. They saw Riot’s diversification into other
entertainment offerings—including music, animation, and esports productions—as a sign that the
culture and talent that Riot cultivated could continue to create hit content in the future.

Nonetheless, there were some nagging doubts. How would the company’s future game offerings
fare after a decade of focusing almost exclusively on LoL? Were Riot’s systems too rigidly intertwined
with LoL to make for an easy transition to supporting future games? Were Rioters ready to embrace
the new challenges that future games would bring? Would new games developed by industry
heavyweights such as Blizzard Entertainment for the purpose of competing with LoL succeed in
taking significant market share from Riot? What roadblocks would Riot have to overcome as it
continued its growth into the future? More generally, could Riot’s culture survive growth?

Leaving Bilgewater Brew, the cofounders continued their discussion as they made their way
through Shurima, Demacia, and Freljord—all parts of the new campus named after LoL champions’
city-states of origin—before arriving at their pit-style workstations to continue their workday.

a Rioter was the term the company used for its employees.

Professor Boris Groysberg and Case Researcher Michael Norris (Case Research & Writing Group) prepared this case. It was reviewed and
approved before publication by a company designate. Funding for the development of this case was provided by Harvard Business School and
not by the company. Professor Groysberg has performed paid consulting work for the company. HBS cases are developed solely as the basis for
class discussion. The case is a part of the YPO/OPM research project. Cases are not intended to serve as endorsements, sources of primary data,
or illustrations of effective or ineffective management.

Copyright © 2015 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685,
write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu. This publication may not be digitized,
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416-016 Riot Games: Can Culture Survive Growth?

Videogames Industry
Some of the earliest videogames were coin-operated arcade games like Pong. Games designed for
computers and gaming consoles like the Nintendo NES followed in the late 1970s and early 1980s.1
Due in part to the different control mechanisms between PCs (using a mouse and keyboard while
sitting within arm’s reach of a monitor) and gaming consoles (using specially designed controllers
while typically sitting on a couch), different types of games became popular on the two different
channels. PC games tended towards real-time strategy (RTS)b and role playing games (RPG),c while
console games were more often first-person shooters (FPS),d action/adventure games,e or sports
games.

PC games By the mid-1990s, hundreds of PC game development studios had sprung up along
with a few major game publishers such as Electronic Arts (EA), Activision Blizzard, and Ubisoft.
These companies both developed their own content and served as third-party publishers for the
smaller studios. Developing a game involved artistic expertise, creativity, and computer
programming skills, while publishing games involved creating the game discs and packaging, and
marketing and distributing the game to software retailers such as Best Buy and Electronics Boutique.
PC games began taking advantage of Internet connectivity by the mid-1990s, allowing for new
gameplay modes and automatic game updates once the game had been installed on the PC. Internet-
based distribution of games began to take hold in the mid-2000s.2 Top PC games could fetch $60 or
more.

Console games Console gaming advanced in discrete leaps. The three major console makers—
Nintendo, Sony, and Microsoft—released the successive generations of their respective proprietary
gaming hardware every five to seven years. Consoles typically cost $300-$400 when new. With each
new generation of a console, the processing power and graphics improved exponentially, and new
games were never compatible with an older generation of the console. 3 Like PC games, console
games could cost anywhere from just a few dollars to $60 or more.

Mobile games With the birth of smartphones and tablets in the late 2000s, a new channel of
videogaming emerged. Mobile games were typically devoid of the complex storylines that many PC
and console games had. They relied on the touchscreen as a control mechanism, had to be small
enough files to allow for easy downloading from a mobile application store, and required gameplay
that was simple enough for the small screen and bite-sized attention span of casual mobile gamers.
Unreliable mobile Internet bandwidth also presented several challenges that made competitive
multiplayer games difficult to create. Mobile games typically cost a maximum of only a few dollars,
with the majority being free to play and supported by optional in-game purchases.

b RTS games pitted two teams of fighters against one another on a game map in a chess-like scenario. The winning team
destroyed its opponent’s home base while defending its own base.
c RPG games allowed a player to embody a character and explore the game’s world, interacting and fighting with other
characters.
d In FPS games, the player’s viewpoint was in the first-person perspective and typically involved shooting enemies to advance
in the game.
e Action/adventure games encompassed a broad genre in which players solved puzzles and fought enemies to complete some
sort of overarching quest.

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The Videogames Industry in 2015

In 2015, videogames were an $80 billion global business.4 Major markets included North America,
Western Europe, Russia, Japan, China, and South Korea. The industry was growing at a rate of about
10% annually (see Exhibit 2), driven by the rise of mobile gaming and the new generation of consoles
released in 2013-2014.5 Mobile games made up about 20% of the market, PC games 35%, and console
games 45%.6

Major players in the industry included the Japanese firms Nintendo and Sony, the American firms
Activision Blizzard and Electronic Arts (EA), and France’s Ubisoft.7 While physical distribution of
consoles and games was concentrated in electronics and big box retailers, as well as ecommerce sites,
digital distribution of content took place on mobile application stores, each console’s digital store,
and the Steam digital gaming platform, developed by the American company Valve. Steam handled
about 75% of all digital PC game content transactions in 2015,8 a market that topped $10 billion
globally.9

Major Trends
The biggest trends in the industry in 2015 were virtual reality, the growth of alternate publishing
and funding for developers (e.g., Kickstarter, or Valve’s Steam Greenlight platform), and opening up
videogames to more casual players. Cheap and easy-to-play mobile games were being embraced by
people who previously thought of themselves as not having the time, money, or skill for videogames.
New technologies such as motion sensitive controllers or motion-capture cameras allowed for new
games that were more physically interactive. Simple touch screen games on tablets allowed even
infants to play. And game developers were targeting their games to more girls and women than ever
before, an overlooked audience. The new business model of free-to-play games with optional in-
game purchases also reduced a barrier to entry (i.e., the upfront cost of a game) for many players.

As a result of these trends, the video gamer market grew about 10% annually from 2008 to 2015,
topping 150 million gamers in the U.S. and 1.2 billion globally.10 The market was segmented based on
how much time an individual spent playing games—core gamers made up one end of the market,
while casual gamers occupied the other end. Merrill explained, “Our perspective on core gamers is
that they play games nearly every day and devote a large portion of their free time to gaming; they
enjoy playing games of all genres on all platforms. Casual gamers, in contrast, play games only
occasionally, often as a diversion rather than as a primary focus of their spare time. If their friends are
playing, they’ll join in.” Core gamers made up about 20% of the overall gaming market, but
accounted for almost half of all videogame spending.

Esports
Esports, videogaming as a spectator sport, began to develop as videogames started to become
popular in the 1970s and 1980s. It was not until the late 2000s, however, that a broad audience of
millions of people in the West began to take notice of esports. The Internet helped spur this growth,
connecting individual players into communities who could organize tournaments and attract
sponsors and advertisers. By 2015, widespread broadband Internet access around the world allowed
gamers to live-stream their gaming sessions on gaming broadcasting sites like Twitch.tv for others to
watch. Merrill explained:

The rise of esports may seem strange to many who aren’t intimately familiar with
why videogames are so compelling to play, let alone watch. Certain videogames have
extremely deep paths to mastery on both an individual level and at the team level, akin

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to traditional sports such as American football. To the uninitiated, football looks like a
bunch of large men running into each other time and time again. Yet, to the fans who
understand the nuances of the sport, they appreciate the incredible depth and
complexity that exists at the individual level, where a player’s position informs the
techniques to master, the physical prowess one needs to possess and the understanding
of the team’s tactical and strategic plans to counter the opposing team. These exact same
dynamics exist in team games like LoL and make it extremely interesting to watch for
fans who appreciate the nuances of the game.

