Torte De Lini

The most important aspect in esports is the pro-players. Without the players, there would be no competitions, teams, sponsors, industry, etc. The second most important entity in esports are the tournament brands.

Around since the late 90s, tournaments have been a public stage to display the popularity, growth, interests and brands in esports. Tournaments are how an esports game showcases their value and opportunity. Tournaments provide a/an:

• physical gathering for fans
• public stage to market teams
• direct reach to consumers for sponsors
• majority of livable income for commentators & talent
• display of popularity for a game developer’s product
• platform for players to compete for major prizes
• entertainment for viewers at home

With that said, the public discussion about tournament brands earning a profit on their events has been troubling in recent years. This article seeks to reveal the range of costs and revenue for tournament brands as well as the challenges they face.

How much it costs to run a Dota Tournament

Regarding cost, there are a lot of factors to consider. In this piece, we take on the assumption that this tournament is a Valve-sponsored Major (which means that Valve only provides you with half the prize-pool)

Depending on the region, a Dota Tournament can cost approximately 2 to 3 million U.S dollars including the prize-pool of $500,000 (Valve provides the other $500,000). The largest costs being technical production and accommodations which is about 50+% of a tournament’s costs.

As you can see, the largest costs are not paying for talent or even the prize-money but rather producing the entire event and hosting the players/talents coming in (travel & accommodations). For Dota tournaments especially, this cost is harrowing as Valve forces 16 teams to attend which is approximately 112 people who need flights, rooms, training facilities, shuttles, visas, three meals a day for 12-13 days (teams need to arrive before group-stages begin).

To take an example, MDL DisneyLand hosted players at the Newport Bay Club Hotel which is about $325 to $450 a night (before group discount/negotiations): ~$580,000. An alternative example is 2018 ESL Katowice, which had talent and players staying at the Atlus Prestige for $150 a night (some players/teams may have been at other hotels due to lack of rooms): ~$218,000. This doesn’t include talent, cheaper hotels for working staff or all other costs needed to accommodate.

The cost to run an event is incredibly high because of the number of players attending as well as the forced number of days an event must be held for.

How do tournaments make their money back

Before we talk about revenue, we should note that some tournament organizations have long-standing deals with small towns like Katowice and ESL where the venue may be discounted (or free) as these events drive a lot of tourism to a city that most people would likely never visit.

The revenue streams for event organizer’s is relatively straight-forward, it’s just the values that shift depending on the event: please note that each event is different and these are only approximations to help give you a sense of ratios between costs and returns.

• Sponsorships/Advertising
  • The largest revenue stream for a Dota tournament is sponsorship/advertising sales.
  • Depending on your largest (title) sponsorship, it can be approximately equal to your consumer ticket sales.
  • Sponsorships have decreased over the years from $700 to $800,000 to now more $400 to $600,000 (maximum).
    1. Some events like to load up on a lot of sponsors at lower prices while others like to sell minimum packaging for high-prices but cover a lot of areas (branding, advertising, on-site booth, etc.).
  • Depending on how you package your sponsorship deals (per-event level packages, annual multi-event agreements, etc.), this number heavily fluctuates.
• Media Rights Sales
  • Media Rights are a tricky business and the numbers range depending on the region you are selling rights to.
  • China is the most valuable region and sales go at approximately $200,000 (maximum). Other regions can earn up to $100,000 but it’s rare.
  • Some broadcasting sales are fixed fees or performance-base
  • I’ve opted to not talk about the Facebook deal amount, Twitch negotiations and more because it’s a much larger subject.

• Consumer Ticket Sales
  • Consumer ticket sales heavily fluctuate depending on the region and experience of the organizer to advertise and push sales.
  • Typically Majors are announced a few months in advance, very little time for many attendants to afford and make travel plans to attend. This affects # of tickets sold.
    1. Additionally, this is why many tournament organizers apply for next-year event dates: to ensure proper leeway to plan and advertise their event.
  • At the MDL Disneyland Major, a lot of factors were stacked against them that made their event challenging (and thus even more impressive they pulled it off):
    1. They began selling tickets much later than the usual, meaning promotion/advertising to get people aware and interested in the major is much harder (flights/hotel costs go up, closer to the event’s launch)
    2. They launched an event in a country that is not known for its Dota player-base. League has been hosting major events in Paris for almost 5 years.
    3. They chose a venue location very far from Paris at a much higher cost than other events. This can turn many people off who are not financially comfortable spending that much money for a Dota event (yet they are your target demographic)
• Merchandise and misc.

We should also consider B2B convention sales such as what ESL achieves with Katowice (conventions), however this is not common for most Dota tournament organizers and heavily affects the variable venue rental costs, resources and human resources to manage this aspect. For the sake of brevity, I’ve excluded ESL events (though anyone could write a whole lot about ESL and its business history and relationships).

