The Valve Effect: Top 30 e-Sports Prize Pools of All Time

I saw some interesting data on e-sports prize pools, graphed below. Both bars on the right are for Valve's International Dota 2 championship, for last year and this year (2014 has a $9mm prize pool). Because the vast majority is crowd funded through the sale of in-game digital goods, the 2014 prize is still increasing - yesterday alone it increased by almost $100,000. With 42 days until the tournament, the prize could top $10mm. 

This obviously blows every e-sport prize before it out of the water. The 5 person team that wins The International will be splitting almost $5mm. For comparison, the 2014 Masters golf tournament awarded $1.6mm to the first place winner.

Traditionally player payouts in sports mostly come from sponsorships, not prize pools. It will be interesting to see how the sponsorship ecosystem for e-sports evolves. These events will be distributed in new ways: live-streaming on Twitch (recently acquired by Youtube) and in-game viewing within Dota 2 itself. While ads run on Twitch, the ad dollars are a small fraction of the ad dollars spent for televised sports. I could imagine these events making it to television and growing toward a traditional model, but there's an important difference between Valve and other professional sports: Valve makes its money directly from the players of the game by selling them digital goods. This means their primary interest isn't in ad sales, but in creating as many happy Dota 2 players as possible. It would be like if the NBA made most of their money selling basketballs and shoes to amateur players instead of advertising. When they don't need sponsorships as much as they need happy players, crowd funding the prize pool might be scalable and preferable for Valve, players, and fans. 

Professional e-sports isn't new. Starcraft has been televised in Korea since 2002 (and recently replaced by Starcraft II) and professional players like Lim Yo-hwan have become famous and made millions from sponsorships. But it's never caught on in a major way in the United States. $9mm prize pools will make a big splash into the mainstream, and it will be exciting to see how and if it sticks.