Record $350 Million Esports Deal Dissolved Before It Began

(Bloomberg) -- When Riot Games Inc. announced a $350 million deal with BAMTech 18 months ago, it marked a hallmark moment for the growing economy of professional video gaming. The first major media rights deal in esports, it suggested a future in which major video game competitions could make money in the same ways major league sports do.

After months of delays, that deal is now dead. Riot on Friday announced a new streaming agreement with ESPN+, the digital platform launched this year by Walt Disney Co.’s ESPN. Starting in June, League of Legends matches will be available on ESPN+ on a non-exclusive basis, meaning esports fans can still watch events on YouTube, Twitch and Riot’s own website.

Terms of the new deal were not announced, but exclusive deals are typically far more lucrative than non-exclusive ones.

Riot called the new deal “an evolution” of the original, which was signed before Disney bought a controlling stake in BAMTech last year. League of Legends will reach a broader audience alongside other sports on ESPN+, the games company said, and it will also give Riot the freedom to sign other media deals in other regions.

Still, the original deal would have created a single viewing portal for League of Legends fans, and the money was significant. At the time, Riot said both the financial terms and the scope of the partnership made it a “game changer for our sport.” BAMTech was planning to build a streaming app, compatible with computers and smartphones, that would be the exclusive home of many League of Legends competitions. BAMTech was also going to help drive revenue through ad sales and sponsorship.

A series of delays led to frustration and confusion among League of Legends team owners, who paid $10 million to $13 million for franchises in Riot’s new league last year. The revenue and exposure generated by the deal was part of the rationale for the relatively steep price in an emerging sport. It also set the League of Legends league apart from rival Overwatch League, built by publisher Activision-Blizzard Inc. Overwatch League later signed a two-year deal with Twitch worth a reported $90 million.

After Disney took a majority stake in BAMTech in August, the company’s strategy shifted to favor ESPN+, which it wants to load with a diverse array of sports content. The $4.99-a-month service already has a wide array of sports content including some NHL games, some MLB games, college sports and wide Major League Soccer rights.

BAMTech, which was fully purchased by Disney in August, has gone through many changes since the original deal was announced. In addition to operating the underlying tech for ESPN+, it supplies the back-end technology for a number of other digital sports properties, including those of the NHL, MLB, PGA Tour and WWE Network.

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