Tournament Monetization - An Organizer's POV - Page 3

On June 08 2015 07:03 FHDH wrote:
Thanks for posting this LD. I have read quite a lot at Polycount from Anuxi and others about the other side of this issue and I care a lot about the workshop artists both from the perspective of someone who respects artists and the struggles they often face, and more specifically as a cosmetic collector to whom workshop artists have brought much joy.

I also have a great appreciation for BTS and other third-party organizations who do an honest job of trying to produce some quality competitive Dota. Right now this system is causing difficulties for both artists and TOs. So let's grind on it a bit more.


Defining the problem set

1. Artists feel beholden to third-party organizations to get their work published and get paid
   
2. Tournament organizers have limited options for revenue streams
   
3. Tournament tickets themselves, independent of bundled items, add only marginal value
   
4. Bundled cosmetics dominate the drive for ticket sales
   
5. As a consequence of these things, and the current revenue split model, TOs and artists depend on each-other and must divide a meager percentage of ticket revenue between them

OK so if you literally just tuned into the thread I think you've got the basics.


What's our desired end-state?

It's not enough just to know what the problems are. What you need to define is a desired end-state. Doing this will help you separate desired results and possible means.

The problems of the workshop economy are manifold so I think what we want to do is define this from the perspective of TOs with the objective of at least not making the problems artists face worse.

I propose that our desired end-state is one in which tournament organizers can generate significantly greater internalized revenue in total AND in proportion to the work put in by workshop artists.

If this is accomplished:

1. TOs will be less reliant on artists
   
2. As a consequence, Valve can - not necessarily will, but can - comfortably release more cosmetics independent of tournament bundles
   
3. TOs will generate more revenue for the same product

So how do we accomplish this? Let's break it apart.


What's a tournament ticket without a bundle?

It's just DotaTV access, right? One avenue of increasing the value of the ticket itself is in simply improving DotaTV. I personally love DotaTV. I use it all the time. And that's why, from a viewer perspective, I can talk about all the shit that's wrong with it. And it's a lot.

While the challenges DTV gives producers are important, this is about increasing the value of a DTV ticket, not making things easier for PimpmuckL et al. Unfortunately we have no idea what's happening to DTV with Source2, so let's assume none of this is being fixed.

Since we want to add value to tickets and DTV is the core product of a ticket, let's talk about that value.

1. Unfuck audio. Give us a bit better of a codec, and fix whatever it is that's making us lose casters on a regular basis.
   
2. Give us the option of following a broadcast, taking us from game-to-game.
   
3. Provide, at the least, uninterrupted audio between games.
   
4. To go with this, give some kind of visual bridge broadcasters can use to communicate what is going on if there is no video.
   
5. Fix all the damn player perspective bugs.
   
6. Fix DTV lag that doesn't show up in streams.
   
7. Completely rework the replay interface. A tournament isn't just a list of games.
   
8. Create significantly more robust replay download options. Give us a download manager and the ability to subscribe. Let us download a whole series - and give us a series interface in-replay so we can skip ahead to the next game at will - or go on auto-play.
   
9. Move that goddamned bar at the bottom so it's easier to inspect sets.

Many things could be done that would improve broadcasting also but our focus is on increasing the value of a ticket, and most of these fixes are just about bringing the DTV experience in some aspects closer to par with watching a game on a streaming service. And this is a very quick pass if I'm honest.

Ticket purchases currently provide you with three things: the ability to watch the game live, the ability to watch replays on demand, and an interactivity with the observation experience. The above only addresses the first two aspects, which are currently not very competitive.

Before continuing it's important to take a second to acknowledge something about Dota2 in general: this entire economy is based on a price-discrimination model. While we want to see more revenue in Dota, if we ever see an economy where a lot more people aren't watching a tournament on a free streaming service we know something has gone very, very wrong with the ecosystem. What you want to do in a price-discrimination model is not to force people to spend money but make them want to. On one end of the spectrum, you give people a free product. On the other, you give people who have a LOT of money ways and motivation to spend a LOT of money.

