Riot’s relationship with Tencent has reportedly been strained over declining profits and mobile games

Riot Games’ relationship with parent company Tencent Holdings has been a rocky one over the past few years, according to a report published by news platform The Information.

The feature was based on interviews with “more than 40 people close to Riot and Tencent,” including current and former employees. It also features statements from founders Marc Merrill and Brandon Beck, as well as CEO Nicolo Laurent.

The article, for the most part, provides specifics on Tencent’s full acquisition of Riot in 2011. The interesting parts, however, are the details about Riot’s declining playerbase and Tencent’s own pursuit of mobile gaming, which have caused both companies to butt heads more than once in the past.

When mobile gaming began to overtake “hardcore” gaming, Tencent apparently approached Riot about turning its only game, League of Legends, into a mobile title. Riot declined, saying that the game’s experience “couldn’t be replicated on smartphones.” Tencent then reportedly created their own mobile game, Wangzhe Rongyao, roughly translated to English as Honor of Kings, in 2015.

When Riot discovered early screenshots of the game, which has now arrived in North America as Arena of Valor, some employees weren’t happy. “We were stunned,” one of the former Riot staffers that The Information interviewed said. “They were blatantly ripping off our intellectual property.”

Riot reportedly brought these concerns to Tencent, and Tencent responded by changing its own game enough to sell as a standalone product with no relation to League. The game then went on to become the most popular smartphone game in China by the end of 2017, according to the report. Riot supposedly wasn’t a fan of Kings’ sudden popularity, according to the interviews with those “close to Riot” by The Information.

On top of that, The Information reports that Tencent has moved on to PlayerUnknown’s Battlegrounds and Fortnite, focusing its efforts now on the stock owned in both games’ developers, Bluehole and Epic Games respectively. The sudden shift is due to a rapid decline in League’s playerbase and profits, which has resulted in significant layoffs at Riot’s worldwide offices.

When The Information approached CEO Laurent about these declines, he stated that they haven’t actually been that significant. This was despite former and current employees telling The Information that Riot leadership held a massive, company-wide meeting in March to inform workers that the company would reach a deficit if they continued on the current path.

Despite all that, both Beck and Laurent told The Information that Riot’s relationship with Tencent is strong. Beck said that the situation with Kings was simply a “bump in the road.”

Update August 13 12:37pm CT: After this article’s publication, Riot Games provided Dot Esports with an official statement pertaining to The Information’s report.

“League numbers are down from their peak, but it’s still one of the most-played games in the world and we’re very happy with the numbers, and we think some of the new content we’re putting out soon can only help with player numbers,” Riot said. “Basically, League is doing incredibly well by any measure except its own very high watermark. 

The relationship with Tencent is the best it’s ever been. We talked to Rioters about it a fair amount back in February and while the Arena of Valor situation wasn’t great, we worked through it and leadership’s take that it made the partnership stronger. We’re working together toward an exciting future, both for League and our upcoming games (yes ‘s’).”