The Implications of the Company Behind Riot Games
This is part 4 of a 4 part series on Esports.
Riot Games is the masthead company behind League of Legends, with their name being plastered all over the esports leagues and the game itself. Their global headquarters are located in their studios in Los Angeles, not far from where the company first started developing their game. This would make Riot Games a primarily American company responsible for managing a global game and network?
Well, that’s partially true. In 2015, a company that has flown under the radar of Western societies purchased a 100 percent ownership stake in Riot Games: China’s multinational internet holdings company, Tencent.
On the one hand, this has had minimal impact on League of Legends. Riot Games is still the developer and publisher, meaning they maintain the game and produce content. People who focus on running the League professional circuits and developing the game are still technically employees of Riot Games, although the professional circuits tend to be splintered into various offshoot companies themselves. In some cases, it has even been a major boon for League. The only way League was able to expand as quickly and dominantly as it has in China was due to Tencent’s work. Indeed, it is unlikely that Riot would have been able to break into the Chinese market at all without Tencent’s presence.
But while the effects of Tencent’s acquisition of League haven’t been felt within the game, it has major implications on esports around the world. This is mainly due to China’s increased ability to pressure companies to comply with its official narrative, and force western companies to give Beijing what it wants with the threat of being cut off from the lucrative Chinese market. So long as the western companies “play nice” with the Chinese wants, they get access to the billions of dollars that flows through the Chinese economy.
Tencent has risen to become the most valuable video game company in the world, topping USD$500 billion in 2017, and its Chairman and CEO, Ma Huateng, is the richest man in China. But how has this obscure company developed a worth that eclipses well known triple-A studios like Sony, Activision Blizzard, Microsoft, and Electronic Arts?
The answer? Tencent seemingly has its fingers in every esports-related pie. The company has invested in an incredibly large number of companies and has purchased the rights for an even larger number of games. Besides owning League and Riot Games, Tencent also owns a 40 percent stake in Epic Games, publisher of Fortnite; the rights to Player Unknown’s Battlegrounds (PUBG, Fortnite’s predecessor); a significant stake in Activision Blizzard; and the rights to distribute Candy Crush in China. It even owns Finland’s Supercell, which develops Clash of Clans and Clash Royale, two of the most popular mobile games in the world.
Tencent’s unique business strategy allows them to remain mostly behind the scenes. Their approach involves investing in developers and allowing them to retain autonomy, making everyone happy. The developers get a funder, and Tencent gets a lot of money. But since Tencent is the gateway to the lucrative Chinese market, it also gives it a lot of control over companies and their actions. Displeasing the Chinese giant could threaten a developer’s access to China, which would likely see revenues plummet off of a cliff.
And due to the Hong Kong protests, this was thrust into the spotlight. In fall of 2019, Tencent effectively shut down the NBA’s activities in China due to Houston Rockets’ general manager Daryl Morey tweeting in support of the Hong Kong protests. This sent the NBA into a financial panic and led to intense pressure from the league to undo the damage. The tweet was deleted, players backpedaled their statements of support, and the protests were actively suppressed during broadcasts and games. China was appeased.
Then along came professional Hearthstone player Ng “Blitzchung” Wai Chung. At the end of a post-match interview at the Hearthstone Grandmasters Tournament, Blitzchung pulled down his Hong Kong protester mask and yelled “Liberate Hong Kong! Revolution of our age.” In response, Activision Blizzard, the developer of the popular online deck building card game, promptly issued Blitzchung a year-long ban effective immediately, effectively kicking him out of the Grandmasters tournament and denying him any winnings he would have earned during that period. They also terminated the contracts of the two interviewers involved in the incident because they appeared to encourage Blitzchung’s statement. Blizzard’s reasoning for the harsh response was to preempt China’s angry disruption of the company’s services and subsequent loss of revenue. Again, China was appeased and Tencent kept Blizzard’s Chinese market access open.
This isn’t restricted to Hearthstone or Activision Blizzard. Not long after this incident, Riot Games issued a statement where it stipulated that its broadcasters should refrain from discussing sensitive topics on air. The statement was in response to fans angrily pointing out that its broadcasters seemed to be censoring the name of the administrative region from the broadcasts, with the name of the team Hong Kong Attitude exclusively referred to as HKA. While broadcasters often refer to teams interchangeably between their abbreviation and full name, they never begin to say the full name and then quickly switch to the abbreviation, as occurred during one of the broadcasts of the 2019 World Championships.
This indirect control of companies through access to a market ought to worry all of us. It means players could have their careers ended for supporting a political movement or voicing criticisms. This goes against some of the fundamental principles that professional athletes have adhered to for decades. Most professional sports teams in the world are founded on some degree of community service and dedication to activism. Indeed, many sports players retire from their careers as athletes and move on to the world of activism; Clark Kellogg’s activism on social justice in sports being one such example. Even esports has strived to instill its players with a degree of activism. Twitch streamers, including professional players, combined raised over USD$200,000 to fight the fires ravishing the Australian countryside. China’s attempt to censor entire sports, electronic and traditional, goes against sportsmanship itself.
Fortunately, although China was appeased by these capitulations, fans were not. The Blizzard scandal caused such outrage among the gaming community that angry fans, other developers, and even American lawmakers issued strong condemnations against Blizzard’s decision to ban Blitzchung. Epic Games issued a statement that it would never restrict speech of any kind, even though Tencent owns a 40 percent ownership stake in the company. The criticism against Blizzard was so scathing that the company returned USD$10,000 in confiscated prize money to Blitzchung and reduced his ban to 6 months, although they were adamant in refusing to reverse the decision completely.