Valve has gotten very, very good at this, as demonstrated between TI4 and now. If the average person should learn anything from this it's that there's always a new idea, a new way to get people to open their wallets. Unfortunately for third parties, Valve has and will always have more options in this regard than most TOs. Even more unfortunate is when Valve is putting 25% into a pot, they get to take 75% to pay everyone involved - including their artists. The TO running a tournament with 25% pot contribution gets to work with 12.5%.

It shouldn't require pointing out that price discrimination completely fails if you can make the argument that what you're paying for is worse than the free product, especially when it comes with essentially zero prestige. Thankfully, Valve is capable of implementing many fixes to DTV, TOs are capable of ideas, and the revenue split model is not written in stone.


Your love give me such a thrill...

Another way to achieve the desired end-state is to just change the goddamned equation. Let's agree on three premises:

1. Tournaments bring significant positive externalities to Dota2 in growing, exciting, and informing the playerbase
   
2. Valve is making a lot more money from this monster than they were when they originally set up the current revenue system
   
3. Regardless, there are still costs associated with ticket sales and there are no Dota2 tournaments without Dota2

The fixed costs associated with DTV are not insignificant: there is an engineering investment for its development and maintenance, and for any major improvements like the short list above. It's probably reasonable to assume that the investment into server infrastructure is defined far more by Valve's own events than any other tournaments, with the exception of something like DAC where they realized they needed to serve DTV from outside of China.

The majority of costs associated with ticket sales, then, are the variable costs of serving DTV content. I think it's safe to assume that this consumes a very small portion of the ticket price for a premium tournament. When you add cosmetics to the mix there is the manhours cost of the personnel dedicated to the oversight and implementation of workshop cosmetics.

I think it's safe to assume that Valve does not need 62.5% to cover these expenses. The remaining argument then is that this is one of the ways Valve pays for the development and improvement of the game. Well, we have a wee problem right now:



TI5 is making a ton of money. Many tournaments have raised very impressive pots. But the playerbase is not growing with TI this time. Certainly there are factors outside of Dota contributing to this but that doesn't change it as a source of concern. When people talk about the sustainability of third-party tournaments or the sustainability of the workshop economy, one factor rules all others: how many potential customers are playing the game?

Valve needs to take seriously TO's role in the growth of the playerbase and invest. There are multiple vectors for this, such as increasing the staff dedicated to third-party tournaments, and providing local servers for major LANs (seriously: do it).

But the other way is to just give up more of their pie. I've heard many arguments from artists about the way their split comes but Valve's philosophy seems to be simple: we want you to pay players, so we'll help, we'll take our cut, and involved parties can take the rest. What do I propose?

Simple: move from single-match to 1.5-match. Keep the starting split the same 75/25. But, if a TO wants to get to the traditional 25-point pot share, now they only give up 10 points, and valve gives up 15. Valve still gets 57.5 points, but a TO has 2.5 more points to work with. This will allow them to either have more points to offer an artist (ask DC how much of a difference working with a top-tier artist like Kunkka made for them) or keep more. For Valve, five points in a tournament means almost nothing on the scale of things. For studios and artists, 2.5 points means a lot.

There are a lot of investments Valve needs to be making so let's not pretend that any one problem has a ton of money that can be thrown at it without opportunity costs. But investments sustaining third-party tournaments is very much in Valve's interest and will pay for itself if done intelligently.


You wanna take this outside?

Not everything is about Valve. Don't get it twisted - we have plenty more "what Valve should be doing" to talk about, but they aren't the only way to increase revenue.

First, let's talk about sponsorships.

Or rather, let's talk about "who is willing to throw money at a tournament" because the average TO is fucking awful at sponsorships.

Actually, let's talk about how to stop sucking at sponsorships.

I keep hearing that esports sponsorships are hard. The money is tight. The returns for sponsors are uncertain. But what I also see is organizations - teams and sites and organizers, all - failing to take an intelligent approach to getting that money. Certainly it's easier from my perspective to criticize because I'm not the one in the hot seat, scrambling to try and make sure my people get paid. But that doesn't change the fact that bad strategy is bad strategy.

The current strategy seems to be: we are hosting a Dota2 professional tournament, who has money to throw at this and how can we entice them to throw more.

This gives you sponsors like G2A, Vulcun, Twitch, whatever.