It’s also interesting because the stakes are big. The growth of esports has allowed the
top gamers to become professionals and make thousands, sometimes millions, of dollars
playing games. They make money through a variety of avenues, such as salaries from
professional teams, winning tournaments, sponsorships from major corporations like
Samsung or Coca-Cola, and advertising while they livestream their gaming on
YouTube, Twitch, and other platforms.

Riot Games Early History

Brandon Beck and Marc Merrill
Beck and Merrill were self-described core gamers, who were avid members of multiple online
gaming communities in the late-1990s and early-2000s (see Exhibit 3 for more information on the
development of these gaming communities). They met in high school and became friends while they
were in college together at the University of Southern California (USC). Merrill, a year older than
Beck, graduated from high school and started at USC in 1998. Beck, however, dropped out of high
school after his junior year. Merrill explained:

Brandon wasn’t a big fan of the structure of the high school curriculum. Its rigidity
kind of drove him nuts. He felt it was inefficient and was frustrated when he would ace
standardized tests but still get dinged by teachers for not completing homework that he
perceived as arbitrary and uninteresting. Brandon was always doing a million other
things outside of school—for example, he took a college extension course at UCLA and
started a web hosting company—and couldn’t wait to be done with high school. He
found that USC had a program where they accept a few high school juniors each year, so
he applied, was accepted, and that’s how we ended up at USC together, since I was a
year ahead and already there.

Beck and Merrill stayed close friends through their years together at USC, and after graduation
they became roommates as they began their careers. Beck became a consultant, while Merrill went
into marketing. All the while, they played online games and discussed their dreams of starting a new
kind of gaming company. As Beck explained:

Marc and I had back to back gaming rigs in the small apartment that we shared after
college. Whenever we could, we would play games together and, given our shared
passion for games, couldn’t help ourselves from talking about the future of the industry
and how we felt that our needs as players weren’t really being met. We played the types
of games that you would play for hundreds or thousands of hours and would become
deeply immersed in the online communities around these games. We often felt
abandoned by some developers because due to their business model, after releasing a
title, they would need to move on to the next game that could sell units and would

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rarely continue to nurture the existing game and community that we loved being a part
of. We couldn’t blame them for that, but it got us thinking that the game company of the
future would be a different kind of company that continually catered to specific niches
of gamers—people like Marc and I who wanted to play certain games really deeply.

The Birth of Riot Games and League of Legends

In 2006, Beck and Merrill decided to create Riot Games, a company founded on the aspiration of
becoming the most player-focused game company in the world. For their first product, they decided
to develop their own multiplayer online battle arena (MOBA) game; gameplay would be similar to
other games in the genre that had been popular (refer to Exhibit 3), but it would solve some of the
problems that those games presented by evolving and improving the experience.

Beck and Merrill began working together on a business plan in mid-2006 and sought out investors
to support the development of their new game—League of Legends. Worried that investors would not
take a couple of 20-something gamers seriously, Beck and Merrill focused their early business plans
and communications with potential investors on the strategy of disrupting the dominant business
model of physically distributed games with a model that focused on continuously delivering value to
core gamers through a service-based game and a long term relationship with players.

LoL, as it was envisioned by the two founders, would be a MOBA that was completely free to
play. This was unusual at the time; most videogames had either an upfront price or a subscription
model. It would be distributed primarily over the Internet rather than sold as a DVD in stores, and
players would download and install the LoL program onto their computers to play the game rather
than playing it directly within their web browser. Once in the game, players would have the
opportunity to purchase access to digital content and features with either in-game currency, which
could be earned through gameplay achievements, or real-world currency (i.e., dollars, euros, yen,
etc.). However, real-world currency was mostly used for cosmetic digital goods such as new
costumes for the game’s champions. Players could not pay to improve their champion’s skills or
power, which was something that many other games allowed, but that core gamers found distasteful
in a competitive game like LoL because it undermined the sense of fairness and a level playing field
that core gamers were expected to have.

Actual gameplay would consist of a five-on-five battle to defeat the other team’s home base. Like
in Aeon of Strife and Defense of the Ancients (DotA), there would be a map with specific lanes for the
teams to advance towards each other (see Exhibit 4). Play would take place almost exclusively in an
online multiplayer mode (they did develop a training mode to allow new players to learn how to
play the game by playing against computer-controlled characters). Players would select from a list of
champions with a wide range of abilities and therefore battle styles—some champions were more
focused on defense, some on offense, some on shooting from afar, some on hand-to-hand combat,
some on supporting their teammates.

Starting the Player-Focused Company

Beck and Merrill began reaching out to potential investors to drum up interest to fund a $1.5
million angel finance round in late-2006 so they could begin building the game; by the end of 2006,
Riot Games had been officially incorporated and had begun work on LoL. One of the company’s first
hires provided an early lesson for the young founders. As Beck explained:

In the very early days we were deferential to one of our early leaders that had direct
experience in the games industry. Up to this point, our game development experience

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was limited to what we had learned in school and our crude modding and hobby
projects. We had a clear vision for what we wanted to build, but we often suppressed our
instincts around how because we didn’t want to micro-manage or clip the wings of those
with more experience. However, within months it became clear that if we wanted to
build and deliver game experiences differently—a live service instead of a shiny disc, no
$60 price point, and an uncompromising focus on our multiplayer experience instead of
the standard approach to prioritizing the single-player campaign—especially given our
very limited resources, we would require a healthy disregard for “how things were
always done.” Instilling this value around questioning the status quo and clearly
understanding the nature of the game we were making and the type of player we were
serving became critical. And an impending big milestone forced Marc and me to get
extremely hands-on and lead development. Our small team came together to meet the
milestone, and Marc and I learned to trust our gut instincts as they brushed up against
the industry status quo.

Development continued on LoL through 2007 and 2008. Beck and Merrill raised $15 million in debt
and equity financing from venture capital (VC) firms over this period. The company scaled slowly,
growing the team to about 50 people by mid-2008. While the game envisioned by Beck and Merrill in
2006 (and described above) was very similar to what LoL eventually became, the founders originally
envisioned Riot Games as solely a game developer, not a publisher. The decision to self-publish the
game was driven by a desire to provide a great end-to-end experience to players. Merrill described
their rationale for why they ended up being quite vertically integrated:

We consistently tried to find off-the-shelf solutions to non-gameplay technology that

we needed to make the game work—things like the digital store, the player matching
system that determined who you’d play with and against in a particular game, or the
servers hosting the game traffic. But in each instance, we found that off-the-shelf
technology would deliver what we considered to be a subpar player experience. In one
case, we got pretty far along with a third party system only to find that it couldn’t scale
to meet our anticipated load, so we had to build our own technology from scratch,
pushing back our launch date by a full year. We also decided to build our own
publishing organization to take LoL to market ourselves because our conversations with
potential third party publishing partners didn’t give us the confidence that they
understood our vision for how integrated development and publishing needed to be in
order to deliver a great experience to players.