It is critical to highlight the pivotal role played by Tencent in these developer-China relationships. Although the Chinese government is the one that orders the disruption of a developer’s economic activity within the Chinese market, the company that carries out that order in the esports world is Tencent. Just as Tencent is the gateway in, so too is it the enforcer of the Chinese government’s will. In the case of Riot Games, its 100 percent ownership stake means that the Riot leadership cannot risk displeasing China, or it will face serious repercussions from their only shareholder.
Already, Riot has proven developers’ willingness to play along with China to secure their spot within the Chinese market. In order to register for a League account in China, a player must provide their unique “national ID” number to the developer, in order to verify ages. This has recently begun to matter significantly. In line with a recent Chinese law, Tencent has recently placed a 2 hour time cap for minors playing League. Following those 2 hours, minors are automatically booted from the game and barred from playing any more. These have recently also been enforced recently in Blizzard’s World of Warcraft and Fortnite, and a one hour limit has already been in place for under-12 players of Tencent’s Honor of Kings. The Chinese government claims that this is an anti-addiction measure, which has the added benefit of improving eyesight. Failure to comply with this new rule would likely have seen Riot-Tencent lose the right to operate within the Chinese market, but it demonstrates the willingness Western companies have when dealing with China’s social controls.
The developers can’t even stand by China’s anti-addiction campaign because the campaign is completely founded on common misconceptions. Video games are rarely addictive, with negative, gambling-like patterns being exhibited by less than 1 percent of gamers. Even the WHO, which recently declared “video gaming addiction” a diagnosable condition, acknowledges that the majority of gamers will never actually develop addiction and that they haven’t really conducted their own study. We are basically creating a disorder that doesn’t exist and pathologizing a behavioral outlet, with China’s “computer recovery boot camps” being the prime examples of the illogical extreme—although developers are becoming cunningly adept at capturing more and more attention due to advances in technology and marketing.
Although studies haven’t been able to conclusively prove the existence of video game addiction, they have been able to show that video games may present some tangible benefits. Many studies have shown a direct correlation between video game playing and spatial processing, multitasking, perseverance, and attention control. When video games are played, the brain’s rewards pathway system is activated, leading to increased motivation and goal orientation, as well as the hippocampus, leading to increased learning and memory (probably the only way anyone is able to memorize all of League’s champions and items, especially if they play other games). Speaking from personal experience, I can pick up a game I last played years ago and still remember the controls and strategies without a second thought. Lastly, playing video games with people leads to strong social bonds. Many gamers end up playing in groups with people they’ll never meet, but will consistently go back to those same people.
This isn’t to say that there shouldn’t be limits nor that there aren’t negative side effects. There are dangers to interacting with random people on the internet, especially for kids. Research has shown that one to two hours of gaming time is ideal for teenagers, better than more than three or four and none at all. And we can’t forget about the radioactive toxicity of games like League and DOTA 2. Nor should the disastrous effects of a run-away compulsion to play video games be understated.
The time limit on the Chinese servers isn’t the only way Tencent has fiddled with League. Fans recently discovered that the global database of blacklisted words, the repository which detects profanity or inappropriate words, is also tailored to Chinese censorship. For instance, the word “Uyghur,”the name of the oppressed Muslim ethnic group in China’s Xinjiang province, seemed to be intentionally filtered out, even in servers outside of China. Riot responded by saying they had fixed the issue and began an internal investigation into the blacklisted words database. They pointed out that the chat filter occasionally blocks words erroneously, highlighting that certain phrases such as “Free Uyghurs” appeared fine. But League fans have responded that other words—such as “genocide,” “Tianenmen” in simplified Chinese, and “great firewall”—seemed to be blocked as well.
This all culminates with a further push from Tencent and China to co-opt the international professional League scene. Already, Tencent signed away the exclusive rights to stream League within China to Chinese media giant Bilibili, effectively barring Amazon’s Twitch or other Chinese platforms from streaming for the country’s domestic market. Quite conveniently, Tencent happens to own an 18 percent ownership stake in Bilibili, more than Bilibili’s Chairman—and no stake in Amazon. This deal will require all viewers in China to stream League games via Bilibili, but will still let Riot stream the games internationally via Twitch (mainly because Bilibili doesn’t have the appeal in order to justify broadcasting outside of China). This is mainly an internal deal designed to make Tencent more money and limit the amount of control Riot has over the LPL.
More importantly, Tencent is developing an exclusive, pro-only server in China. This means that the best players in the world would be given an exclusive place where they would be able to test their skills against their peers and their peers alone. This would provide players and teams an outlet where they could practice at a quality not seen anywhere else in the global professional League scene. The catch? These players would have to move to China. Obviously designed to give the Chinese teams a leg up on international competition and attract high-profile players to China, this pro-only server might possibly cement the LPL as the best League circuit in the world, and Chinese teams have already won Worlds twice in a row. The potential co-optation of the professional League scene would only further increase Tencent’s power over Riot and League’s global affairs.
Esports are an incredibly complex global phenomenon. Developers, players, teams, governments, viewers, and corporations are all players in its complex market. Hundreds of different games fall under the umbrella term esports, each with their own rules, teams, and players. Ultimately, they are set to become global sports at the level of, or even surpassing, soccer, potentially joining the Olympics by 2024. Yet for all their potential, they still have many problems. They aren’t timeless and are completely subject to the profit-seeking visions of their developers. There are very few legal precedents for any of the issues they are raising, and must go up against the stigma many have against video games in general. Tencent and China are pulling strings behind the scenes in most cases, leading to questionable circumstances where developers are willing to sacrifice civil liberties to guarantee their access to China’s lucrative market. And finally, we would do well to remember who is being left behind during the esports boom, and the implications that has on these fractured global professional circuits.