Riot Games Acquires Gaming Studio Hypixel

Riot Games closed its acquisition of game developer Hypixel Studios on Thursday, the Los Angeles-headquartered firm announced in a statement. Deal terms were not disclosed.

Riot was founded in 2006 and released its flagship title League of Legends in 2009, which the company reports is the "most-played PC game in the world and a key driver of the explosive growth of esports."

Hypixel was founded in 2018, with Riot part of the initial investment group. The young development studio now boasts over 40 developers, currently at work on its debut game, Hytale. Described as a combination of a "creative sandbox" (á la Minecraft) and a "roleplaying game," 2.5 million people have reportedly signed up for the beta version, which does not yet have a release date, per a company representative. Hypixel has stated it expects Hytale to be playable by 2021. The game's trailer on YouTube has nearly 56 million views.

Hytale - Announcement Trailerwww.youtube.com

"Over the last 18 months," said Riot Games President Dylan Jadeja in the statement, "we've been fortunate to advise Hypixel Studios as they build toward their vision for evolving a game genre that reaches an incredibly diverse range of players around the globe."

"As development kicks into high gear," said Aaron Donaghey, Hypixel's new CEO, "we'll benefit from Riot's resources, expertise, and experience while maintaining the operational independence that has enabled our success so far."

Things are certainly looking rosy in the gaming industry. New Zoo, a gaming analytics service, pegs the 2020 global games market at over $160 billion and forecasts nearly $190 billion by 2022. Gaming has climbed during the coronavirus crisis, too; last month Verizon reported a 75% increase in gaming among its customers in the first week following widespread lockdowns. As for esports, global revenues are expected to surpass $1 billion this year, according to New Zoo, and reach nearly $1.6 billion by 2023, a 15.5% compound annual growth rate from 2018.

Earlier this week the Washington Post reported that Riot will oversee the esports component of its second AAA game, Valorant, in a less centralized way than it has with League of Legends. Instead, said the report, the "gaming community" will take on an active role. Riot did, however, issue certain guidance, including standards for prize money and advertising in tournament play.

Not all video games are ripe for esports. One industry source told dot.LA that, "The popularity of an esport is going to be inextricably tied to the game itself. The majority of your esports watchers are either actively playing the game or are lapsed players."

In addition to popularity, the source said that other key factors that determine whether a game will find success in esports include whether it is free to play, requires some level of skill, and is team-based. Given its structure, Hytale is unlikely to hightail its way into the world of esports.