In Riot’s early years, Beck and Merrill strove to develop the company’s culture to attract and
retain the type of professionals who would lead it to achieve consistent wins. They soon found that
hiring other core gamers was a good strategy to get hires who fit the company culture. As David
Banks, current co-head of LoL, who joined the company in 2008, explained, “We define our company
by our audience—core gamers—not the MOBA genre of LoL, nor the PC platform that LoL is played
on, nor the business model [that LoL is free to play]. Everything we do is striving to meet and exceed
the needs and expectations of core gamers. So Rioters first must understand those needs and
expectations; it helps if you are a part of that audience.” The company believed that a set of common
personality traits and work styles could often be found in core gamers—a desire for flexibility in
working arrangements and tasks (often described as “creative chaos”); a love of learning and
improving one’s craft (called “levelling up,” a term from gaming); favoring a merit driven decision-
making system and a meritocracy rather than a bureaucracy with established rules and processes;
and a respect for giving and receiving open and honest feedback about their work, both in terms of
substance and style.

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The Riot Manifesto

To codify the important aspects of Riot’s culture, Beck and Merrill devised a statement of the
company’s values, which they debuted in 2012. The Riot Manifesto encompassed five points:

Player Experience First: We obsess over every part of the experience, from a player’s first game to
their thousandth win, from installation to support to esports broadcasts. It all matters. We listen to
what players say and do. We analyze. Then we make data-informed decisions to improve the
experience.

Challenge Convention: Impossible’s our favorite kind of possible. Doing the right thing often
requires disregarding the rules and upending the status quo.

Focus on Talent and Team: We attract, develop, and cultivate entrepreneurial teams who prefer
action over process and bureaucracy. We’re a sports team, not a family. As a meritocracy, we value
results delivered.

Take Play Seriously: It’s never just a game. We play lots of games and proudly call ourselves
gamers. Even at work, we make time for daily play and fun. We’re professionals, but don’t take
ourselves too seriously.

Stay Hungry, Stay Humble: We strive to be humbitious—ambitious and humble. Complacency

kills innovation but ambition kills complacency. We humbly seek and accept feedback. We credit the
larger team: the families, teammates and players who make it all possible. And we believe there’s
always more we can do for players.

As the Riot Manifesto was unveiled, Beck and Merrill also announced a system for recognizing
outstanding performance and embodiment of the Riot culture by Rioters—the Champions Cup. The
Champions Cup was a silver trophy (engraved by the same trophy-makers who handled engraving
on the NHL’s Stanley Cup) that was shipped around the world to Rioters to recognize their
contributions to the company. Each winner had his or her name engraved on the trophy and his or
her story told to the company.

Data Informed, Not Data Driven

One group at Riot, the “insights” team, mined the petabytes of data on player activity that the
company had accumulated to understand what player-focused insights could be gleaned. Their
findings led to constant small tweaks to LoL to improve the player experience. One example of a
change brought about by the insights team was Riot’s efforts to reduce toxicity in gameplay. This was
just one example of how data insights could guide Riot’s strategy, but Merrill was careful to note,
“Riot is data informed, not data driven. We use as much information as possible to guide our
decisions, but we do not allow the data to make decisions for us. Delivering great experiences to
players is more of an art than a science.”

Toxicityf was a term that referred to habitual negative behaviors, specifically, in Riot’s case, the
negativity that sometimes appeared in the live chat feature of LoL. While a LoL game often began with
players telling each other “GLHF”—good luck, have fun—that sentiment often did not set the tone
for the rest of the game. A game was a highly competitive battle, often involving 10 teens operating in

f For more on toxicity, see Marcia Lynn Whicker, Toxic Leaders: When Organizations Go Bad, (Westport, CT: Quorum Books,
1996).

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the anonymity of an online game. Put-downs and trash talk were an occasional, unfortunate aspect of
LoL, as was the case in nearly all online videogames. Riot’s insights team discovered that LoL players
who experienced toxicity in gameplay from teammates or opponents were less likely to come back to
the game. As Banks explained, “It’s not necessarily our fault that our players can display
unsportsmanlike behaviors to one another, but it is our problem to address.”

Riot’s solution involved players and technology to reduce toxicity and teach players
sportsmanship. Riot developed a machine-learning program that allowed its computers to
understand toxic speech in all of the languages (and gamer acronyms) that LoL players used and
issued automatic warnings and more severe penalties, such as banning a player from the game for a
set time period. It also added a feature that allowed players to report their teammates’ or opponents’
toxicity. All penalties were reviewed by a system of volunteer player tribunals. The tribunals were
automatically sent reports of the problem and recommended penalties, and they decided if the
penalties were appropriate. Riot found that their efforts had reduced toxicity of all types by 2015.

Launching League of Legends and Scaling the Company

Developing and Launching the Game
After three years of development, Riot Games launched LoL in late 2009. At its initial launch, the
game was available in North America and Europe, with localized versions of the game in Spanish,
German, French, and English. Players could choose from a roster of 40 different champions (see
Exhibit 5) to use in the game. Five-versus-five online multiplayer battles took place on a three-lane
map called Summoner’s Rift, and the game offered a player-matching system that allowed for evenly
matched teams to face off against each other. In addition, players could enter the game with a fully or
partially pre-formed team, a feature that other online multiplayer games at the time did not allow.
Tom Cadwell, head of game design, explained:

We built our matching system from scratch because we wanted players to be able to
play together with their friends. At the time, no MOBA had a matchmaking system built
into the game—players would just meet up in the game’s virtual lobby, negotiate the
teams, and start the game. Looking at the marketplace, we felt that the best solution
would be an automated matching system that put together games with two fairly
balanced teams. This ended up being difficult for two reasons. First, very few companies
had the technical know-how to do this sort of system. Second, we felt that introducing
partial-premade matchmaking, where players could join games by themselves, or as
teams of two, three, four, or five people, and then be matched against other teams,
would provide less social friction and allow players to more easily recruit their friends
to the game. Managing this fairly was extremely challenging, and we ultimately hired a
machine-learning expert to help us optimize a solution. Then we still had to convince
our community that it would be fair. Initial reactions were skeptical, and many players
assumed it would not be able to fairly balance a game. Ultimately, the feature was both
convenient and fair, and players embraced it, aiding the viral growth of the game.

LoL was critically acclaimed at its launch, winning several videogame industry awards (see
Exhibit 6), but player adoption was relatively slow. Chris Enock, head of LoL publishing, explained:

The marketing strategy we focused on was to deliver the best possible player
experience at all times. We did not add players that fast at the beginning, but players
had deep connections to the game instantly. They played for hours, and they brought

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their friends into the game through word-of-mouth buzz, so a network effect developed.
About 80% of our players have joined the game because their friends invited them to
play. LoL is also a popular topic on reddit;g after launch, it quickly became the largest
videogaming subreddit on the site.