Challenges

Beyond the obvious challenge of keeping costs low versus improving your revenue streams, the involvement of a Valve’s “rules” to run a Major have become increasing leaning towards the player & viewer experience. This is not to say it is right or wrong, but depending on the perspectives – this heavily affects a TO’s costs and revenue. Some of these “rules” include:

1. Nearly a two-week long LAN event
   • as mentioned before, this multiplies several costs to run an event.
2. Must have all 16 attending teams go through qualifiers
   • Tournament organizer’s can no longer invite popular teams to their events, reducing viewership and increasing administration costs, time and human resources to manage these qualifiers.
3. Non-exclusive viewing options
   • Non-tournament affiliated user brands can re-stream the event – re-streams do not help the event organizer in any way and heavily affects its bottom-line by reducing its future market-value for sponsors and media right broadcast sales.
   • Fans can view matches in-game
     • previously, digital tickets provided a valuable alternative revenue streams for tournaments (since their Twitch agreement may exclude any possibility of channel-subscription sales).
4. Uncertainty of a Major status (this affects sponsorship sales) Major status approved 3 to 6 months before your event.
   • This affects venue rental options
   • Some tournament organizers pay to hold a venue on the dates they proposed to Valve, uncertain if they will be approved for those dates until a much later point in time (in which they are paying for that waiting period)
5. No gambling or betting sponsors
   • Side-note: betting sponsors are approx. 30 to 50% greater than current sponsor sales depending on the size of the event.

Many of these factors are for the benefit of the viewer but disempower the tournament’s business and ability to stay in the black.

Conclusion

At the moment, there are many flaws and concerns about the Dota Major system for all parties:

• Tournament brands are facing increasing costs with diminished potential returns.
  • The more Majors per year, the less value each Major is as sponsors now have more choice.
• Players are feeling mentally and physically exhausted from too many events
  • May lead to a new Major tournament system, perhaps at the expense of tournament opportunity.
• Talent are being negotiated down their previous rates as tournament businesses seek to cut costs to accommodate increasing expectations
• Valve permitting re-streams provides more eyes on their product/game;
  • however this reduces the tournament’s viewership and marketable value for tournament brands.
  • Tournament brands must then re-invent their event to provide more than just games, but is challenged by the cost to do it.
  • Additionally, re-streams hurt a tournament’s revenue stream as it means less viewers, thus less value for sponsors as well as media rights sales to other broadcast companies.

In short, tournaments are a business above all but they are a source of human resources to market a product for a developer, income for many talents and commentators as well as a platform for teams and pro-gamers. As of right now, profits to run Dota events is tightening with each Major system iteration. Over the course of Dota 2, the cost to run events has increased but the actual returns have decreased over time. Once a developer becomes involved in an esports eco-system, there is no turning back, the environment is forever changed and that involvement must be kept and maintained. Valve’s involvement has created a consistency and opportunity at the benefit for the players and spectators, but it may be time to consider balancing the other end of this industry: ensuring the longevity of tournament organizer’s involvement with Dota 2.

*update: consider reading some corrections and clarifications on this piece in my subsequent article

For the past few months, I have been between employment in esports. I have been unemployed 5 times since 2013 and it’s simply the nature of working in risky start-up esports endeavours. However, with each new search for new roles and opportunities, I’ve come to understand better on how to sell my candidacy and abilities. With each year, my esports experience, range of projects and roles has widened. This makes the search for new work easier but not without its challenges and constant shaping of my profession and character.

Within this article, I will highlight some personal thoughts I’ve learned over the years in search for new work and moving on from past ones. This is not to say that my approach will work for everyone, but rather someone can make a career going bust with six different companies, yet still find work.

My Background

If you haven’t visited my LinkedIn Profile, you can receive a basic summary of my roles, work and projects over the years. In short, my 9 years of esports can be summarized as the following:

• 9 years of esports experience working with companies representing in major regions including North America, Europe, Russia & CIS and Korea
• During my university years: (2010-2012)
  • General Manager for over 5 professional StarCraft teams and 50 internationally achieving players.
  • Helped organized over 10 community and competitive event projects.
  • Writer for a variety of esports and mainstream gaming outlets.
• Professional Experience: (2013-2019)
  • Launched one of the first esports major studios, digital magazines and live-streaming platforms.
  • Managing Director of an esports press company, reaching 1.5 million monthly readers and among the top 10 most read esports media sites.
  • Head of Int. Strategy & Development for an esports Holding company, acquired by Mail.ru Group and provided expansionary strategies for its current holding’s brands.
• Personal Projects (2010-2019)
  • Launched three different esports clubs and many community events across Montreal, helping establish its esports presence.
  • Created the Dota 2 Hero Builds Project, accumulating over 350 Million subscriptions, 83% of the playing population and collaborating with the developers to create an in-client UI for user-generated in-game guides.

From an initial glance, it reads impressively but it becomes easy to immediately scrutinize and find holes in my experience. For example, all this was done in 9 years, 6 of which are full-time positions. That would mean that I have been at a job for maximum a year (my previous position being two for the first time) and none of the companies are currently still standing (something any hiring team should do a background check on).

