Valve has cut Dota 2 royalties, and workshop creators are crying foul

There’s unrest in Dota 2’s community this week, as several artists responsible for many of the free-to-play game’s popular cosmetic items allege that Steam owner and Dota 2 developer Valve Software has systematically reduced their earnings and may be permanently damaging the long-term viability of Dota 2’s business model.

Dota 2 is completely free to play — all characters and mechanics are available to every player. Valve makes its money through the sale of in-game cosmetic items — colloquially referred to “hats” or “skins” by the community. Among other things, these cosmetic items give heroes completely new appearances.

The majority of these alternate skins are created by independent creators or teams who submit their designs via Steam’s Workshop feature, which lets community members sell game content for titles that support it. Creators who have cosmetic items accepted by Valve for sale within Dota 2, or for inclusion in in-game promotions, are not paid a flat rate. They receive royalties on the sale of each item.

Initially, these cosmetics were offered directly through Dota 2’s in-game store. Over time, these independent releases have dwindled, forcing creators to rely on inclusion in specific, event-related initiatives. These often reward players with cosmetics for purchases of in-game tickets and treasures. The biggest Dota 2 events are, unsurprisingly, Valve’s own Majors, high profile tournaments with $3 million prize pools that lead to The International Dota 2 Championships each summer. That event’s crowdfunded prize pool in 2016 exceeded $20,000,000 — which was funded in large part due to sale of “blind-box” treasure chests full of largely community-created items.

Complicating the situation further are “Battle Passes.” Offered in advance of Majors, the International, and other third-party tournaments, Battle Passes allow players to earn cosmetic items through completing quests. Players may also purchase blind-box, Battle Pass-specific treasures. These contain a random item from the Pass’s cosmetic collection — assuming the player has also purchased the appropriate Battle Pass — but other items can only be earned.

Originally, creators and teams who contributed an item to a Battle Pass received an even share of royalties from sales of the pass and all related treasures for each set or item included. For example, a creator with two accepted cosmetics would receive two shares, but a creator with only one accepted cosmetic would receive one share. Treasures and event-related collections followed this by changing the manner Valve determines and allocates royalties.

This has, according to multiple creators Polygon spoke with, caused increasing consternation and concern.

Things reached a boiling point this week with an anonymous posting on the Dota 2 sub-forum on Reddit, which purported to be the combined observations and criticism of several high profile Dota 2 cosmetics designers. As of publication, Valve has not responded to a request for comment, and Polygon has not been able to determine who contributed to this “open letter.” However, we have spoken with more than half a dozen Steam Workshop creators responsible for some of the game’s most popular items to confirm the basic claims made in the Reddit post. These are as follows.

1. In 2015, in the lead up to the fifth International Dota 2 Championship, Valve reduced the royalty rate from cosmetic items for its International and Majors promotions to 12.5 percent of net revenue — split evenly across all cosmetics contributors involved in that event — down from 25 percent. This change was not negotiated, according to multiple sources. Instead, Valve informed creators their items had been accepted for inclusion in the event in question, and that they would need to accept the new reduced royalty rate or forfeit participation. Valve has asserted to creators that this is in part because of a “substantial” contribution to the Battle Passes for Majors and The International.
2. After the 2016 International, artists learned they would no longer receive royalties from the sale of Battle Passes (which coincided with a reduced schedule of Majors, from three yearly tournaments in advance of the International to just two). This caused two issues, according to workshop creators who spoke with Polygon. First, quests and experience within Battle Passes yield the same chests that players can opt to spend money for instead. A player who reaches level 60 in the most recent Battle Pass will earn 17 treasures without spending any additional money beyond the initial Battle Pass cost, meaning that creators’ work is often given to players without compensation. Second, some creators feel that their earnings are being unfairly diluted, with shares of revenue from Battle Pass-specific chests going to creators whose cosmetics are only available via in-game quests.
3. Workshop submissions are curated by the Dota 2 community, but Valve must give the final go ahead before a cosmetic item can go on sale within the game. Valve’s move to release cosmetics predominantly around Majors and The International limits the opportunities for artists to sell sets within Dota 2’s marketplace. Creators are also frustrated by what they allege is poor communication by Valve regarding events and their expected themes. Events often have specific motifs — this year’s International, for example, is themed “A Call to Arms,” with an oceanic, pirate-oriented concept. This conceit isn’t a problem, but it means that any items already in progress that can’t conform to it must be shelved until after the 2017 International in August, or scrapped entirely.