Beck and Merrill cultivated a company with an unusually sharp focus on LoL. Merrill explained:

We are in a dynamic industry that is changing rapidly and has many attractive
opportunities that we have at times been criticized for not pursuing, but we felt that
losing our focus on LoL would have been a mistake. We operate LoL as an online service
that evolves and changes over time, and as such, when we originally launched, our
perspective was that we couldn’t treat this like a traditional consumer packaged goods
product where the product is “done” upon launch. We felt that we owed it to our
players to continue to improve the game to make it the best experience possible and we
still believe this today.

As a free-to-play game, LoL had millions of players who did not pay Riot for their many hours of
gameplay (see Exhibit 7 for a comparison of LoL and some other PC games). Riot, however, still
considered nonpaying players its core customers. Enock explained, “There is no ambiguity in the
company about customer versus player. Any player is our customer. Even if they never pay for
anything within the game, players can spread the word about LoL, they can help us improve the
game experience, and having millions of players makes it so that there is never a time when any
player is unable to join a new LoL game with other players of their level.”

Going Global
As the company continued to grow (see Exhibit 8), it began to enter new global markets. Riot
initially planned to partner with international game publishers to make LoL available to players
outside of North America, but, with the player-focused business strategy in mind, the company
decided that existing foreign publishers with whom they could partner might offer international LoL
players a subpar experience. With that decision came a set of new challenges for the company. As
Nicolo Laurent, head of international business, explained:

That which must be consistent for all LoL players around the world is decided
centrally in Los Angeles—things such as the in-game experience. The same roster of
champions is available to everyone in the world. Those things that affect how we
execute locally are decided in our international offices, which are all staffed with natives
of their location. Riot pushes the empowerment culture even in its international
structure with full authority on local decisions, headcount, budget, marketing, player
events, and front-end content, such as the homepage that you see when you log in to the
game. We also locate servers in our international markets to improve the speed and
reliability of the gameplay experience. It is the same gaming experience around the
world, but delivery of the game is tailored to local customs. Every local Rioter reports to
the head of the territory, and we removed reporting lines to LA to address the issue of
internationally-located Rioters feeling disempowered compared to those in LA.

Riot used a combination of local player interest and local talent availability to determine which
markets to enter. Thus, South Korea was one of the earliest markets; it was home to the largest
concentration of core gamers in the world. However, Riot’s office in Istanbul, Turkey, a relatively

g A discussion forum site that aimed to be “the front page of the Internet.” A subreddit was a discussion topic on the site.

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small gaming market, opened before its office in Tokyo, Japan, a very large gaming market, due to
the difficulty in finding the right talent in the latter country. Laurent explained,

Staffing in Asia can be difficult because Riot’s culture often conflicts with the local
culture. We are happy to accommodate the local culture until it conflicts with the
company’s culture. For example, we have no problem with incorporating feng shui h
principles into our office designs in regions where that is meaningful to Rioters, but we
will not put in place a rigid hierarchy as it goes against our empowerment culture, nor
accommodate people “saving face,” as it goes against our desire for transparency. This
makes it more difficult to hire in locations where saving face is customary, but we don’t
compromise on it.

In 2010, Riot partnered with the Singaporean technology company Garena to publish LoL in
Southeast Asia, and the 2011 launch of LoL in China was handled by Chinese publisher TenCent.
TenCent also purchased a majority interest in Riot Games in 2011 by buying out the stakes of the
early angel investors and VCs. As Beck explained, “TenCent turned out to be an extremely
supportive investor for the next phase of Riot’s growth.”

Riot’s Esports Division

LoL was the largest esport in the world and the most popular game on Twitch.tv in 2015, as it had
been for several years. Riot’s esports division hosted annual world tournaments of collegiate and
professional teams of LoL players. The world championship game in October 2014 in Seoul was won
by the Samsung White team, which received a $1 million prize and the Summoner’s Cup, a trophy.
Like the rest of Riot, the esports division was focused on delivering value to players. Beck explained:

We always dreamed about the production values of our broadcasts and live events
approaching those of our favorite sports. This was not an easy challenge because very
few veteran event producers, camera operators, directors, on-air personalities, etc., had
experience with games. We wanted to draw on broadcasting and event production
talent from the NFL and the Olympics, but they also needed to be fluent in games or be
predisposed to bear-hugging all the micro nuances of LoL, because nothing is more
disappointing to audiences than an inauthentic broadcast. The intersection between core
gamers and pro broadcasting talent is not particularly deep, and we learned to cultivate
certain roles from within our community of players and pros, such as our on-air
personalities, analysts, and in-game camera operators, where we invest heavily in
training. Most of our directors, producers, and camera operators are extremely
experienced veterans who love games and are eager to build something new together.

Riot in 2015
By 2015, Riot had branched out beyond its core business of making and publishing videogames.
The company had released albums that had topped the iTunes charts, produced music videos and
animated shorts with tens of millions of YouTube views, and offered LoL-related merchandise, such
as t-shirts and figurines of champions, in its online store. Riot Games’ esports division had helped
grow and popularize videogames as a spectator sport. The 2014 LoL World Championship was
played live in front of a sellout crowd of 40,000 in the Seoul World Cup Stadium in South Korea and
was watched by 27 million people around the world, with broadcast commentary in 19 different

h Feng shui was a Chinese architectural design philosophy that aimed to spiritually harmonize a space and its occupants.

10
Riot Games: Can Culture Survive Growth? 416-016

languages. In 2015, LoL was played daily in more than 145 countries around the world, and Riot had
14 regional satellite offices serving those local markets. All of this created an immersive and enriching
experience for LoL players, and, as a result, they kept coming back to the game. Beck explained:

We see these “around the game” experiences as enhancing and deepening the
experience of LoL. We view our esports broadcasts and events in the same way we
would think about creating a new game feature for LoL. The goal is to deepen
engagement by delivering great content that our players want to experience and enjoy
the characters and world beyond what’s possible in the moment-to-moment game
experience. The LoL universe is vast and complex and is best experienced through a
variety of different media and storytelling vehicles where appropriate.

The company employed 1,800 people—1,100 in LA and 700 in satellite offices around the world.
Riot had estimated annual revenues of at least $1 billion,11 and at its last public announcement, in
January 2014, Riot noted that LoL had more than 67 million monthly active players. About 90% of all
players were male, and about 80% of players were between 13 and 28 years old. Players accounted for
more than 2 billion hours of monthly gameplay.

Organizational Structure at Riot

The company went through a series of management models in its early years, eventually settling
on a matrix model (see Exhibit 9). In the matrix structure, Rioters were allocated into departments,
called disciplines, focused on cultivating the expertise of Rioters according to a particular specialty,
such as art, engineering, design, product management, etc. The company was strategically aligned
around several different products—LoL, R&D, esports, etc.; within each product there were typically
several initiatives. For example, within LoL there were five initiatives—gameplay, personalization,
service availability, social play, and the platform ecosystem. Within each initiative, there was a
variety of work to be done; for example, within the LoL gameplay initiative, some Rioters from
different disciplines worked as a cross-functional team to create new champions.

Cross-functional product teams focused on solving high value problems according to a very clear
and specific customer need. Riot formed new product teams for each major game development
project it faced. Game development work at Riot followed the agile software development model.
Development work was broken down into chunks that could be tackled in two-week sprints by teams
and were constantly iterated upon. These product teams had variable leadership make-ups according
to the specific needs of the particular product opportunity the team was working on addressing. The
product leader was in charge of ensuring the end product was the most optimal solution for its target
audience, whereas the discipline leadership and team members on product teams helped ensure the
work was done in accordance with company or product standards, such as adhering to engineering
or artistic guidelines and style. Teams also usually had a designated process leader who was in
charge of delivery and ensuring the team was efficiently working together and with other teams that
may have interdependencies, with a huge focus on collaboration. Individual Rioters occasionally
worked on or led a handful of teams at any given time.

