The International, the biggest annual tournament hosted by Valve for their MOBA, Dota 2, holds the distinction of the largest prize pool in esports history four years running. Since 2014, The International has managed to break its own record year after year; not especially surprising, as the popularity of the game had been following a similar pattern through 2016. However, in 2017 Valve had seemingly run into a problem: the active player base had shrunk down by approximately 15-18% in 2017 (according to steamcharts.com). Was it possible for Valve to once again break their own record by generating more revenue from what was a smaller player base for the first time since crowdfunding for The International begun?
They proved it was. Despite the smaller pool of players, Valve was able to break their own record once again. They achieved this by taking lessons learned from years of popular Steam Sales and applying them to microtransactions in their game as a service.
Since Valve began crowdfunding for The International, 2017 was the first year that the active playerbase had been down from the previous year.
It’s important to first understand the structure of The International and its prize pool. Since 2014, Valve has invested $1.6MM directly into the event’s prize pool each year. The rest of the prize pool is crowdfunded through a series of microtransactions released throughout the tournament season (historically anywhere between 74-102 days, running up to the end of the tournament). Eligible items include the initial purchase of a compendium/battle pass, additional levels for the battle pass (which rewards cosmetics and other items at certain thresholds), and blind loot boxes with items of the highest rarity. These items are released over the span of the fundraising period, meaning that the prize pool increases steadily over time but also experiences bumps in revenue when new desirable content is released. 25% of each sale goes directly into the prize pool.
2017 was also the first time The International’s prize pool dipped below the previous year (Tracker data from http://dota2.prizetrac.kr/international2017).
In a year where player activity is down, how did Valve continue to grow the prize pool? By evolving their content strategy. 2017’s Battle Pass contains all of the features from the previous year, but it also adds a few big bonuses, such as a limited cooperative campaign mode (a first for the game). Growth in content, however, has been standard for The International; since 2014, each compendium has had more content, and each treasure series has had more sets and/or immortal items to collect. While this expected increase in content has allowed for steady growth each year, it could not necessarily make up for the shrinking player base on its own.
More content is added to the Battle Pass every year, and the level of investment required to acquire everything has generally increased year over year.
What did change in 2017, then, was not growth in content but growth in buy-in. The prices of items have been consistent since 2014, and while new types of purchasable items have been added in years past, prices on existing items have not historically shifted. 2017 saw this change; Valve is offering more content, but in return asking for a higher investment from players. For example, the Battle Pass costs the same in 2017 as it did in 2014, $9.99. However, players were given the option to purchase the Battle Pass with 50 bonus levels at a slight discount in 2016 and 2015, at $26.99. In 2017, a similar offer still exists, but now offers 75 levels instead of 50, and runs for 10 dollars more, at $36.99. The 50-level bundle from previous years is gone. This combination of extra content in the battle pass, along with a higher buy-in value, was successful at immediately raising the prize pool above the previous years.
Many items for sale have remained consistent in price, but bundles added more content and value in 2017 in return for being sold at a higher cost.
This strategy has proven effective with other items, as well. The biggest bump in the 2017 prize pool, and in the entire history of The International, came from the sale of the Battle Level Bundle. This bundle includes levels for the battle pass, as well as several types of chests. The bundle generated ~$3.4MM over the course of five days. By comparison, over the same stretch of time, the 2016 Battle Pass Bundle managed to earn ~$2.5MM. What made it $1MM more effective in 2017, which saw a smaller player base than 2016, and how can other developers learn from Valve’s success this year?
Once again, Valve is pushing value by taking the strategy they utilize during Steam Sales and applying it to the Battle Pass. At the start of the Steam Summer Sale, Battle Pass Levels for Dota 2 went on sale, bundling levels with treasure chests at a severe discount. In 2016, Valve sold 50 levels (a ~$20+ value by itself) with 6 International treasure chests for 14.99. Continuing the trend of higher buy-in for 2017, this year’s bundle was priced at $19.99 but included ~$37.49 worth of levels and two more chests than the previous year.
Not only does this strategy again leverage more value at a higher buy-in to produce more revenue, but it also leverages a classic Steam Sale tactic: the flat price bundle. Though Valve has mostly done away with it, in the early day of Steam Sales, companies like Valve, Id, and Bethesda found great success in selling bundles on Steam. What made these bundles smart was the effect of perceived value. Players would buy these heavily discounted bundles, either to complete a collection of games or for one or two titles that they really wanted. Even so, the inclusion of many smaller, older games (which players may or may not have already owned, and could be sold at little cost by the publisher) added to the perceived value of the bundle, making it easier to justify the purchase. These level/chest bundles work in a similar fashion; it’s often the levels that players want, since those unlock rarer chests/items in the Battle Pass. The bonus treasures are a nice extra, but will likely include duplicates of items that players have already acquired. They’re throw-away bonuses that cost Valve nothing to give away late into the crowdfunding cycle, but their inclusion has the psychological effect of adding significant perceived value to the bundle.
These Kitchen-Sink type promotions are becoming more common, and it’s hard to argue against the results. They’re grand spectacles of marketing tactics, including sales and transmedia appeal. Valve has all but mastered these techniques through many years of Steam Sales, and they’ve now applied this knowledge to Dota 2’s Battle Pass. During this once-a-year event, Valve rallies the game’s player base with their limited-time items, quests, and mini-games, leading up to the largest esports tournament in the world.
As the Free-to-Play/games-as-a-service space becomes more crowded, the fight to maintain an active player base becomes more difficult. Companies like Valve are finding success in content cycles focused on their tournaments, and Blizzard seems to have a similar release strategy for their successful titles: dump a large amount of content at once to generate excitement from the community. For example, Hearthstone is moving towards an expansion-only content release schedule. Adventures, which were once sold separately, will be unified with expansions to provide more significant content drops. For Overwatch, Blizzard continues to focus their microtransaction releases around holiday events that introduce new modes and occasionally new characters.
Both titles are also exploring other forms of media for marketing purposes, including comics and short films. When Overwatch launches their official league, it will be no surprise to see in-game tie-ins there as well. These days, when there is always a hot new game vying for audience attention, it just may be smarter to make as much noise as you can for a month a few times each year. Give your players a memorable experience; leave them looking forward to the next big event, instead of burning them out with a constant deluge of content.