The Numbers

"I've applied the formula for success!"

The Opportunity

League of Legends is the most played video game in the world by far. It's estimated that about 1 in 100 people play every month. (~70 million) 1. That's more than the population of Canada, Greece and Sweden COMBINED. If there are more summoners out there, than Canadians, Greeks or Swedes, how could we capitlize on this as a business?

Well, the bulk of the business model and livelyhood of League of Legends is reliant on its sale of RP. The total cost to buy everything in the League of Legends store with RP is 449,620 RP or around 3000 USD.2 With 70 million active players, thats approximately 210,000,000,000 USD in possible uncaptured revenue. Yet, League of Legends only made approximately 4 billion USD from RP Sales per year.3 (<2% of total potential sales) If virtually everyone plays or knows about the game, why is the conversion from spectator to player to RP purchaser so low?

  • People stop or never start playing the game even despite having friends who still do.
  • Players never feel the need to buy RP even despite playing the game on a consistent basis.
  • Players who have purchased RP in the past dont think any new developments warrant purchasing more RP.

From Relationships to Revenues

GroupBuy leverages our massive player base, esports and and media presence by encouraging the development of player connections. Having a unified skinned roster with friends would lead to more players, and ultimately more RP purchasers thus warranting the 20% discount.

  • Active players would encourage non-playing friends to play so that they can take advantage of GroupBuys discount.
  • Active players would be more encouraged to buy RP if its a smaller commitment and a communal decision, relieving them of a lot of pressure and buyers remorse.
  • Friends wanting to bundle together are a motivating factor to buy RP even if the skins alone aren't enticing anymore.

GroupBuy Projection

Sales to Players who would not have purchased otherwise

Skin Price(RP) Number of Players Discount(RP) Net(RP) Population Est.4 Gross(RP) Gross(USD)5
975 1 195 780 1% 546,000,000 3,640,000
1950 2 390 1560 0.75% 819,000,000 5,460,000
2925 3 585 2340 0.25% 409,500,000 2,730,000
3900 4 780 3120 0.05% 109,200,000 728,000
4875 5 975 3900 0.005% 13,650,000 91,000
TOTAL 1,897,350,000 RP OR         $12,649,000

Sources

1http://www.forbes.com/sites/insertcoin/2014/01/27/riots-league-of-legends-reveals-astonishing-27-million-daily-players-67-million-monthly/
2https://www.reddit.com/r/leagueoflegends/comments/2rppsv/how_much_it_would_cost_to_buy_everything_possible/
3 http://www.tencent.com/en-us/content/ir/rp/2012/attachments/201202.pdf
4 Estimates based on several factors: A group's power to influence 4:1 or 3:2, the snowball/marketing nature of skins being shown off in game and the want for matching skins for duo partners and 3v3 teams.
5 Based on 100$ 15,000 RP cards yielding a 1USD/150RP ratio. Actual sales would realistically use significantly more 10$,25$ and 50$ cards that are not as economically efficient for consumers. Current Numbers are deflated to remain conservative.