Engineering, the largest discipline in the company, with more than 350 Rioters, had been managed
by Scott Gelb since 2008. He noted:

Riot’s work system allows Rioters to behave as owners. Discipline managers don’t
tell Rioters what to work on each minute of the day. Anyone can find a problem, devise
a solution, put together a team, and iterate on it. It is an empowering way to work, and
it leads to some very innovative solutions. We ultimately aim to foster strong

11
416-016 Riot Games: Can Culture Survive Growth?

autonomous teams that make great decisions in ambiguous situations. But it can be a bit
confusing for new Rioters to step into a role with so little structure. It’s not that no one
helps you figure out what to work on when you start your first day, but there is a lot less
direction than most people are used to. Rioters need to be able to deal with ambiguity;
that’s why we spend a lot of time in the interview screening process on critical thinking
and judgment. Many of the situations we encounter on a daily basis are novel and have
no playbook to draw from; thus, we must be able to synthesize the data we do have and
make decisions in ambiguous spaces.

Riot’s People Practices

As Riot was focusing on attracting players, it was also scaling up the size of the company. The
company set a high bar in terms of talent and did not hesitate to exit team members who could not
meet performance expectations. As game producer Steve Snow explained, “Riot got a reputation in
the industry for firing people, but we created a mindset of strong performance. We want to hire as
many 10X-ers as possible—people who perform at 10 times the level of an average performer.” CFO
Dylan Jadeja noted, “Great people attract great people. Marc and Brandon have attracted a lot of
highly talented individuals to this company, and some of our best hires come from Rioter referrals.”
Merrill explained:

Riot looks to hire “athletes” whenever possible—people with incredible potential

that we think will perform far better over the long term than other people who have
more experience and may look better on paper. We believe that this type of person can
be 10X more effective than their peers and seek to put them on teams that can really
unlock their potential. That being said a 10X-er on one team isn’t necessarily going to
perform at their full potential on all teams, so it’s very important for us to understand
the unique strengths and weaknesses of individuals and to design teams and working
styles to harness their strengths. Saddling a 10X-er with a team that operates in a
different style than they need can not only undermine their effectiveness, but also
frustrate them and cause them to want to leave the company. But when we get this right,
these 10X-ers often lead their teams to accomplishing great things that ordinary teams
would simply not be able to accomplish. Understanding the varied strengths that
Rioters offer and composing effective teams is a challenge for managers that we think
about and work on all the time.

10X-ers don’t worry about job security because they can work pretty much wherever
they want. So retaining them is about ensuring that they’re working on really
meaningful problems with other great people and actively trying to minimize the typical
organizational roadblocks that would get in their way and frustrate them from
accomplishing what matters. They’re also extremely demotivated by average or low
performers; we can’t let low performers linger, as great people want to work with other
great people.

Riot’s internal research revealed that Rioters scored very high in tests of cultural alignment. Beck
and Merrill attributed this to their hiring practices and operational systems, including onboarding,
performance reviews, and learning and development classes whose philosophies were informed by
the hiring culture. Hiring was an involved process at Riot and was considered a leader’s most
important job. Art leader Adam Murguia, explained, “Working at Riot feels like surfing on the
shockwave of an atomic bomb. The company has grown fast over the last few years, and my primary
focus has been hiring great talent. We are very deliberate and work hard to seek the best possible

12
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culture fits.” Involuntary turnover (i.e., firing), which had been relatively high in Riot’s early days,
was low in 2015, while voluntary turnover was even lower, in the single digits. Riot offered a
program called queue dodgei to any new hire in an attempt to weed out bad culture fits. Queue
dodge was an open offer to all new hires (within their first 90 days) to take a lump sum payment of
20% of their annual salary on the spot if they quit their job. As of 2015, only three new hires had taken
the offer.

The hiring process involved two to three hours of phone screens to check for cultural fit and
technical ability. A visit to Riot’s LA campus or the global office where the new Rioter would be
working followed, with more interviews to further determine cultural fit. Many candidates were
asked to teach a lesson on a topic of their choice as part of the interview process. Gelb explained, “We
ask candidates to teach a lesson—we call it ‘Teach Us Something’—to get an understanding of how
well they communicate and explain ideas at a level that anyone can understand.”

Most new Rioters came to the LA campus for a weeklong onboarding orientation called
“denewbification,”j which began by playing a game of LoL. Beck explained, “On the morning of every
Rioter’s first day—typically a Friday—the first order of business is to sit the new Rioters down to a
playtest for hands-on time with League of Legends. Starting out this way helps emphasize the
importance of making time for daily play and sets the tone for the first day.”

The onboarding orientation included a talk with Beck and Merrill, an introduction to the campus
and the Rioters who worked there, and a “thorough acculturation with Riot values and core
philosophies and how they manifest in practice,” explained Merrill. He continued, “We strongly
reinforce these concepts over and over. We believe that having aligned people and teams is a key for
us to continue to improve.” Denewbification was also an opportunity to introduce new Rioters to the
cultural artifacts present on campus. One such cultural artifact was that Rioters, when meeting one
another, fist-bumpk rather than shaking hands. Another was the gaming terminology that was used
in all aspects of work at Riot—in addition to terms like leveling up and newb, “to nerf” something
was to make it less powerful,l (for example, “If you put that process in place it will nerf our team’s
creativity”). This and many other examples of gaming terminology were another reason for hiring
core gamers—nongamers might literally not understand the organization’s language.

Jay Moldenhauer-Salazar, a human resources (HR) specialist, who had worked in high level HR
positions in global companies including Starbucks, was the head of talent at Riot. A core gamer,
Moldenhauer-Salazar was hired in 2014 into a position that had been vacant for more than two years
because Beck and Merrill had been unable to find the right person for the role. As a result,
Moldenhauer-Salazar explained, “The talent discipline here was a little fragmented and broken when
I arrived, but we are working to make it a world-class team.”

Riot had very few codified processes or policies. As Moldenhauer-Salazar explained, “We just
trust Rioters to make good judgment calls in terms of getting the work done and taking off what time
they need.” Rioters could work from home and design their own schedule, but the leadership found

i Another gaming reference; to “queue dodge” was to quit the game before it even began while your teammates and opponents
were picking their champions because you were unhappy with the results. Players who queue dodged in the game were
penalized by blocking their ability to enter a new game for several minutes.
j A “newb” was a gaming term for a new player. Riot used it to refer to new hires.

k This is related to the Riot Games logo, which featured a fist.

l The term came from the Nerf brand of toys and was originally used to describe game developers making particular
characters’ abilities less powerful—as if they were given a Nerf foam dart gun instead of their “real” gun.

13
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that teams were most productive when all members were co-located and could communicate easily,
so most Rioters were in the office from about 10:00 AM to about 7:00 PM.

