Instead of Valve’s The International tournament in August, a league collaboration between teams, Epic Esports Events & WePlay! has begun. This league comes at a dire time where the final Majors of last year’s DPC system have been canceled due to COVID-19 and the DPC Leagues of the coming year are still up in the air.
With 650,000 in prizing and all the best Western teams invited, it is bound to make a splash during the months where The International would typically take place. A precursor to the DPC Leagues coming in 2020-2021, the Omega League has two separate leagues: an immortal tier 1 league with 12 teams (10 of which are directly invited) and a secondary league called Divine with a 50,000 prize-pool.
A Shift in Team/Tournament Business Dynamic
As noted in the title, Omega League is a Dota league that has a revenue share agreement between teams and tournaments. While the announcement text alluded to a closer collaboration between organizations to create a sustainable ecosystem. It was not outright saying what that meant nor the terms to achieve this. The revenue share includes all points of revenue for a competition including media rights, betting agreements, sponsorship, advertising and more.
For those unfamiliar, ‘revenue share’ means that if an organization generates a profit or earns monetary value, a percentage of that earning must be divided or ‘shared’ to other parties. In this case, if tournaments generate money from sponsors, selling broadcasting rights, betting cooperations or advertising for a specific event, teams earn a percentage of that earning in exchange for their exclusive participation at their event. Because team brands and their players generate audience growth for an event, that is the justification to expect a portion of the revenue generated. For example, when working with Epicenter, I was told that just having Na’Vi (and Dendi) in their event grew viewership up to a 10% increase.
The teams involved in this deal are all EU/CIS organizations including Team Secret, Team Liquid, Nigma, Alliance, Virtus.pro (part of ESforce Holding that owns Epic Esports Events), Team OG, Evil Geniuses, Na’Vi. Revenue share discussions for CN and NA organizations are still ongoing. This agreement is only for third-party online competitions. DPC-affiliated leagues, majors or tournaments are unaffected.
How It Started & Details
After WePlay!’s Mad Moon (Feb. 2020), WePlay! initiated a discussion about revenue share and closer cooperation with teams for future events and tournaments. When the COVID-19 pandemic caused Majors to be canceled for safety reasons, a surge of online event invites increased for teams. Strategically, this was an ideal time for teams to test the waters regarding revenue share agreements as they now had WePlay! opening the possibility that tournaments were willing to cooperate in regards to a revenue split. With the COVID-19 pandemic issue shifting power towards team organizations, they could now determine the scheduling for their participation on their own terms.
Unified, teams sent out proposals (RFPs) to tournament organizers: OGA Dota Pit, ESL, WePlay! and Epic Esports Events with no specified initial revenue share amount in the terms. Different conversations varied in their amount for the teams’ exclusive participation during those dates. These terms give tournaments exclusive calendar dates with no competitors and allows teams to see what kind of revenue they can generate in an esports scene that offers very little. These discussions also helped untangle the overlapping scheduling tournaments were proposing without coordinating with one another first.
ESL and WePlay! agreed but Epic Esports Events held off (before eventually joining with WePlay! to create the Omega League). For Omega League, less than 10% of revenue from sponsorships, advertising, betting and more is shared revenue.
Lastly, these agreements are on a per-event basis and may not continue once the new DPC season begins.
Strategic Goals & Outcomes
*to help understand both sides of the situation, consider reading my previous piece (June 2019)
The Omega League achieves several goals for tournament organizers. For WePlay!, they further cement their place as a leader in tournament organization for Dota 2 and other Valve-related games for future consideration of the DPC Leagues and Majors, beating out StarLadder and the Epicenter brand.
For EEE and ESforce, the Omega League keeps them desperately afloat and involved in the Dota 2 scene during a critical year for their survival (hence why they’re joining forces with WePlay!, a direct competitor and very likely successor). Both the general manager for Virtus.pro and CEO of Epicenter/EEE have departed from the organization. This year, Mail.ru Group had to write off 70% of the Holding and their initial value of 100 million has dropped to 30 million in only a couple of years. This goes without saying that the Omega League also helps RuHub who have been suffering since the Maincast/ESL/DreamHack exclusive deal. Back in January, I disclosed a rumour that Maincast paid an 8-figure amount for a multi-year deal with ESL & DreamHack. RuHub is usually the default buyer for CIS media rights to ESL/DH events (approx. 1 mil per year).
For teams, this is the first step towards a sustainable future for Dota. At the moment, teams are nearly powerless compared to the stronger influence and involvement they have with League of Legends, Counter-Strike and other games (not saying it’s perfect over there either). Teams earn about 10-20% of all prize-revenue but can pay up to 400,000+ (or more – pre-COVID) in player salaries on top of lodging, food, visas, services and more. To add, Dota players are less willing to do sponsor-related activities compared to players in other games, causing sponsors to look elsewhere for cooperative opportunities (e.g: League of Legends, streaming, etc.). This causes an uncomfortable position for teams where they cannot capitalize on the success of their Dota squad for future sponsorship. Teams earn nearly nothing from that success and depending on the level of success (or lack of) of their roster, a team can lose their entire brand power in Dota if the roster dissolves or moves on. This is not to paint team organizations as victims, but rather to continue outlining my conclusion I wrote about the Dota 2 esports scene back in June, 2019 from my article “Dota 2 Majors are not guaranteed profitable events“.
It is only natural that teams seek new revenue streams if they are finding dwindling opportunity with players and sponsors. Borrowing ideas from joint leagues in CS:GO with the ESL ‘Louvre Agreement’ may be an exploratory avenue that could lead to be more equitable ecosystem for Dota 2 outside or even potentially within the DPC system (pending Valve’s decision-making). It is very clear that the intent of Omega League is a case-study to display how the Dota 2 esports ecosystem could work to the benefit for the businesses that put the most risk and involvement into the scene.
Teams understand that tournament organizers earn little to nothing (e.g WePlay! losing money on each of their events) but teams also face the conundrum that without LANs, there is no value in Dota for (western) sponsors. This emphasizes the importance of results and to ignore other obligations that would help a team business grow an audience, consistently create engagement and engagement for current and future sponsorship opportunities.
Especially true when the Dota audience is shifting to China, SEA and Europe/CIS – markets that are secondary to sponsors. These factors lead to high operating costs with revenue and sponsorships very heavily emphasized on performance: both for players and team organizations.
Conclusion & Thoughts
This article purely aims to inform audiences about the current business inner-workings within the Dota 2 scene. If Valve draws decisions based on what fans and players call for, then the only solution to a better Dota scene is to inform that public of the struggles, growth, success and challenges esports faces.
The Omega League is a step for teams to generate revenue for a game that faces a systemic challenge of finding a reliable ecosystem. It is also a demonstration of trying for consistency in quality, production, story-telling and business collaboration. If you compare Dota to the games that teams are moving towards: PUBG Mobile, League of Legends and Rocket League, you see a consistency of exposure, potential and results (whether lost or not).
As the DPC system changes every year:
- limiting opportunity for event organizers due to less open calendar dates for third-party tournaments
- limiting the amount of involved tournament organizers (from 11 majors/minors to 9 to 3 majors and 6 seasonal leagues) driving event organizers to other games
- and continuing to emphasize performance-only value without much room for additional exposure for teams
it is becoming increasingly difficult for tournaments and teams to find stability and profit, especially if sponsorship value is lowering with each year (as noted in my 2019 article: “Dota 2 Majors are not guaranteed profitable events“).
To repeat, this is a systemic problem with the Dota esports scene. Omega League and revenue share is not about the money but a search for stability in a scene that disregards businesses.