This is your first challenge and during your earlier years, when you are working for companies that no one will never heard of (which is most of the start-ups I’ve worked for), you need to shape your CV (resume) to highlight your personal achievements, especially in the face of professional failure.

Curriculum Vitae

For many people, a CV is something that is very easy for them to create and keep it professional. For others, the basics are lost and don’t quite grasp what they should be highlighting and what information they should omit. In short, always highlight your achievements, actions and consequences and results. In both CV versions, you see not only the range of my roles but the results that were due to my involvement.

Only one out of the many companies I’ve worked with have generated a return worth mentioning. This is the nature of start-ups, especially in an industry where even leading companies are earning a loss of 30 million or more a year. But there are other KPIs that matter, that show your strength and ability: viewership, readership, reach, engagement and interest are quantitative traits you can display on your CV.

Customize your CV. This is something I fail to do but you should always be adjusting your CV according to your target role. Between the two CVs, I use the one I had professional made for corporations that use filters to get rid of certain CVs or lack certain keywords. For my personal CV, I often share this one within my network as it is more readable and concise for the average company who typically don’t have a human resources team.

Lastly, avoid why a company failed as a whole and focus more on the reasons you got it to where it is. Seems obvious to not put why a company failed on your CV but at the same time, a lot of people don’t put certain achievements or work on their resume simply because the company didn’t work out (rendering the actual work useless for the company). Just because it wasn’t as useful for the now-defunct company, doesn’t mean it wasn’t useful for you. The skills you’ve accrued will be valuable for future companies.

Exposing Yourself

The primary reason I created this site over 6 years ago (2013) was to better expose myself and abilities. Everything I do is in search of what I can do and expose what I feel I have to offer. In fact, my first three full-time positions came from professionals reading my thoughts and opinions. With each professional failure, you’ll come away with a lot of lessons, opinions, knowledge and blame. While you should always share the first three in whatever space or capacity you can, try and avoid blame. Blaming only distinguishes you as someone bitter and resentful, rather than hopeful and accepting of elements outside your control. Start-ups will come and go, dwelling on part work serves no purpose when you are trying to seek your new role and with new people.

In short, always be doing something. Be proactive in creating awareness about yourself in a way that promotes what you have to offer. In my spare time, I update a project called the Standard Hero Builds and for its first 6 years, I did not earn a single dollar from its strenuous work. However, through this passion, it has allowed me to meet and get acquainted with so many great people and expanded my network into a competitive scene I’ve personally loved but had yet to be involved in professionally.

Your Network

Your network is not about how many people you know and can reach out to but rather that you are surrounded by the right people who you know you can rely on. If you have a network of acquaintances of whom you can refer to as a friend but cannot privately ask for assistance, then your network is just posturing. I often found that having a network of pro-players or talent proved to be less valuable (beyond a good discussion and some great games of Dota, CS, League, etc.) than making friends on those who work behind-the-scenes. That is not to say that a network is a group of people you can use but rather a collective of professionals of where you can comfortably help them and vice-versa. A streak of connections where an exchange of knowledge, advice, friends of friends can be handy. Lastly, I often found that sticking with people who love to work in esports rather than the people who love to say they’re in esports is a good indicator if you are surrounded by genuine people.

In recent years, a lot of previous work opportunities, consulting roles and friendships have come from people who I met at my first jobs. They’ve continued to succeed and we’ve continued to build on each other’s successes to get where we are now. Professional relationships are gardens, they need constant tending to and care for their growth and life. Give the attention you seek to those who aren’t as vocal about their struggles or search for help. To quote an old motivational speaker, Zig Ziglar: “You can have everything in life you want, if you just help enough other people get what they want.”

You Don’t Have to Work in Esports

After every job, I always consider leaving esports. That my professional failure may be a sign to move on to more traditional industries where I’ll earn a good wage and find stability in exchange for a job that may be less exciting. I think this personal honesty is good rather than trying to force one’s self back into esports. You may end up taking a low salary and a role beneath your actual expertise. Esports is a small industry. There’s a lot of turnover at the lower levels and even nepotism in certain parts of this industry. Giving up in esports doesn’t mean you failed, it means you want something else in life and esports doesn’t quite fit that expectation: that’s completely fine and understandable.

***

I am not a particularly unique candidate when it comes to finding new work. In fact, for a variety of jobs, I’ve been passed over for candidates more recognized, especially during my earlier years. That said, over time, I’ve become particularly interesting to companies because of my range of experience in esports both in terms of sectors of this industry (sponsors, tournaments, teams, publishing platforms and start-ups) and in esports regions (having worked with or in CIS, North America, Europe, Korea and China)

However, before all of that: the simple fact that I was willing to move to Europe, did not need a visa (since I am a Swiss citizen) and could read/write in English was all it took to start my esports career. To this day, my flexibility to move and comfort working in start-ups has built me a foundation of experience that I can now sell as a personal success. Yet most of all, this foundation has also taught me how to accept professional failures and seek new endeavours each and every time.