Rather than relying on performance metrics to award bonuses, Riot assumed that its people
would perform exceptional work and therefore automatically included bonuses in its total
compensation packages. All compensation packages also included some form of equity, but, as game
producer Snow explained, “As the company ages, veteran Rioters’ stock options are starting to
expire. They must exercise them or lose them, but exercising them brings tax implications. We have
no concrete plans for an initial public offering (IPO) or other event, so some Rioters question the
value of their stock options.”

All Rioters took leveling up their craft (i.e., career development) seriously. Departments held
regular workshops offering opportunities for skill development in Rioters’ various disciplines. These
workshops were often taught by other Rioters to share their personal expertise. The company also
used best-in-class third party training tools. The average Rioter spent 200 hours each year on these
development activities. One Rioter who worked on in-game events (i.e., special limited time twists
added into the gameplay experience) noted, “Riot is the first game studio I’ve worked at that has
invested in me. It is the best in the world at helping you improve your craft.” In part because of this
commitment to Rioters’ development, Fortune ranked Riot Games at number 13 on its 2015 “100 Best
Companies to Work For” list, the first time Riot had made the list, in Riot’s first year of eligibility.

One area that some Rioters felt the company struggled in, however, was management
development. An engineer commented, “We have top level management in place, and over the last
couple of years we have hired hundreds of entry-level engineers, but the mid-level management isn’t
there.” Gelb described the ideal engineer as “T-shaped,” meaning:

An individual with a high level of expertise in a specific discipline—that’s the

vertical line of the T—who is also able to handle all of the dozens of things an engineer
must do every day—that’s the horizontal line. We need people to act as subject-matter
experts in areas like 3D graphics and rendering, distributed computing, and artificial
intelligence, but we want these same people to embrace working across our discipline,
when and where it makes sense, while still being able to mentor others in their
specializations. Those types of people are very hard to find.

Unlike some companies where talented people could only move up the ranks on a management
track, Riot allowed high level performers within each discipline to follow the “guru track.” Although
many Rioters liked the company’s relatively flat structure, others believed there were too many
managers to answer to. Thomas Vu, a producer, explained,

Rioters who are new to the company can sometimes get confused about
management. There are the top leaders—Brandon, Marc, and Dylan—and then there are
product and business leaders who oversee the major organizational initiatives that most
Rioters work within. Rioters also belong to disciplines, which are led by discipline
leaders who manage departments that help them work on their career track and with
leveling up their craft.

Rioters valued their freedom and flexibility, saw it as an important part of the company’s culture,
and connected it to their everyday work. One artist explained, “We don’t need a producer telling us
how to do things. Ideas can come from everywhere. At Riot, if you give us a framework, we will fill it
in with awesome.” An engineer explained that openness and frequent communication led to good
decision-making, noting, “Riot has a flat management structure and no politics. Everyone can offer

14
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their opinion on any decision without any fear or hesitation. Our cultural alignment keeps everyone
on the same page because at the end of the day we all share the belief that we need to do what is best
for players above all else.”

Other Rioters, however, saw the open communication culture as impeding the speed that the
company needed for success. Oksana Kubushyna, lead development manager, described the open
culture as “potentially impeding development efficiency. It is a system of checks and balances that
allows for multiple places for input—anyone who has an opinion can offer it on any aspect, which
can make it hard to make final decisions.” Anita Sujarit, LoL product manager, noted, “Because
everyone needs to be aligned and on board, it can take months to get things done. Although not
everyone may agree with the decisions, they need to understand the reasoning behind them.”
Another Rioter, who had been with the company since its earliest days explained, “It would be easier
if the top line goal were to make money. Then we could make faster decisions as the company gets
larger. As it is now, everyone is empowered to add their input on how decisions will impact players
and things move very slowly. At the same time, because roles are so fluid, some Rioters hesitate to do
things because they don’t want to step on others’ toes.”

Moldenhauer-Salazar and Jadeja were just two of a number of Rioters who felt that putting in
place some standardization and processes could help the company scale more quickly and painlessly.
As Jadeja explained, “Off the shelf processes or systems do not necessarily work at Riot. Given this,
our desire to be flexible, and the rate of growth that we have witnessed, we have not implemented
many administrative systems or processes that are often standard at companies of our scale. Over the
long term, I believe there are some processes, like financial planning, that could become more
standardized without losing anything.” Moldenhauer-Salazar noted, “We have outstanding data on
the players of LoL, but we need to bring that ability into the company. Right now we struggle to get
an accurate company-wide Rioter headcount, for example.”

But Riot’s leadership knew that instilling processes in the company would have to be done
delicately, if at all. Steve Mescon, head of player experience, put it simply, “Rioters won’t just do
whatever you tell them to if you don’t provide context with the instruction. They really need a
rational explanation that makes sense. Pushing back when you don’t understand the justification for
a decision is an important part of being a Rioter.” Legal head Minji Cho provided an example:

Riot, as a company, does not like policies, but as the head of the legal team, I get
pulled into meetings all the time to comment on proposed ideas. It would be much more
efficient and less chaotic if there were some general guidelines written down that
everyone could reference. There has been a lot of discussion about a company alcohol
policy as we have moved into our new campus. Bilgewater Brew was originally going to
be a full open bar, but some people thought that might be a bad idea, so it swung all the
way in the other direction and became a hand-crafted coffee bar. If we are going to put a
policy in place, it should probably be somewhere in between absolutely nothing and
absolutely everything. I have no doubt that Rioters could be responsible enough to do
their work and have a bar on campus, but when everyone feels empowered to speak up
and offer a different opinion on the issue with no clear owner of the decision, the result
is sometimes less than optimal.

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The New Campus: Room to Grow?

Arriving back at their workstations, Beck and Merrill reflected on how the company would be
shaped by its continued growth in the next several years, just as Rioters were beginning to reshape
the new campus—rearranging its movable walls, reconfiguring desks, tacking up artwork and inside
jokes, and digging into the free food available in the pantries throughout the buildings. The campus
was made up of six large buildings—buildings Q, W, E, R, D, and Fm—which gave Riot plenty of
room to grow to meet the needs of its future offerings—new games, music, and other entertainment.

At the same time, the conference rooms all over the campus were named after and themed around
LoL champions, and fan-created LoL artwork covered the lobby (refer to Exhibit 1). The R&D division
was prototyping a number of different concepts for Riot’s next game, but the company had no
timetable for a release. Nonetheless, leaders at the company were consciously thinking about the
future. Merrill noted, “We define our company as one that serves the core gamer; trying to do the
best thing for them is our guiding compass that informs all of our decisions, including what products
or experiences we’ll do next.” But Moldenhauer-Salazar explained that a player-focused mission
could get more complicated with two or more different games: “How do you determine what is the
most player-focused thing to do when you have some players playing one game, some players
playing the other game, and some players playing both games? Shifting resources from one game to
the other will be an interesting issue when the time comes.”

Beck and Merrill wondered if Rioters would be able to embrace all of the new opportunities and
complexities that would come with a second game. If Riot could emulate the best companies in its
industry, it could expect tens of millions of players to flock to its second game. Did Riot have the
right organizational structure, culture, and people to keep responding to the gaming market even as
it began to move beyond LoL? Was Riot missing the boat on mobile, virtual reality, and other
industry innovations thanks to its tunnel-vision focus? Were the years of investment in culture and
talent to develop LoL’s success a good idea? Or would the company become a prisoner to its own
success? More simply, could culture survive growth?

m Yet another gaming reference—players used the Q, W, E, R, D, and F keys to control their champion’s abilities in LoL.

