It's this time of the year again. No, I am not referring to your summer vacation, but rather to the largest tournament around the Dota 2 game IP and at the same time an annual record breaker in terms of prize pool.

What is a "Dota"?

Ok, let me get you up to speed. Dota 2 is a MOBA developed by Valve, which ironically picked up on the idea of Dota (1), which was a mod of Warcraft 3 by Blizzard Entertainment. As to why Valve received to take over such an idea around the platform of another game developer and how RIOT's League of Legends squeezed into that most strategic period of disorientation and made yet another AAA-title should be an entirely new article.

What is "The International"?

The International is the annual tournament to find the best team within Dota 2. The whole magic started in 2011, but if you compare it today's tournaments it had back then more of a LAN party character rather than reputable tournament or anything that would break records in a booming industry.

It wasn't until 2013 when Valve started to implement the at the time visionary way of boosting the 1,6M of the previous 2 TIs. Via ingame items and collectables - the so called "compendium" the community was able to contribute directly to the major format. However Valve is not a charitable organization and was always disciplined in terms of business.

Only 25% of the ingame items sold contribute to the prizepool overall.

So while we cheer for new records and high numbers, let's please not to forget to attach a x4 multiplier to grasp the entire volume of ingame purchases. Please also note that the graphic about growth of the prizepool and the current record breaking is just news of today (20th August), but the crowdfunding part is still active throughout the tournament. Until the champions are crowned on August 25th we can expect this prizepool to go up by a bit.

A second, often ignored vision!

At the end of the picture you also see something I appreciate so much in Valve. The second very visionary move (in my opinion) was the distribution from 1st to last place. I remember in the last 20 years+ of tournaments how much frustration derives from "Winner takes it all" or the "Winner's podium" only having 3 spots. By rewarding even the 18th team of the competition, alongside a very wide spectrum format to qualify for the competition, Valve created many opportunities for smaller teams, underdogs, orgs from weaker regions and much more. During the time of ecstasy of world records this is a fact often forgotten. Now some of you might say Valve covers most, if not all expenses, but mind you that making it to The International requires months and years of preparation as an individual and even more intense practicing as a team prior to the tournament. Often teams don't have the funds for a bootcamp or anything similar the top teams have a constant and henceforth you can expect performance being significantly lower. However, knowing you already "won" 60k+ by qualifying, makes a few business decisions easier. That being said, I also saw the dark side of esports and instead of investing the 60k guaranteed money into increased performance - team owners pocketed it, didn't go for any bootcamp prior and the results were as expected. It's a very shortsighted view in light of 16th place+ already rewarding 100% increased profit, but to be expected from very young entrepreneurs.

Concerns about growth?

While I am on the negative things, I'd like to also mention that I think the growth of the prizepool might flatting out a bit. However at this point it's just a hypothesis and we will know more after August 25th and confirmation in 2019.

Let's not forgot the community!

It's also worth mentioning that the rewards ingame were often not and/or late delivered to the community - which is something very dangerous, given the momentum behind this crowdfunding monster. A disgruntled community might be a huge difference worth millions and furthermore also skewer projections on the Dota 2 IP.

Inflation, market cap and dilution?

Also inflation is something worth looking into. The "Majors" and "Minors" is an additional format throughout the year added much later after the first International. Prior to that tournaments did crowdfunding through so called ingame tickets. Also the Chinese format "DAC" also had heavy elements of crowdfunding. - The bottomline is, Valve had this rev sharing notion throughout many formats, parts of steam, ticket services and other things. That combined with a very much failed steam market economy (this amounts to another article, but not today) and overall a very steady flow of new items might make the user/community tired.

What's to come?

I think 2019 will be a very interesting year to observe for me and check some of my theories. Dota 2 is a great IP, will certainly stay great for a few years to come, but it's time to look under the hood in search for innovation and growth. Will Dota continue to grow? Will the community keep buying? Will the 25% stay in place or adjusted later to draw a good PR outcome? Where does Valve's focus lie, given also all the hardware ambitions as well as large steps into the streaming business? Steam market to be reworked? Many more questions and each and everyone could have an impact on the prizepool in the years to come, for better or worse respectively. It's going to be exciting!