The Genius Behind Valve and their actions

[tomemozok]

In the next few lines i will describe why i am a die-hard fan of Valve,and why do i think they really are the smartest of the bunch in terms of approaching their costumers,and mr.Gabes talks about value to customers paying off,in practice.

First off,i would like to say the following numbers are an estimate,and should be taken with a bit of a reserve,but i think i will be hitting the mark pretty close.

This thread is about the International 3,and how valve have effectively done a self-sustained tournament with the largest prize pool that i know of.

As of this moment,the prize pool about dota2 has grown with the help of compendiums to 2,3 mill $.
Now,valve is giving the starting 1,6 mill $ out of its own pocket,as it was with the International 1 and 2.

So,compendiums have generated an extra 700k $ in the prize pool,which is pretty neat,and considering that the international is in august,they will generate more(my prediction goes to around 2,7 mill made, but we will see).

So,valve lets you boost the international by 2,5$ for each compendium,and you get some cool stuff out of it, plus the more the merrier, since for each goal passed you get something extra.(info here,the thread isn't about how compendiums work).

Here is where things get interesting. Compendiums cost 10$ each (8 euros here, but euro to dollar ratio is 1,3 dollars=1 euro,so 8 euros are roughly 10$), and you deposit 2,5 dollars in the international. That leaves valve with 7,5$ of your purchase. And since 7,5/2,5 =3, they are basically making 3 times more than the deposit from compendiums.

So,700k times 3 is 2,1mill. They made 2,1mill profit because we donated 700k in the international.
Now, subtract the starting 1,6mill from 2,1mill,and you get 500k $ left.
I believe that the remaining 500k will be spent on stuff like hotels,paying the staff, the hall they will be using, and the programmers and designers back at valve that will be making the compendium exclusive items and such. They should brake even and have 0 on their balance now.

From here on out,every 100k $ is 300k $ in valves pocket as PURE PROFIT,it will not be used on the international, they will be able to do anything they please with it since they just funded the whole international with customer money.

And noone will mind,since you get a lot for 10$,albeit virtual goods, they are still goods.

No one will be able to touch them,noone has figured this out before, and i don't believe that someone will in the near future. They will do every international in this fashion from now on, and be sure that it will only help them grow DOTA 2 more and more as an e-sport,since the prize pool can't be found in any other e-sport game.

All in all,Cheers valve,for the sheer brilliance with this move,we love you,give us HL3 etc etc.

P.S. i have bought a compendium a long time ago,and if you play dota, my advice is to get it, and you will get a lot of stuff for just 10$.

 

[tomemozok]

2,295 mill in prize pool,sorry,just checked. And the cost is rumored to be around 3,5 mill for the first 2 internationals (marketing,prize pool organisation and all of that),so the math is a bit off.They need to make 400k more in donations to turn in a profit(my 2,7 mill prediction). However the logic is still the same,and i believe that the cost will be slightly lower than that.
Also forgot to take in the international tickets in consideration,they generated around 50$ a peice,and sold more than 5k i beleive (can't find data about how many tickets were sold), so that is around 250k more for valve, and would lower the donations needed to 350k.

Still i have no idea how many tickets were sold,could be less than 2k as far as i know...

 

[FoB_Ed]

So basically you're saying that Valve is a great company because they can put on a profitable tournament?

 

[Shem]

Wow, never knew you could do basic math. Amazing!

 

[JossiRossi]

Wow, never knew you could do basic math. Amazing!

Knock it off.

 

[Shem]

Oh you know you love me

 

[sixteenth]

I have a feeling this thread will not turn out as intentionally desired.

 

[Bad^Hat]

All kidding aside though, isn't the fact that they're shrewd businessmen kind of the opposite reason that people usually admire Valve? I'm not saying you're wrong, I just don't understand how this sets them apart from any other successful developer/publisher.

Edit: Except that they're essentially still independent I guess, which is pretty impressive.

 

[tomemozok]

They are still independent,and again they made a self-sustaining tournament with this.

All other tournaments are funded by their creator,which hopes to return the investment in one of 2 ways.
Either the tournament itself will spark a greater demand for the game in question,or
They make money trough sponsors and adds during the event.

Valve avoided all of that,effectively grew the tournament by a lot(700k is not a sum to be taken lightly)and made gamers who love the game fund the whole thing.
Riot did fund their international tournament with 5 million from their own pocket (it also is a lot of tournaments that dip in this prize pool,not just the main event,as they share the whole sum to a so-called season 2 tournaments) in hopes that their streams will generate a lot of viewers,which in turn will offset the cost of the whole thing by adds from their sponsors.

Call of Duty tournaments do the same thing as riot,and starcraft ones aswell.
I can elaborate further,but the point is Valve doesn't need sponsors and is not dependent on view counts,unlike all others.

 

[BabyHeadCrab]

I'm glad someone is interested in the shit Valve does lately. I haven't found them interesting in nearly a decade.