16
 416-016 -17-

Exhibit 1 Photos of Riot’s LA Campus

A conference room themed after the champion Vi A giant chess board in the quad A PC bang
(see Exhibit 5 for more information on Vi). in the center of Riot’s campus. where Rioters could play LoL.

Bilgewater Brew. Art in Riot’s lobby based on LoL champions. Rioters’ work stations and conference rooms.

Source: Company documents.

416-016 Riot Games: Can Culture Survive Growth?

Exhibit 2 Global Gamer Market, 2013–2017

Source: Casewriter from Newzoo, “Global Games Market Webinar,” June 23, 2014, www.newzoo.com, accessed August
2015.

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Exhibit 3 The Mod Community

By the mid-‘90s, PC game designers had begun to create games with multiplayer modes that
allowed core gamers to play online against other gamers around the world. Online multiplayer
games allowed communities of players to develop organically around those games in online
discussion forums and fan sites. Many of these games included features that allowed players to create
multiplayer modes with gameplay rules or maps that differed from the game’s default settings. This
was especially true of RTS games in which all of the game’s action took place in a relatively limited
arena and the physical layout of the game’s map could drastically affect a player’s strategy.

Among the early games with this feature was StarCraft, a PC game released by Blizzard in 1998. In
a typical game of StarCraft, two players faced off against each other, with each player managing the
economy of a home base for the purpose of producing an army that could defeat the player on the
opposite side of the map. The game was an instant hit, selling more than 1 million copies in the first
year, and ultimately more than 11.5 million copies worldwide, about half of those in South Korea.
The widespread availability of broadband Internet access and the thousands of Internet cafes, called
PC bangs, in South Korea allowed online multiplayer games like StarCraft to become very popular.

In order to increase the variety of gameplay and alter the strategy considerations during the game,
some players began creating their own maps and distributing them to other players to host
multiplayer games. These new maps were called “mods” (short for modifications), and some
changed gameplay so significantly that it was as if they were entirely different games. One such
StarCraft mod from 1998 was called Aeon of Strife. This mod placed a team of players on one side of a
map with lanes that led to an artificial-intelligence (AI) controlled opponent on the opposite side of
the map. Instead of StarCraft’s typical gameplay where each player controlled an army, this mod
allowed each player to control just one extremely powerful character. Players would fend off waves
of AI-controlled monsters while collaborating to destroy the enemy home base. Aeon of Strife enjoyed
some success, but as the modding community was only a small percent of all StarCraft players, it had
a limited audience.

In 2002, Blizzard released Warcraft III, an RTS game similar to StarCraft, with its own powerful
multiplayer editing tools. Soon after its release, a modder recreated an Aeon of Strife-inspired mod in
Warcraft III, calling it Defense of the Ancients (which players soon began abbreviating as “DotA”). DotA
was further modified and improved upon by several other modders throughout the early 2000s. Like
in Aeon of Strife, DotA’s gameplay featured a team of powerful characters that came together to defeat
an opposing team’s home base on a map with limited lanes that they could move through. Players
began to recognize this as a new genre of game—multiplayer online battle arena (MOBA).

Sources: Kelly Olsen, “South Korean Players Get a Sneak Peek at ‘StarCraft II,’” USA Today, May 21, 2007,
http://usatoday30.usatoday.com/tech/gaming/2007-05-21-starcraft2-peek_N.htm, accessed May 2015; John Funk,
“MOBA, DOTA, ARTS: A Brief Introduction to Gaming’s Biggest, Most Impenetrable Genre,” Polygon, September 2,
2013, http://www.polygon.com/2013/9/2/4672920/moba-dota-arts-a-brief-introduction-to-gamings-biggest-most,
accessed June 2015; and Lane Pushing Games, “Review: Aeon of Strife,” December 5, 2013,
http://lanepushinggames.com/2013/12/05/review-aeon-of-strife/, accessed July 2015.

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416-016 Riot Games: Can Culture Survive Growth?

Exhibit 4 A Basic MOBA Game Map

Source: Company documents.

20
 Riot Games: Can Culture Survive Growth? 416-016

Exhibit 5 LoL Champions

There were 125 characters in League of Legends called champions. LoL was filled with champions of
every archetype, from devious masterminds to epic monsters and everything in between. Different
champions suited different player roles and strategies, so not all champions fit every player’s
playstyle. Teams were made up of five players, each playing as a different champion. Here are five
champions that make up an example team:

One of League’s most recent champions, Ekko

is a very powerful mid-lane threat. With his ability
to manipulate time and deal massive damage
and stuns, Ekko can lock down even the best
assassins, slow and smash even the best
mages, and is agile enough to avoid the
constant threat of being ganked by the enemy
team’s jungle.

Abilities:
 Z-Drive Resonance
 Timewinder
 Parallel Convergence
EKKO:  Phase Dive
Mid-lane Assassin  Chronobreak

A prodigy from the rough streets of Zaun, Ekko manipulates time to spin any situation to his advantage. Using his
own invention, the Zero-Drive, he explores the branching possibilities of reality. As well as experimenting with multi-
dimensional probability, Ekko spends his days running wild with the other lost children of Zaun. Though he revels in
this freedom, when there's a threat to his friends, he'll endure anything to defend them. To the unknowing observer,
Ekko accomplishes the impossible with ease, time and time again.

In the lonely game that is the top lane one-on-one

battle, Gnar is a unique and multi-faceted tank.
This little yordle can strike at distance and with
agility, but when the fight reaches its peak he
transforms into Mega Gnar, a super tanky and
brutal version of his littler self. This creates tough
match-ups for any experienced top-laner.

Abilities:
 Rage Gene
 Boomerang/Boulder Toss
 Hyper/Wallop
 Hop/Crunch
 GNAR! GNAR:
Top-lane Tank

Time marches on for most, but not Gnar. A yordle born millennia ago, Gnar was captured and trapped in true ice,
frozen, quite literally, in time. Civilizations formed and fell as the prehistoric yordle vacantly stared on, but nothing, not
even true ice, could confine Gnar forever. After breaking free, he wandered Runeterra until he found himself taken in
by his yordle descendants. But, as they would soon discover, there’s a beast behind the boy.

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Vi is an incredibly agile jungle champion. Her

ability to close in on an opponent and lock them
down in the middle of a fight makes her a very
powerful complement to a team’s strategic
composition. A jungle’s main role is to apply
unanticipated pressure on lanes to help give
their team an advantage by securing a kill or
getting an objective.

Abilities:
 Blast Shield
 Vault Breaker
 Denting Blows
VI:  Excessive Force
Jungle Fighter  Assault and Battery

To Vi, every problem is just another brick wall to punch through with her gigantic hextech gauntlets. Though she
grew up on the wrong side of the law, Vi now uses her criminal know-how to serve Piltover's police force. Vi's brash
attitude, abrasive humor, and blatant refusal to follow orders can often infuriate her by-the-books partner, Caitlyn. But
even the sheriff of Piltover cannot deny that Vi is an invaluable asset in the fight against crime.

