Valve drops big bucks on $20.5-million prize e-sports contest in Seattle
With sixteen teams and a record-breaking $20.5-million prize pool, the e-sports contest dubbed the International is one of the burgeoning industry’s most-watched events.
For Valve Corp., which organizes this week’s tournament and makes the spectacle’s central game, “Dota 2,” it’s a major revenue opportunity — and a big expense.
Valve says little about its finances, leaving analyst estimates as the best lens into the secretive, closely held Bellevue, Wash. company’s fast-growing operations. Some say Valve exceeds $500 million in annual sales through “Dota 2,” “Counter-Strike: Global Offensive” and other widely played games.
Recently released public records clear the picture a little more, at least as far as the International is concerned.
Valve is paying a minimum of $145,000 this year to rent Seattle’s 17,000-seat KeyArena for six days of competition and 11 days of moving in and out, according to a contract The Times obtained under a public records act request.
Other costs, including ushers, security and technicians, weren’t tabulated when the contract was signed in March. But experts familiar with the arena industry said those could add an additional $80,000 to $100,000 per day, or as much as $600,000 in Valve’s case.
On top of that, Valve shells out $50,000 for the right to sell merchandise at the city-owned arena, the contract says. The company even must pay if it wants to distribute bottled water to participants, an example of smaller fees that can up the price.
The elaborate stage (teams in separate glass boxes at center court under the Jumbotron), use of some outdoor areas for a TV set and red carpet and a graphically slick online video stream likely add several hundreds of thousands of dollars in cost, if not more, as Valve pushes the bar on production value.
Costs also have jumped as Valve expands the event, now in its sixth year. Two years ago, Valve rented out KeyArena for nine days at a minimum cost of $85,000 — $60,000 lower than this year’s price.
The expenses add up to well over $1 million, a hefty sum but one likely more than made up by player purchases.
The International’s prize pool — including the $9 million payout split among the first-place team of at least five players — is funded by “Dota 2” users buying a special set of features and virtual items for the game. Valve keeps 75% of sales, with 25% set aside for awards.
Thousands of people bought tickets for $25 to $100, depending on which part of the weeklong competition they wanted to access. Pricier tickets, for the later stages of the tournament, sold out.
Frenzy over a few events, such as the International and Riot Games’ League Championship Series for “League of Legends,” has fueled a flurry of investment in various aspects of e-sports over the last two years. Some in the industry question the bets, concerned over whether more events can match the success of those of Riot and Valve. Venues are optimistic and are finding novel ways to cater to competitive video gamers and their supporters.
Twitter: @peard33
