How Social Media Pressure Influenced Riot Games to Push to Dissolve FTX Deal
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Though it’s been nearly a month since FTX declared bankruptcy, “League of Legends” publisher Riot Games filed a motion in Delaware late last week in a bid to recoup losses and claw back some of the $96 million from its failed sponsorship deal. This was Riot’s largest sponsorship deal ever, so the filing isn’t particularly surprising.
What is surprising, however, is how often Reddit is mentioned in the brief. In particular, the brief mentioned Reddit posts discussing the FTX deal inked a year ago and cited one comment from a user who called the deal “huge news” and noted “that’s a ton of exposure for crypto!” Riot also noted that other Reddit pages, including “cryptocurrency and gaming communities,” were discussing the deal.
The repeated references to Reddit in Riot’s filing show just how plugged in the company is into the online discourse. The “League of Legends” subreddit in particular has over 6 million followers and is a big source of discussion for all things related to the game. “No Riot employee[s] are moderators on the subreddit and they have no say in how the subreddit is run,” one anonymous mod of the subreddit told dot.LA. They added that Rioters who are members of the sub do get a special flair to identify them as employees, but that’s “mostly to avoid impersonation.”
The moderator also told dot.LA that ironically, the FTX sponsorship discussion aside, advertising or promoting crypto or NFTs on the “League of Legends” subreddit isn’t allowed.
General gaming communities and subs dedicated to games by Activision Blizzard, which has its own conveyor belt of scandals, often discuss the company’s alleged dirty dealings. Last July, the Washington Post cited Reddit posts from angry users looking to oust former Blizzard president J. Allen Brack for failing to prevent sexual misconduct at work (Brack left the company a month later).
Part of this ties into one of Riot’s big arguments in the court filing, which is that besides losing money on the deal, having their flagship game with over 124 million players this summer be associated with FTX’s former CEO Sam Bankman-Fried is potentially damaging to its growing “League of Legends” universe.
“FTX cannot turn back the clock and undo the damage inflicted on Riot in the wake of its collapse,” the filing read. “There is simply no way for FTX to cure the reputational harm already caused to Riot” following its bankruptcy filing, the brief added.
The filing also cites one of Riot’s esports teams, TSM, that recently terminated a $210 million naming rights deal with FTX (one of many sports sponsorship deals to flop since FTX’s crash began). In addition, the notice made clear that although Riot is unable to capitalize on its crypto sponsorship with FTX, the company is interested in a new sponsorship. Which may come as a surprise considering the crypto market as a whole continues to dwindle.
So who’s going to be the next crypto sponsor for Riot – and, crucially, will fans be as bullish the second time around? Or the third? Who knows, we could see this saga repeat itself several times before the right partnership comes along.– Samson Amore
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