Riot Games has raised $8 million from Tencent and returning investors Benchmark and FirstMark Capital, said the Culver City, Calif.-based publisher, which develops free-to-play, digitally distributed games with a microtransaction/virtual goods revenue stream. Such a model has worked extremely well in Asia, and is showing promise in the West, but mainly for web-based social/casual games and virtual worlds for kids. With this funding, however, Riot plans to target hardcore gamers, starting with the launch of League of Legends, a downloadable strategy/role-playing game from the creators of the extremely popular Defense of the Ancients.
The goal, Riot Games CEO Brandon Beck told me, is to provide a rich gaming experience that’s competitive with major publisher franchises like Call of Duty and World of Warcraft — but unlike those retail-distributed, high-cost titles, offer it online for free. As Beck explained, “The video game industry is undergoing a dramatic transition from a packaged goods offering to a service industry.” His company is backed by experienced investors with a pretty good track record in gaming: BenchMark also put early money behind Habbo, Gaia Online and Second Life, while China’s Tencent is the big gorilla of virtual goods, earning $1 billion in revenue last year.
Image credit: www.leagueoflegends.com