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‘Valorant’ esports is entering a new era. It took some ‘hard’ choices.

Riot Games’ president of esports talks turning down teams applying for partnership, sports marketing and engaging with the Middle East

(Washington Post illustration; Colin Young-Wolff/Riot Games)

ISTANBUL — On the day of the Valorant Champions 2022 grand finals, a procession of influencers and stars were invited to the Volkswagen Arena in Turkey to kick off the proceedings. The singer Ashnikko, whose music gained viral popularity through the video app TikTok, walked the event’s so-called “gold carpet.” Popular streamers and content creators, including Michael “Shroud” Grzesiek and Tarik Celik, smiled and waved to a crowd of fans waiting outside the venue. Then came the Riot executives.

The Champions grand finals signaled the end of one era for “Valorant,” and the beginning of another. The executives were on-site to bask in the excitement of the in-person event, but also to tease what that new era might look like.

“Watch this next year,” said John Needham, president of esports at Riot Games. He was hyping an upcoming event in Sao Paulo, Brazil, while in the same breath, extolling the deep fandom for “Valorant” visible in countries like Japan and South Korea.

“You will be surprised where our events go,” Needham said.

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In a food court next to the Volkswagen Arena, The Washington Post spoke with the executive about making “Valorant” esports profitable, Riot’s criteria and expectations for partnered teams, and the developer’s approach to bringing esports to the Middle East. At the time, Riot Games was planning to release “Valorant” partnership news — at least pertaining to its Americas league — on Wednesday, Sept. 21, and Needham was tight-lipped about which teams would make the cut.

The following interview has been edited for length and clarity.

Launcher: Last year, you told one of our colleagues the following: “If I can’t make esports a great business for teams and our sponsors, then we’re not going to last long. We’re very much thinking about, ‘How do we make the entire ecosystem profitable?’ ” I’d like to ask you your own question back: What are you doing to make the entire “Valorant” ecosystem profitable?

John Needham: With the partnership model that we’ve set up, instead of the teams paying Riot for a slot, we’re asking them to invest their cash back into the ecosystem. Invest in marketing their teams and marketing our sport. Invest in infrastructure to develop their teams. Invest in business development, and get a great set of sponsors backing their teams. All those things were very important requirements when we did partnership interviews. We’re lowering the investment basis for teams. We’re still asking them to invest in our ecosystem, but making it easier for them then to be profitable for us.

For us, our sponsorship business just keeps growing. We have grown 50 percent a year in sponsorship revenue for the past six years, so we’re doing really well. “League of Legends” [esports] is pretty close to sustainability. We’re getting to the point now where we’re trying to allocate more revenue to the teams, out of digital and other digital products that we put around our events. We’re making great progress there, and we still have work. “League of Legends” teams are expensive for our team owners. But I feel like with “Valorant,” we’ve kind of set a great foundation to allow the teams to really invest their money in places that will make the business really good.

We’re a really fast-growing sport right now, but I think we can do a lot more. We don’t have nearly the percentage of active players in the game watching esports in “Valorant” — yet — but with our partnership model, we’re just more closely aligned with the teams, and together I think we’re going to build the sport a lot faster.

How are you planning to bridge that gap between active players and folks who follow the esport?

Needham: I think it’s just getting back to basic sports marketing: Telling our players why they need to watch, why it’s exciting, making stars out of the players and helping the teams build fandom around their brands. All of those things will give this generation of “Valorant” players a reason to be a fan of our sport. Everything we do right now is around “How do we elevate our players to become fans?”

We have a closer relationship with the “Valorant” game team than we do with any game team that we build sports around. So that kind of close partnership with the game team is going to allow us to do things like the new mode, Premier, that we’ve talked about: a new competitive layer that will link into the esports competitive scene right out of the game. I think through that, we’ll get a lot of our players interested in our esport. It will be very strongly tied right into our Challenger series, and then on up into our international leagues that we’re launching this next year.

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Last year you told The Post that “League of Legends” esports wasn’t profitable. Is “Valorant” esports profitable?

Needham: We’ve been running the sport for two years now and experimenting with how to bring it to life through our broadcasts and our events. We figured out, I think, that a lot of things are different with “Valorant” esports compared to “League of Legends,” but we are investing deeply. We’re going to be investing in this Challenger tier at the national level. We’re investing deeply in the international tier and all of our international events. Our expectation is we will be profitable in three to four years.

Does Riot have a metric internally that tells you, “Yeah, we’re on the right track with this. We might not be profitable, but fans are funneling back into the game.”

Needham: With “Valorant,” we have seen a direct correlation in our events and the growth in viewership around our events and the growth in player count. So we feel like esports is really helping the game to grow and pull players in.

I’m sure there were tough decisions that had to be made in the past several months, where maybe there was one partnership slot for several qualified teams. Tell me a bit about what factors pushed certain teams over others.

Needham: Getting back to the intent of the system, we asked, “Who do we want to partner with, who do we think can grow the sport along with us in a great way?” So, who has great marketing, who has great player development? But it’s hard. There were a lot of teams who applied for a very limited number of slots. What it led to was what we announced less than a month ago, Ascension out of the Challenger tier.

