The secret sauce of Dota 2: crowdsourcing and crowdfunding

The secret sauce of Dota 2 - crowdsourcing and crowdfundingA peculiar misconception seems quite common when it comes to Valve’s Dota 2: the belief that Dota 2 is not well-monetized, perhaps because as it brings in people to the Steam platform, Valve simply does not care about monetizing it.

When we look at the actual figures though, this conception is heavily challenged. Let’s dive in!

Dota 2 is perhaps the MOBA with the highest ARPU

According to data gathered by SuperData Research in 2014, Dota 2 brings in higher monthly revenue per active user than either League of Legends (LoL) or Heroes of Newerth (HoN):

  • Dota 2: $1.54
  • Heroes of Newerth: $1.48
  • League of Legends: $1.32

Of course, League of Legends still brings in a lot more revenue ($123 per month compared to Dota 2’s $18 million per month) because it has a much larger player base, but on per-player basis, Dota 2 is doing better.

Why is Dota 2 doing so well?

The success of Dota 2 seems counterintuitive especially when taking into account that everything that affects gameplay is free in Dota 2, unlike in League of Legends where heroes need to be unlocked with either soft (in-game) or hard (real money) currency.

An interesting thing to note is that League of Legends has been criticized for giving away too much for free, and that it could increase its ARPU by adopting more aggressive monetization measures. Yet, a game that gives away even more for free is making more money per user!

A standard line of explanation for the relative success of Dota 2 is its player base: as the slightly more hardcore MOBA, it is often claimed that this more core audience is more willing to spend money in a game than the more casual LoL audience. Ironically, though, Teut Weidemann makes almost the exact opposite point in his presentation where he criticizes LoL monetization, as he claims that LoL is, in fact, a fairly hardcore game.

As LoL and Dota 2 share the same general genre, both being MOBA titles, it is hard to find an explanation from that aspect either. Now, compare this to Wargaming’s World of Tanks, the F2P game with the highest ARPU, which is clearly directed at older gamers with more disposable income than MOBA players in general.

So, what is the big difference between Dota 2 and LoL when it comes to monetization? It is the crowd: both crowdfunding and crowdsourcing.

Crowdfunding of tournaments

Dota 2 has been a major innovator when it comes to funding esports (which in turn serves as a marketing machine for the game). In the past 2 years, more than $32 million of Dota 2 tournament prize pools have been crowdfunded – dwarfing the over $8 million that has been provided by the organizers.

This crowdfunding has largely been achieved through sales of in-game cosmetic items with a set portion of the price going to the prize pool of a set tournament. The sales of The International 5 compendium, for example, amounted to over $67 million, of which 25% was added to the prize pool of the tournament.

As a testament to the effectiveness of this model, a smaller competing MOBA, Hi-Rez Studios’ Smite, crowdfunded $2 million to its world championship prize pool in 2014, making it the third-largest esports tournament of the year. Not bad for a clearly smaller title!

Crowdsourcing of content and crowdfunding for teams

In Dota 2, it is possible for anyone to create new cosmetic items and upload them to Valve’s workshop for potential inclusion into the game – and if selected, for a share of the profits generated from that item. This business model enables Valve to include much more items to cover any possible taste, and thus make it easier for players to find cosmetic items that they enjoy.

Furthermore, professional teams have a chance to get their branded cosmetic items, such as HUD bundles, up for sale in the game store. This provides further opportunities for teams to make money and for people to support their favorite teams. (Smite has copied this feature as well, despite not copying the whole crowdsourcing model.)

Conclusions

So, perhaps there is more to monetization than just tricking customers into parting with their cash.

Crowdfunding gives purchases more purpose, making them about something more than just buying pixels on a screen.

Crowdsourcing enables the creation of much more content to cover any possible taste.

Combined, they form the basis of a different take on monetization.

 

Picture is from Dota 2 press kit

Author: Ville Kilkku

I run my own consultancy business, so if you find the ideas on this blog intriguing, contact me at consulting@kilkku.com or call me at +358 50 588 5043 and we can discuss how I can help you solve your business problems. I am currently based in Tornio, Finland, but work globally. Google+

  • Lina Nguyen

    I think the average revenue per user is a bit misleading, as they all have different in game prices ect. As LOL has a much higher player base, they can afford to have a much lower revenue generation per user, and it’s remarkable it’s as close as it is to the top.
    http://www.getlolaccount.com/