What Dota Plus Means for Dota 2

Dota Plus logo

Valve released a new subscription-based monetization feature in Dota 2 this week: Dota Plus. This feature is the first of its kind, and offers a wide variety of benefits to cast an extremely large net over the various types of players in the game. It also indicates a real change in direction for the game’s monetization and life cycle, but before I can discuss that, I’ll need to catch you up with some basics on free to play game monetization strategies.

Talking About Free to Play Monetization

People who spend money in free to play (F2P) games are often discussed as being part of different groups of buyers. It helps developers to separate buyers into different buckets because they can look at data for each of those groups and create new revenue strategies to meet each group’s needs and encourage them to spend more.

The tiny number of very heavy spenders in a game are called whales, a name uncoincidentally based in the casino industry. The larger group of average spenders are called dolphins, while a much larger number of occasional and frugal spenders are called minnows. For many F2P game developers, revenue from a few whales can make up the majority of revenue for a game.

To see this in action, here is a simple spreadsheet that can be used to simulate the impact of whales on a game’s overall revenue. Click “File, then “Make a copy” to experiment with the variables to roughly simulate in-game purchasing trends.

For Dota 2, an example of a whale would be someone who maxes out their International Battle Pass, spending hundreds or thousands of dollars a year. A dolphin might be someone who buys every Battle Pass and maybe bought a Battle Pass level bundle or a few treasures. A minnow might then be someone who buys one or two passes a year with no additional levels.

Chasing after whales can often be consciously or unconsciously exploitative. Players with gambling problems or other mental issues often get caught by the traps developers put in place to aggressively extract purchases from players. This is at the root of the loot box controversy in games now. As a community manager who spoke to many whales in the games I worked on, I can say for certain that for some players, their spending behavior was the result of mental problems rather than the presence of disposable income. Watch South Park’s disturbingly accurate episode Freemium Isn’t Free: everything related to F2P monetization in that episode is sadly very accurate.

Of course, not all players spending lots of money in games have addiction problems or mental illnesses. But I do believe that most F2P monetization is created in a way that unfortunately exploits players who have these problems. It may not be a conscious effort on the part of the developer to target Gamblers Anonymous members, but forgetting that these people exist is a byproduct of using data to drive monetization methods and decisions without caring to understand who is actually spending the money and why.

Dota Plus is significantly less exploitative than other monetization features like the TI Battle Pass and Treasure loot boxes. The main reason is that the most anyone can spend on Dota Plus is $3.99 per month, capping spending on this feature at under $50 a year for minnows and whales alike. Compare this to loot boxes with ultra-rare cosmetics and Battle Pass level purchases, which have no upper limit to how much a player can spend.

Dota Plus Relic Shards screenshot
Shards cannot be purchased with real money… yet.

One area to watch out for here is whether Valve will add the ability to purchase shards – a soft currency used to unlock several Plus features. For now, they can only be earned by completing objectives, which is great for people with gambling issues or similar problems with controlling their spending. With Plus, rather than teasing rare items, Valve has a financial incentive to make the feature as fun and useful for every subscriber.

This model is a lot easier to maintain too: it’s easier to keep a current player happy with new heroes, cosmetics, and challenges rather than trying to get new players to start playing. And that leads to my next topic…

Game Lifecycles

Dota isn’t dead or dying, let’s get that out of the way. But it appears to have peaked in popularity over a year ago. But F2P games with a large and dedicated audience stick around for a long time after their peak, unless they get completely killed by a new competitor or a sequel.

The typical phases of many products including F2P games are Acquisition, Monetization, and Retention:

The Acquisition phase is the initial period after launch when the game has not peaked in popularity yet. This is when growing the audience is the most effective way to increase revenue. In this phase the developer is focused on marketing the game to people who haven’t played it and trying to get current players to convince their friends to join in. For Dota, one example of this strategy was releasing and heavily marketing the Free to Play movie to get new players interested.

The Monetization phase occurs when new player growth has slowed and increasing spending for the existing audience is the most effective way to increase revenue. If the average player spends $1 on the game and you can increase that average to $2, you just doubled your revenue. The TI Battle Pass is the most successful example of this strategy in action, but you can look back and see Valve’s experiments with other strategies like gems, crafting, and chests. These features were not designed to appeal to new players, they were meant to get existing players to spend more money.

And the Retention phase begins when more players are leaving the game than joining the game, so the strategy changes to maintaining the existing player numbers rather than acquiring new players. To do this, developers are going to aim to keep current players as happy as possible while locking them in to consistent spending patterns, sacrificing short-term revenue gains for long-term strategy.

lifecycle
Estimates of Dota 2 Lifecycle stages, based on official data from Steamcharts.com

It should be clear now that Plus is Valve’s strategy for the Retention phase of Dota’s lifecycle. Rather than a new feature that gets whales to spend as much as possible in a short time like the TI Battle Pass, this new feature avoids high but exploitative whale revenue options for a more consistent and longer-term revenue scheme. Offering a discount for 6 and 12 month subscriptions is part of this strategy: if you buy an annual subscription, you’re going to be less likely to quit over the next year because you are financially committed. If you are paying month to month and an interesting new game comes along, you can avoid the sunk cost fallacy more easily by quitting after your current month is up.

I repeat: all this should not be interpreted this as “Dota is dying”. Retention is usually the longest phase of a game’s life cycle, unless it gets replaced by a sequel or killed by a superior competitor. Even better, it can be the most fun and rewarding phase for many players. This is because instead of focusing on maximizing spending or new player growth, Valve’s primary goal now is to keep current fans happily playing.

The downside is that it’s unlikely we will see any huge new features after Dota Plus. I expect a constant focus on proving the value of Plus with new benefits, while continuing to produce fan favorite content such as new heroes, balance updates, and cosmetics, all while continuing to support professional Dota.

In its current form, Dota Plus is a much less exploitative monetization feature than their previous efforts. This doesn’t mean we won’t see the TI Battle Pass wooing whales every summer, but it does indicate that Valve’s current direction is to retain their current players and provide a great experience for them with a consistent and considerate revenue model so they continue playing Dota for years to come.

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