A few weeks ago, I released insights outlining that teams were sending revenue share RFPs to various tournament organizations from the start of the COVID-19 season (after WePlay expressed interest in revenue share with teams after Mad Moon). While most tournament organizations agreed, including OGA, WePlay and ESL, the new Omega League is different. Usually, tournaments are proposed and organized by a tournament company, Omega League is organized and pitched by a collective of EU teams.
How Omega League came about
Back in early Summer, teams set out to look for a partner to start a league. The proposal asked for a minimum of 1 million prize-pool and inclusion of a minimum of 10 team organizations: Na’Vi, EG, Alliance, Nigma, Liquid, NiP, OG, Secret and later on Virtus.pro, FlyToMoon. The goal was to have a league during the prime days of where The International was intended to be. This league would also serve as a case-study for more sustainable Dota business esports ecosystem as mentioned in my previous article.
While this proposal was sent to a number of organizations, WePlay and Epic Esports Events [EEE] (the makers of Epicenter and part of ESforce Holding) were keen to execute this league and sought to share costs. The Omega League agreement for this league event expects a 10% revenue share where all generated revenue from the tournament (sponsors, media rights deals, betting and more) is split: 90% to the tournament and 10% among the founding teams. Additionally, the proposal seeks a $500,000 as minimum guarantee payment to the founding teams. In other words, to execute this league, a $500,000 payment is expected to be made to the teams organizations (50,000 each).
To note, it is confirmed that Omega League paid an amount to teams to exclusively participate in the Omega League. Though the final agreed amount is not publicly confirmed, it leans towards approximately $500,000. Additionally, EEE, specifically, is expected to directly pay the teams but it is not confirmed if WePlay is making contributions to this payment fee.
Though the finalized agreed terms are subject to the change, what was proposed by teams are these main points:
- 10 teams agree to exclusively play in this tournament for a duration of 1-2 months
- A minimum 1 million dollar prize-pool (Omega League is $650,000)
- A minimum guarantee payment of $500,000
- If tournament/league hit their KPIs, teams will endorse the tournament organizer for DPC events to Valve
- teams will also prioritize the organizer over others during non-DPC events
- Possibility of a second season if DPC does not kick off
In my original article, I discussed the strategic goals & outcomes for each party to create the Omega League. Now with new information coming to light, it is increasingly clear what each party seeks out of this partnership.
- For WePlay, it is a shot at larger events, leagues and potential revenue/sponsorship they are currently not reaching.
- For Epicenter & ESforce, it is a stronger likelihood they may receive a Major event, guaranteeing a profit to help them survive another year. Additionally, it gives RuHub much needed viewership since the Maincast take-over of ESL/DH events.
- For teams, it goes without saying that it off-sets some of the costs they don’t earn back in Dota while also leveraging their influence to seek a more equalized esports industry.
To re-iterate the current situation for team organizations involved in Dota:
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.
August 10, 2020
WePlay Operating at a Loss
WePlay has been one of the best Dota event organizers in recent years. Their spending on cutting-edge technology, set designs, and providing top-of-the-line accommodation has made everyone happy with their involvement. That said, their profitability metrics have been at a loss each quarter. Operation and production costs per WePlay event is an estimated ~$1-1.5 Million and their revenue for Omega League is below 500,000. For Omega League, the cost could be more, accounting for human resources & studio rental (to note that some production costs are split between ESForce & WePlay). Their streaming rights deal with Chinese platforms is about $200,000 and sponsors have outright said that the sponsorship costs are too high (their current sponsor pays between 15 to $20,000). In terms of betting, they’ve accepted a $100,000 offer.
For WePlay, this is a necessary loss to demonstrate how their product stands out from the rest (not just in Dota) but also to garner favour among casters, players, teams and ultimately developers (Valve). In short, it’s theorized that it’s a territory move to outlast competing TOs.
For teams, the minimum guarantee is to compensate for the obvious lack of actual revenue generated from the rev. share agreement (approximately $30,000 or <10%).
The exclusive information provided here and from the previous article are still with the same goal.
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).
August 10, 2020
If you are having trouble how to interpret this information as good or bad, it is purely a systemic effect of COVID and the DPC system. There is no clear solution to the DPC circuit’s current situation and writing the possibilities would require a whole ‘nother article. Having worked and spoken with broadcasting studios, media, commentators, sponsors, teams, players and tournament organizers, there are a wide-range of issues that continue to plague this esports scene. With other publishers showing more willingness to cooperate with esports businesses and people, there is hope for Valve to be more committed to the esports scene. However, my personal point-of-view for a publisher is, once you’re involved in any way to esports, you cannot step back without a causing repercussions. For Dota, it’s not a question of money to improve the scene, it’s a difference of perspective and infrastructure. If Dota esports is marketing, it still works. If Dota esports is a business eco-system, it’s suffering.
As of right now, teams and TOs are working similar to Valve: year-to-year, short-term. If we hope for long-term sustainability, we must start thinking, planning and cooperating on real goals – whichever those may be.
Omega League: revenue share between teams & tournaments
Corrections on article: “Dota 2 Majors are not guaranteed profitable events”
Dota 2 Majors are not guaranteed profitable events
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