Ashe’s abilities are focused around Averosa’s

bow, a magical weapon that she wields. Imbued
with frost, it has the power to slow enemies, thus
making her a formidable foe to trade shots with in
lane. As an ADC, her role is focused on getting as
powerful as possible through the protection and
support of another champion, thus enabling her to
focus on items that maximize her damaging
abilities.

Abilities:
 Frost Shot
 Ranger’s Focus
 Volley ASHE:
 Hawkshot Bottom-lane Attack/Damage/Carry (ADC) Marksman
 Enchanted Crystal Arrow
Ashe is from the frozen land called the Freljord. With each arrow she fires from her ancient ice-enchanted bow, Ashe
proves she is a master archer and strong leader of her tribe—the Avarosan. She chooses each target carefully, waits
for the right moment, and then strikes with power and precision. It is with this same vision and focus that she pursues
her goal of uniting the tribes of the Freljord and forging them into a mighty nation.

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Morgana is a powerful wielder of dark magic.

Her damaging spells and ability to stun a
champion in place makes her an excellent
complement to any ADC in bottom lane. As a
support, her focus is to “feed” the ADC kills,
experience points, and gold so that they can
become very powerful and possibly take over a
game.

Abilities:
 Soul Siphon
 Dark Binding
 Tormented Soil
MORGANA:  Black Shield
Bottom-lane Support/Mage  Soul Shackles

There is a world far away populated by graceful and beautiful winged beings gifted with immortality, where an ancient
conflict still rages. Like so many conflicts, this war split families. One side proclaimed themselves as beings of perfect
order and justice, fighting to unite the world under their law and strong central governance. Those that fought against
them saw their kin as tyrants, creatures incapable of seeing the larger view, who would sacrifice individuality and
freedom for the illusion of efficiency and safety. Morgana was one who fought against what she perceived as the
tyranny of her kind, and for that she was branded “fallen.” Morgana was not innocent, having plumbed forgotten ways
to gather forbidden might to become a powerful mistress of the black arts. This goal was driven by her obsession to
defeat the general of the opposition's army—her sister, Kayle.

Source: Company documents.

23
416-016 Riot Games: Can Culture Survive Growth?

Exhibit 6 League of Legends Gaming Industry Awards, 2009–2012

– Audience Award, Best Community Relations & Best Live Game—GDC Online (2012)
– 12 Best Free Entertainment Services and Apps of 2012—PCWorld (2012)
– 100 Best PC Games of All Time—PC Gamer (2012)
– Update of the Year—PC Gamer (2012)
– Best Online Game—Level Magazine (2012)
– Game of the Year: MOBA—GameSpy (2011)
– Free Game of the Year—PC Gamer UK (2011)
– 15 Best PC Games—GamePro (2011)
– Free to Play Game of the Year—Golden Joystick Awards (2011)
– Online Game of the Year—Golden Joystick Awards (2010)
– Audience Award, Best Online Technology, Best Online Visual Arts, Best Online Game Design
& Best New Online Game—GDC Online (2010)
– Readers’ Choice (Best Strategy Game)—Best of IGN—PC (2009)
– Readers’ Choice (Best Multiplayer Game)—Best of IGN—PC (2009)
– PC Gamer’s Choice—GameSpy (2009)

Source: Company documents.

Exhibit 7 Comparing LoL to other PC Games

Peak Reported Top

Game Active Players Concurrent Players Monthly Revenue

League of Legends 67 million (January 2014) 7.5 million (2014) $123 million (2015)
DotA 2 7.86 million (May 2014) 1.2 million (2015) $18 million (2015)
World of Warcraft 7.8 million (May 2014) 2 million (2009) $86 million (2013)

Source: Casewriter from Jeff Grub, “Dota 2 makes $18M per month for Valve—but League of Legends makes that much
every 5 days,” VentureBeat, March 24, 2015, http://venturebeat.com/2015/03/24/dota-2-makes-18m-per-month-for-
valve-but-league-of-legends-makes-that-much-every-5-days/, accessed August 2015; Jeff Grub, “Dota 2 grows larger
than World of Warcraft, but League of Legends still crushes both,” VentureBeat, May 5, 2014,
http://venturebeat.com/2014/05/05/dota-2-grows-larger-than-world-of-warcraft-but-league-of-legends-still-
crushes-both/, accessed August 2015; MMOData.net, “Peak Concurrent Users With A Peak Above 500K,”
http://users.telenet.be/mmodata/Charts/PCU-1.png, accessed August 2015; Steamcharts.com, “Dota 2,”
http://steamcharts.com/app/570, accessed August 2015, and Paul Tassi, “’World of Warcraft’ Still A $1B
Powerhouse Even As Subscription MMOs Decline,” Forbes, July 19, 2014,
http://www.forbes.com/sites/insertcoin/2014/07/19/world-of-warcraft-still-a-1b-powerhouse-even-as-
subscription-mmos-decline/, accessed August 2015.

24
 416-016 -25-

Exhibit 8 League of Legends Player Growth, and Rioter Headcount Growth, 2011–2014

League of Legends Monthly Active Players, Rioters July 2011-January 2014

80,000,000 1,400.00

70,000,000

BRZ
TUR

STL
RUS
AUS
OCE
UK
1,200.00

BRIGHTON,
JPN, 4/2014
60,000,000
TPE, 6/2014
1,000.00
CHILE 7/2014
50,000,000 COLOGNE, GER
10/2014
800.00
MEX, 12/2014
40,000,000

600.00
GER

NYC
GER

HKG

30,000,000
COLOGNE,

400.00
20,000,000
NYC
HKG

200.00
10,000,000

0 0.00

Monthly Active Players (Left Axis) Rioters (Right Axis)

Source: Company documents.

Note: Rioters (red line) on right axis; monthly active LoL players (blue line) on left axis. Vertical lines represent dates of Riot satellite office openings.
 416-016 -26-

Exhibit 9 Riot’s Matrix Management Model

 416-016 -27-

Source: Company documents.

416-016 Riot Games: Can Culture Survive Growth?

Endnotes

1 Peter J. Coughlan, “The Golden Age of Home Video Games: From the Reign of Atari to the Rise of Nintendo,” HBS No. 704-
487 Boston: Harvard Business Publishing, 2004.
2 Ethan Bernstein, Francesca Gino, and Bradley Staats, “Opening the Valve: From Software to Hardware,” HBS No. 415-015,
Boston: Harvard Business Publishing, 2014.
3 Elie Ofek, “Home Video Games: Generation Seven,” HBS No. 505-072, Boston: Havard Business Publishing, 2005.

4 International Development Group, “The Global Video Game Market,” April 2014, accessed via idg.com May 2015.

5 International Development Group, “The Global Video Game Market.”

6 International Development Group, “The Global Video Game Market.”

7 International Development Group, “The Global Video Game Market.”

8 International Development Group, “The Global Video Game Market.”

9 Superdata Research, “U.S. digital games market: May 2015,” https://www.superdataresearch.com/blog/us-digital-games-

market/, accessed June 2015.
10 NewZoo, “Global Games Market Report Infographics,” July 2013, http://www.newzoo.com/infographics/global-games-
market-report-infographics/, accessed May 2015.
11 International Development Group, “The Global Video Game Market.”

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