We have so many teams we’re going to have to unfortunately tell that they didn’t make it — and they’re really good organizations. So we’re going to invest more in that Challenger tier and make those national leagues amazing as well. I want multiple ways for our fans to engage in our esport. I think there will be a national layer for them to engage in and learn about their local stars, and then there will be this international league, which will have the best players on the planet competing.

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What is the brand of “Valorant” esports now, and what do you anticipate it to be at the end of 2023?

Needham: The thing that’s really cool about “Valorant” in general — and you see it come through in our shows — is it’s very stylish, it’s very cool, right? And it’s got this high-intensity action to it in ways that are different than “League of Legends.” You know, the “League of Legends” show for esports is technical. Our players watch that show to really learn how to get better at the game. With “Valorant,” it’s a little bit different. You’re just watching guys with crazy mechanics and crazy speed. We want to lean into that. How can we showcase their talent as a player more than the technicalities of the game? I think the focus is a little bit different in it being an entertainment product, first and foremost.

What are you looking for from partnered teams to achieve in the next year in terms of building out the “Valorant” esports brand?

Needham: Part of the partnership and part of the marketing aspects of our agreement with the teams is they have to give us content that we can use on our channels, [that] we can use on our shows and vice versa. Collectively, if we can just put a lot more effort into the basic sports marketing and into their players and making their players personalities and stars, I think that’s where the sport will start to take off. That’s really the biggest focus: How can we make their brands better, and how can we highlight and put a spotlight on their best players and make them stars?

Is it going to be incumbent on teams to figure out what the best content is for the next year? Or are you saying, essentially, “Here are the specific deliverables Riot wants?”

Needham: We give them an idea on the type of content we want and the quality bar that we need, because I want to be able to put it on air on our show. But it’s not going to be: “Give us your best content.” We will be partnered with them. Our content teams will be partnered with their content teams to build stuff we can use on both channels.

Look, what’s interesting about sports are the stories behind the players and behind the teams. It’s what I love about the Olympics, [what] I love about all the big sporting events: the players’ stories. I think those are the ones that we will most closely partner with teams on, because that’s where people develop an affinity for the star and start rooting for that player to do well.

Can you tell me if Riot had a specific bar for what esports organizations needed to show to enter the partnered league from the perspective of financial stability?

Needham: We definitely had our finance team do financial due diligence, and there is a minimum level of capital that the teams need to have. Again, we want them to be able to invest in marketing, invest in infrastructure, in developing their players. You need capital to do that. So yeah, sure, we had a certain baseline.

But as part of our structure, we’re paying teams stipends, we’re paying teams a portion of digital sales of esports assets. We announced how well we’ve done with the skin pack around this event, which has been incredible. And we’re going to continue to build products where we can share a lot of those revenue back with the teams. So it will require capital, but we’re helping the teams a lot in getting set up and getting financed.

Do you mind if I ask what that baseline is? Can you give me even a ballpark?

Needham: I can’t. I’m sorry.

With regard to Ascension: Some of the teams that didn’t make partner may have been turned away because of sponsorships or business dealings with entities and industries that Riot doesn’t want to be affiliated with, like gambling. I’m curious if you have any protections in place if a team like that — that was disqualified from partnership consideration — makes it through Ascension and becomes an international league team.

Needham: We’re going to have requirements in our Team Participation Agreement that they’re going to have to abide by. We have rules about partners and investors that they can have in their teams. So they will have to modify their business structure to meet our structure.

I want to pivot to a sensitive topic: the esports industry and the Middle East, Saudi Arabia in particular. I understand the argument that there are a lot of fans in the region who care about esports, and that companies in the industry want to bring esports and entertainment to them. At the same time, there are dramatic human rights concerns around some of the regressive governments in place there. I’m curious about how Riot is thinking about those challenges, and whether you have any hard lines around participation in certain countries?

Needham: We are an international company, the biggest international gaming company that I’ve been a part of. So we serve players in dramatically different cultures all around the world, and we have a philosophy around “We’re going to go and we’re going to serve our players where they are in their region.” That carries through in esports as well.

For our fans in the Middle East, we are supporting them with esports there — within the Middle East — and we try to be careful in not mixing the cultures too much in ways that could upset our fan base. We love our Middle Eastern players. We’re going to have a great esports scene in the Middle East. We’ll just see how that grows and develops and whether that can be a part of our bigger international ecosystem.

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A long time ago, Riot gave me a statement that the company was working with Sportradar to look into allegations of match-fixing pertaining to players from other scenes who had moved to participate in “Valorant” esports. Did anything turn up from that?

Needham: We do run into questionable competitions, and that’s why we have a partnership with Sportradar. Competitive integrity is one of our most important things, and we try to protect the integrity of our competitions above all else. We’re always monitoring the “Valorant” matches. We haven’t seen any indication of any sort of fixing. When we do, we step in and we address it.

I mean, we have values at Riot. We take those values very seriously, and we want our players to show those values as well. So we look at players a lot, and we look at the accusations that we see out in the media and we do investigations. We have a whole team that manages that aspect of our business. So we’re aware of a lot of players coming up from “Counter-Strike: Global Offensive,” and we see issues like this and we investigate and we do what’s appropriate within our values.

Can you tell me what those values are?

Needham: I mean, we’re about diversity. We are about women’s rights. We are about being fair and protecting our integrity as a sport, right? So anything that crosses those lines, we will take action against it.