Here's what you need to think about in the future:

1. What is our product, SPECIFICALLY?
   
2. Who are the personalities coming to the event and what special marketability do they have?
   
3. What opportunities are there for sponsor engagement?
   
4. What are our expenses and what potential exists to reduce them through minor sponsorships?
   
5. Who. Is. Our. Audience.

A good sponsorship is more like a partnership. When it has this feel it is more successful for the sponsor as they generate good will in the audience, it feels better for the organizers, and it provides not just money but enhancements to the event.

Let me give you an example. I live in the Bay Area. Let's say I wanted to host an invitational in San Francisco. Invitationals provide little DTV value because they have no qualifiers. I want to add some value to the ticket so I decide I'm going to have a collegiate tournament. I talk to Chegg about sponsoring such an event with scholarship money. For a few dollars more they can get some additional push in the main tournament which will have many college students watching. Even if they decide to leave it at scholarship money I now have a sponsor who is paying for the entire incentive to have local college students compete. I can talk to local universities - there are a couple of note here - about providing facilities for whatever segment of this competition, in exchange for something like a video tour of the campus and maybe airing some plugs about the university during that portion of the competition.

I now have more content for my competition even if I don't have more money from the extra parties involved (and I certainly might). And it all should feel quite organic.

Moving forward to the LAN, we're flying players from all over the world to San Francisco. What opportunities does this create? Well, depending on the format, quite a lot. We can first look at simple expenses: the players need to be flown and housed and fed. Are you talking to travel websites? Are you talking to hospitality organizations? In the words of Scrooge McDuck, money saved is money earned. I have not one time, ever, seen a sponsorship from, say, Travelocity associated with a tournament that is flying players from 5-10 countries, for fuck's sake. I find it impossible to believe there is no opportunity there. I find it impossible to believe that no major hotel in the history of Dota2 has been willing to at least provide a discount.

Now we've got players in San Francisco, an international tourist destination, for several days. Remember that sponsorships aren't just about your revenue and/or reducing your costs but also about creating a better product. How about I talk to the SF tourism board. Maybe I should talk to CityPass and see what kind of deal they're interested in. Maybe comp CityPass tickets to all the teams in exchange for a place on the sponsor banner? Maybe do more than that in exchange for some money? I bet I could get SFDOT to comp some Clipper Cards so the players can get around. Maybe we run around with a camera. Or maybe we talk to GoPro.

Twitch is here. Twitch sponsors everything but how would they like to take it to the next level for this? Let's have some pro players visit the office. Crunchyroll is here. Can you say target audience? Can you partner with them and whatever select players are interested to create some sponsored content?

I mean it goes on and on. And none of this precludes the kind of sponsor involvement that already exists. If you sit down and think about what you're doing, where you're doing it, who is doing it with you, and who will be watching, lots of ideas should come up.

What if you're just hosting a LAN inside a house? Hm, who sells stuff to PC gamer nerds for their house. Who indeed...

The other obvious thing to talk about is Twitch. I'm working on a post about Twitch that doesn't talk about monetization much but suffice it to say they have lots of work to do all around. I don't believe the site as-it-is offers a lot of opportunities for extra monetization. They have a lot of work to do.


The merchman cometh

I honestly don't have much to say about the current state of merchandising but it seems to be that it kinda sucks for TOs. And I don't know how much better it can get when the overwhelming bulk of licenses are owned by teams, players, and Valve. But, there are ways to improve it even I can see.

First, if Valve is taking an active interest in the health of the organizers they can help by leveraging their own resources to make TO merchandise cheaper to produce - even if they themselves see no profit from it. They can also make it easier to merch an event by working with TO submissions in the meatspace shop the same way they work with them for cosmetics. I don't know where exactly the boundaries are for making Dota merch with regards to heroes, the Dota logo, etc., but certainly there must be more flexibility if it's being sold through Valve's own store.

Secondly, even without third-party merchandise, TOs can contribute to the sale of existing merchandise in Valve store, and Valve can give them a cut. I don't believe the mechanism for this exists yet, but it should, and it should be part of the following approach.


I've got a golden ticket...

The great beauty of in-game tickets is the tournament is the product. With sponsors, cosmetics, merchandise...something else is the product. And that is never going to stop being the primary profit driver. But the tickets themselves need to be improved. We talked briefly earlier about bringing DTV up to par as a means to watch games. But there's much further to go than that.

