As of this post, the Valve’s The International 4 Dota 2 tournament has a prize pool of over $3.7m USD. The record-shattering amount is due to Valve’s innovative crowdsourcing technique: selling hats.1 In this case, the hat in question is the Compendium, a $10 item that helps users contribute directly to the prize pool of the game’s biggest esport event. This year, the Compendium isn’t just an item that builds the game’s prize pool, but it unlocks features for its owner.
The TI4 Compendium adds the ability to reward the player for playing the game as they normally would, as well as for participating in TI4 meta events, such as a newly established Fantasy League. Points added up yield visible effects for the player’s characters in game as well as unlockable content only available through the leveling up the item.
However, another complementary feature of this year’s Compendium includes microtransactions that facilitate purchasing points for the item’s levels.2
With this, it’s no longer possible to infer any sort of metric about the amount of folks who bought into and contributed to The International’s prize pool. This distortion is due to players’ new ability to purchase points towards their Compendium rather than multiple Compendiums to further increase the prize pool for the tournament. More stretch goals will be reached this year, thanks to this new venue that allows players to contribute.
In addition to how much the prize pool is raised thanks to Compendium sales, it’s also now more difficult to calculate how much revenue Valve generates per sale—remember, $7.50 from each Compendium goes directly to Valve and not the prize pool. It’s probably the first esport event on a scale this large that actually comes close to turning a profit for its organizer based on event-based revenues alone.
Based on the fact that 25% of all purchases go towards the prize pool, and the prize pool was initially $1.6m, that means that $2.1m came from the 25% contribution. But for a game that has 8m MAU and making the assumption that all sales come from that $2.50 portion of the Compendium price, that means over 10% of the game’s user base is active enough to buy into a freemium game. I’m curious if the real numbers can support the case that Valve actually profits from holding one event a year.