$350 Million for a Majority Share of League of Legends’ Money, I Mean Developer

There’s a really good chance that you missed this bit of news from last week. I did, and I tend to follow companies that develop games I enjoy so much. Tencent Holdings, predominately a Chinese Internet service company, has acquired a majority stake in Riot Games, the creator of the F2P battle arena game League of Legends. Tencent reportedly paid $350 million to buy out other venture capitalists and put itself in a great position to soak up all of Riot’s money as it continues to innovate its genre.

Obviously, I believe that Riot Games has found a winning formula. The company releases new content weekly, be it champions or the occasional map reskin (which is entertaining for some reason). It levies the new champions against skin sales to generate revenue. A scheme that has cleaned the moths out of many a friends’ pockets. It employs daily rewards for the first win to keep us coming back and has an incredibly deep universe for a game that has no open world. It’s no shock that a company was willing to pay nine figures for a piece of that action. Considering its growth – the company has been on a hiring spree since LoL launched in late 2009 – the profits haven’t peaked yet.

If only I had $351 million…

What boggles my mind is how suits in our gaming industry didn’t see this company’s potential. Why is it that a company from China, their Comcast Yahoo for all intents and purposes, snapped up the diamond in the rough? Where was ZeniMax, Electronic Arts, Microsoft or even Activision?

According to TechCrunch, no American game company, you know, the ones claiming they need to expand into F2P gaming, made an offer. Only Chinese and Korean suitors came forward. Likely because they recognized the expertise – millions of players may have tipped them off – and wanted to enter the lucrative American gaming market.

If Glenn Beck followed the gaming sector he’d blow a gasket. He freaked over Chinese companies exporting culture to America a few weeks ago. Now a Chinese company has made the largest video game purchase in recent memory, taking over (the largest) part of our culture. Never mind the fact that Riot Games is to remain an independent entity, with the same successful management staying in place. Fox News certainly wouldn’t.

Interested in the business jargon? You can read the original announcement here, a recap here and Riot’s announcement here.