Ideally, systems are created that drive revenue for each individual tournament without creating work for each individual tournament. This is what improvements to DTV broadcasting and download bring. This is the opposite of what cosmetics bring.

Outside of the broadcast itself, what have we got now?

Heroics: Drops are fucking abysmal right now. ABYSMAL. Heroics aren't even worth mentioning as a value bonus for ticket owners right now. Valve needs to really think about this.

OK! That was a short list. And the only item on it can be basically ignored.

Here's what we should have:

Fantasy: Create a fantasy league exclusively for ticket owners to premium tournaments. Have something like effigy drops for winners and high placement. Maybe you get a custom gold effigy block for #1. Do something with the trophy shelf, like highest fantasy placement and/or number of fantasy leagues placed/won. Let people buy extra entries to the fantasy league the way people buy compendium points. Have brackets, too. Give a drop of some kind as a reward for bracket correctness.

Twitch interactivity: In five years if we don't look back on Twitch today and think of it as extremely primitive they have missed massive opportunities. It's been almost two years since linking your Twitch and Steam accounts was introduced. Nothing's been done with it since. The original feature, heroic drops, has been nerfed to hell. Ticket owners could have an icon. Emotes. Their own chat channel. Much more if someone really wanted to work on it.

Golden tickets: Remember the price discrimination model. Convincing people to buy tickets is good. Giving people means/motive to spend more on a tournament improves on that. Past a point this is really all about prestige. That's the only reason we have compendium levels going up to 10,000. And that's not realistic for every tournament, but put in place systems by which EVERY tournament can give people with more money ways to spend it on pure prestige stuff. Got a ticket? Great. You get your DTV and your other stuff and a little ticket icon added to the top of your profile. Would you like to upgrade to a golden ticket? It'll cost the same as the ticket did in the first place. Now your ticket icon is gold. Now you get +1 on a trophy somewhere. Now you get an extra fantasy entry and automatically receive an effigy block stamped with the tournament's name. You look even cooler and sexier in Twitch chat and DTV chat. Maybe there's some shit we can't even think about because Valve is going to build a new site dedicated to out-of-client shit related to the competitive scene.

InterAPPtivity: (get it? I am clever). You know what sucks? Watching DTV on my TV and having to go over to my PC to unfuck it every game. You know what's amazing? Every Steam account can only be logged-in on one PC. You know what would be reasonably simple from an engineering perspective? Linking up a mobile/tablet app to your DTV experience. Give me a nice tablet interface to change perspectives. To view graphs. To switch games. To rewind. To view player profiles. Oh cool I can shop from here. Give TOs a cut of the revenue when people shop from the app while watching their tournament. There are huge possibilities here. The undeniably greatest thing about DTV is that, unless you have a shitty PC, the picture quality is fucking unimpeachible. It's an overwhelmingly better picture for your big living room TV. But your living room TV probably doesn't have your PC's mouse and keyboard attached to it. So work that angle. With a second screen, there's a lot there.


That's it.

That's all you have to do. All of the above. Twitch, Valve, TOs. A mere pittance of work. You also need to come up with some goddamned ideas. But here's what we've got:

• Valve, make DTV better to watch
  
• Valve, give up a little more of your ticket revenue
  
• Valve, make merchandising easier for TOs
  
• Valve, create serious added value to owning a ticket AROUND the competition
  
• Valve, make some damned apps and let me control DTV from the kitchen or what the fuck ever
  
• Valve, start incentivizing people driving traffic to your store and market (RIP Hattery)
  
• Twitch, keep the pressure on. Your viewer experience is competing with Valve's solely by the grace of your broadcasters. Provide them better technology and more routes for monetization
  
• Twitch, give ticket owners more of a boost when watching games on your site. This is beneficial for everyone.
  
• Twitch, the organization of your website is fucking terrible and this includes how competitive is handled. More about this in a coming post.
  
• Tournament organizers, suck less at sponsorships, and do better with the DTV tools you have now. I'm looking at you, Godz.
  
• Everyone: ideate. Identify problems, think about where you want to be, and build a bridge.

Simple.