In speaking with many creators, all of whom wish to remain anonymous, there is a palpable sense of frustration. “The amount of content Valve creates yearly for Dota is beyond miserable for a company of their size, experience, and financial status,” said one creator. “It is incredibly clear that the workshop fuels Dota, and creates a consistent stream of income for it. There's no other studio that I'm aware of that is in this type of position.”

Other creators explained that the value proposition of creating sets has diminished precipitously. “Assuming the same artist to artist split on each item, you would need to have five or even six items in Winter 2017 Battle Pass to make the same amount of money as ONE item in the Winter 2016 pass,” said another creator. Several others reiterated the feeling: “Things are effectively six times worse compared to a year ago, as of right now,” said one.

No creator would go on record with specific financial figures, as this is expressly prohibited by the terms they agree to in order to participate. However, speaking in general terms, there were commonalities. “It appears that artists involved in the Fall 2016 Major made about half of what they did in the Fall 2015 one, assuming the same amount of content,” said one creator. “It's also looking like the Winter 2017 Major is making about 50 percent of what the Fall 2016 did, maybe even less.”

This giant drop is causing some of the scene’s most prominent voices to consider leaving Dota 2 entirely. “Many of us simply cannot afford to continue making items, even if we are lucky enough to see some work accepted.” As the number of free-to-play titles with financial incentives for creatives appear — and as more and more AAA releases incorporate freemium models and cosmetic microtransactions — the competition for creators increases, and Dota 2 is becoming less and less attractive. According to several creators who spoke with Polygon, many former Dota 2 Workshop contributors have already abandoned the game, choosing instead to create items for Counter-Strike: Global Offensive, another Valve title with a burgeoning cosmetics market.

Valve does create some Dota 2 cosmetic items — each International brings a set of “Immortals,” and once or twice a year a Dota 2 hero will receive an “Arcana,” an expensive collection that involves a completely overhauled character appearance, including new voicework, effects, and other bells and whistles. However, the overwhelming majority of cosmetics in Dota 2 are created by artists independently via the Workshop. If too many creators leave, this could lead to serious complications for Dota 2, a game whose business model is entirely oriented around cosmetics.

This isn’t the first time Valve has encountered challenges with a cosmetics-driven business model. In 2011, the developer’s popular Team Fortress 2 went from a retail-priced title to an entirely free-to-play business model that in retrospect acted as a prelude to Valve’s strategy with Dota 2. One prominent Team Fortress 2 Workshop creator Polygon spoke with — and who also wished to remain anonymous — explained that many of the changes to Dota 2’s cosmetic sales mirror events in TF2’s community.

Valve Software

“TF2 has always been Valve's testbed for a lot of these changes, and a few years ago, it started to implement the same methods that are now affecting Dota,” the TF2 Workshop contributor said. “‘Limited’ cosmetics were implemented and available through crates in TF2 for a certain amount of time. The items could only be found through unlocking these crates, and only while these crates were active.

“Before the implementation, more often than not, cosmetics were also made available on the in-game Mann Co. Store, where items could be bought at full-cost upfront,” the contributor explained. “With the Mann Co. Store, contributors would receive the standard allocation of royalties from their items, while the limited crates drastically lowered those allocations. The artificial scarcity ultimately led to a smaller profit for the contributors involved, and the aspect of having your work be limited to a small time frame was a demoralizing lack of incentive for workshop contributors.”

And in a comment mirroring some of the complaints expressed by the Dota 2 creative community, the TF2 cosmetic creator we spoke with explained the detrimental effect on community morale that’s resulted. “When there's no communication or incentive, it's hard to justify keeping it up.”

"It's scraps compared to what used to be a thriving system,” they said.

A common refrain from the people Polygon spoke to for this story was one of passion for not only the games, but the communities that have grown around them. And there’s a continual hope that things will improve. There have been some signs of change at Valve in recent weeks.

One example: cosmetics creators, as important parts of the Dota 2 community, have traditionally been invited to attend The International, often to hold panels and tutorial sessions on site for aspiring designers and creators to break into the Workshop themselves. In 2016, however, Polygon has been told that creators were not given a clear commitment from Valve until just weeks prior to the event, leaving several scrambling to make last minute arrangements for flights and accommodations. This year, creators received invites to the event at around the same time dates were announced for it, a dramatic improvement.

“This community works very hard, and it's good to see people stepping up to talk about change for the better,” our TF2 Workshop source said. “A lot of the voices being heard are very prominent members of the workshop community, all coming together to say that something needs to be done. Valve had been doing things reasonably fine to an extent for years, but now, it needs fixing. I don't know exactly how, but I hope something can be done.”

Correction (4/2/2017): A previous version of this story said creators were told by Valve Corp. that they would no longer be compensated for Battle Pass sales of their content. They were given no such notification.