Are giant esports prize pools mandatory for tournament success?

Prize pools are one of the primary incentives for competition in esports. In many sports and esports, the competing teams can win a portion of prize money depending on their performance and placement in tournaments and competitions. Typically, professional players receive more prize money for finishing in a better position at tournaments.

Prize pools serve multiple purposes. First and foremost, they give professional players a material prize for which they can compete. This helps ensure that the professional players are competing to the best of their ability. It has the added benefit of giving competitors financial gain to help them continue to compete.

Prize pools also help bring attention to the tournament. They serve as advertising for a match as the allure of the prize money alone is enough to garner attention.

Where do prize pools come from?

Prize pools generally come from the tournament organizers. Tournament organizers can supplement the prize pools with their additional funding garnered from sponsorships. In some cases, the game developers will provide extra prize money to tournament organizers to advertise their game and esport.

Alternatively, fans of the esport can help crowdfund the prize pool. For some smaller tournaments or esports, fans provide donations that go towards the prize pool to exchange incentives.

Combining the two, game developers can become more directly involved and significantly boost the prize pools. They can do this by either investing their own money into the tournaments or relying on the sizeable casual player base. Game developers can provide in-game items that casual players can buy. A percentage of the proceeds from those purchases can then go into the prize pool, significantly increasing the overall available amount.

Finally, pay-to-play leagues like ESEA can also source their prize pools from the participation fees. This was also one of the oldest and most common forms of prize pool sourcing in esports and sports competition. Roughly over 80% of the participation fee goes to the prize fund and the rest goes to the event organizers. This method of prize pool funding is still present in most amateur and semi-professional competitions.

The largest overall prize pools in esports history consistently receive integrated developer support. For example, the largest prize pool in esports comes for The International in Dota 2, boosted by Valve Corporation and the Dota 2 in-game purchases. It features the most robust form of crowdfunding, with the integration of the Compendium system. The most recent The International 2019 had a total prize pool of $34,330,069.

Other tournaments and leagues that featured prize pools larger than three million dollars include the League of Legends World Championships, Fortnite World Cup, The Overwatch League and the PUBG Global Championship.

As we can see, the largest prize pools are always directly funded by the developers themselves and usually are the largest seasonal event for an esports title. For these events its almost a given the biggest teams and players will be present, and the prize pool has turned into more of a bragging right then a necessity.

How do prize pools affect esports players?

Prize pools vary in their impact on competing players. For small grassroots tournaments with only a few hundred or few thousand dollars, prize pools work more as a little incentive for competitors to participate.

For larger tournaments that range in the thousands or tens of thousands of dollars, prize pools can become essential parts of professional players’ economic feasibility. Winning prize money can help the players cover living expenses and other extraneous costs to continue to compete.

The largest tournaments can feature life-changing prize pools. The Dota 2 professional team OG won The International 2018 and The International 2019 and received over $11 million and $15 million respectively.

How teams divide prize money between players and staff varies from team to team, depending on the contract. The amount of prize money received is a common point in contract negotiations for players.

For some aggressive teams, they may take 50 percent or higher percentage of won prize pools. In some cases, teams can even implement stipulations that if the won prize money exceeds a certain amount, the team can claim 100 percent of the prize money. It is more common for larger or more prestigious teams to allow players to receive an equal percentage of all won prize money.

Players on these larger teams typically negotiate for full prize money in addition to large base salaries. This ironically leads to a situation in which the professional players who receive the most prize money need it the least.

Are giant esports prize pools mandatory for tournament sucess?

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Is there a correlation between prize pool and tournament success?

There is no guarantee that high prize pools draw a large viewership. While it is a sufficient eye-catching number to attract attention, this does not always correlate to the general interest.

For more established scenes such as Counter-Strike: Global Offensive, massive prize pools for tournaments are not necessarily enough to draw popular teams and their corresponding fans. For teams with different contractual obligations, or for players who receive comfortable salaries, the prize pool alone is not enough to offset the discomfort from participating in a faraway overseas tournament. Without these popular players or teams, tournament viewership then suffers.

This is most visible for newer games in which many tournament organizers can arrange many competitions that overlap in the calendar and compete for audience attention.

Riot Games’ new shooter, Valorant, currently operates with an open circuit in which many tournament organizers set up competitions with varying prize pools.

The recent BLAST Valorant Twitch Invitational featured a three-day competition from September 9 to September 14 with relatively high production values and a 50 thousand dollar prize pool. It received a peak viewership of 110,011 and over one million hours watched. It featured four invited teams, all high-profile esports organizations: G2 Esports, FunPlus Phoenix, Team Liquid, and Ninjas in Pyjamas.

In contrast, the FTW Summer Series by Nerd Street Gamers ran over a similar period from September 9 to September 15, and also had a 50 thousand dollar prize pool. The female-only North American tournament featured only Dignitas as a notable participant and had a peak viewership of 11,500 viewers with 40 thousand hours watched.

Prize pools alone are not what generates interest in an esport competition.

Happy medium

When talking about a happy medium when it comes to tournament success, we are of course talking about a normal esports ecosystem and not the current online corona enforced way of competition. Nowadays, the larger the prize pool and lower the lag is what determines team participation.

In normal conditions, there is a cutoff point where prize pool values offer diminishing returns. Anything in the above 100,000$ is adequate enough to attract the solid competitors in an esports. Anything extra the organizer sources, can easily be devoted to servicing the teams directly. From travel, paperwork and lodging to press coverage and team focused campaigns. There is much more event organizers can do to attract viewers and guarantee event success.

Unless we talk about the several big esports organizations on the planet, most of the teams always check the encompassing expenses for participation at LAN Events before committing to participation. This always comes down to a zero-sum game calculation, where the prize pool would at the very least cover the expenses to participate. As we mentioned above, organizers should meet a certain base prize pool which is considered adequate, but also focus on what the teams lose in order to participate, before what they gain.

In the end, it is the fan engagement and spectatorship that makes the tournament a success. Obscene amounts of prize money are always a guarantee teams would want to participate, but it is also not the only path forward. A well rounded team and spectator focused approach is definitely healthier for the entire ecosystem and esports event organizers as a whole.

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