As Esports Explodes, Will Valve's 'Dota 2' Be Left for Dead?

As Esports Explodes, Will Valve's 'Dota 2' Be Left for Dead?

In 2017, professional 'Dota 2' finds itself at an impasse, increasingly isolated from the rest of the esports world with no obvious way forward GoodGame Agency

Valve's 'flat' corporate culture has done wonders for its bottom line, but it might not be the most nurturing environment for esports success

Valve's 'flat' corporate culture has done wonders for its bottom line, but it might not be the most nurturing environment for esports success

In 2013, Jack Etienne was a vice-president of sales at Crunchyroll, one of the largest distributors of anime in the English speaking world. But after work – and sometimes during it – he was a player manager for Team SoloMid, one of the most popular League of Legends squads in North America. In another world, Etienne might still be working for TSM or Crunchyroll. But that spring, Etienne was offered a rare opportunity to purchase his own League of Legends team, Quantic Gaming. Sensing destiny knocking, he and his wife paid a reported $15,000 for Quantic, a pittance for esports even in its early days.

The chance to purchase Quantic Gaming arose because of the sudden disappearance of its previous owner, Simon Boudreault, a millennial scion who bet his inheritance on fielding a winning esports organization. After Quantic’s League of Legends team failed to qualify for the spring split of the 2013 League Championship Series, Boudreault vanished into the ether, leaving behind a host of debts and a broken organization. Acquiring Quantic was a risk for Etienne, but it paid off. Under the new name Cloud9, the team earned its way back into the LCS and went on to have one of the most successful single season performances in League of Legends history, culminating in a 3-0 sweep of Team SoloMid in the finals of the Summer Championship.

In a matter of months, Etienne found himself at the helm of one of esports' most valuable new brands; he quit his job at Crunchyroll, and put his sales training to work, drumming up new sponsors for the team. Importantly, Cloud9 required no outside investment. It was profitable from day one on a simple business model: sponsorship money came in, and slightly less than that in expenses – mostly salaries for players and staff – went out. The model wasn't especially sophisticated, but it worked well with esports in its infancy, and allowed Etienne to grow his organization without turning to outside investors.

Etienne moved quickly to build on Cloud9's success in League of Legends, looking to expand his team into other professional scenes. Dota 2, Valve Software's remake of the classic WarCraft III mod Defense of the Ancients, was a natural choice. Not only was the game similar to League of Legends – another 5v5 multiplayer game in the same genre – but Dota 2’s competitive scene was on the rise. Equally important, Dota 2 had an "open circuit" that offered an easy point of entry for organizations. Unlike League of Legends' closed circuit – a single league, the LCS, managed by Riot Games with a finite number of teams – professional Dota 2 was spread across a large and growing number of tournaments across the globe. Millions of dollars in prize money were up for grabs, and the lightweight, largely unregulated ecosystem made it easy for new organizations like Cloud9 to field teams. And so, Etienne set off to find five Dota 2 players to become Cloud9's second professional team.

With hindsight, the moment at which Cloud9 first ventured into Dota 2 was a golden age for the game's professional scene. From 2012 to 2014, the number of premier Dota 2 tournaments – an informal designation referring to high prestige tournaments with massive prize pools and an offline LAN finals – rose from 20 to 30. Viewership was strong, spirits were high, prize pools were big, and there seemed to be no upper limit to the game's potential as an esport.

These days, though, you could be forgiven for thinking that Dota 2's professional scene has stagnated. The number of premier tournaments sunk to 19 in 2016 from 29 in 2014, and, unless more tournaments are announced for the latter half of 2017, a mere 13 this year. Though there are still A-list sponsors like Monster Energy and Comcast in Dota 2, they are increasingly rare and, across the board, sponsorship portfolios are far less impressive than they used to be. Many once-proud organizations have been reduced to taking money from dubious online betting sites and the notorious key-buying service, G2A. Team NP, a leading North American team, is sponsored by an artisan hot sauce company.

Depending on your perspective, though, the most worrying sign about the health of Dota 2's professional scene is the complete lack of investment into the game by a new generation of high profile, venture-backed, multigame organizations. Founded in the mid 2010s and backed by the likes of Shaquille O'Neal and Rick Fox, organizations like Team NRG, Immortals, and Echo Fox have infused esports with more money than all but the most vivid of dreamers could have imagined a decade ago. To date, none have acquired a Dota 2 team. Though all routinely acknowledge a vague interest in doing so, there is little to suggest they will anytime soon.

Why is that? Esports is not a trickle down economy, and investments into esports concentrate in whatever scenes investors think will provide the best return on their money. And right now, Dota 2 is not one of those scenes. News of multimillion dollar investments into esports teams have become a weekly occurrence, yet professional Dota 2 is not benefiting from this ongoing infusion of cash into the esports ecosystem. The writing on the wall could hardly be clearer – esports is changing, and Dota 2 is not changing with it.

The explanation is simple: Valve has largely shown indifference, if not outright hostility, to the things that motivate this new generation of esports investors. In particular, they’re interested in franchising and media rights, which constitute the majority of revenue for traditional sports organizations (it comes as no surprise that the majority of these investors made their millions in sports).

What's at stake in this dissonance – between these investors' goals and Valve's refusal to play their game – is nothing less than a battle over what esports should be, and who esports should serve. Whether it's Valve and Dota 2's open circuit free-for-all, Riot's mostly closed circuit, Activision Blizzard's Overwatch League's absolutely closed circuit, or some kind of hybrid, the shape for esports is very far from set. And few things trace the contours of this shifting order – its many possibilities and its many pitfalls – more closely than the history of Cloud9 in Dota 2.

While searching for a suitable team to represent the Cloud9 brand in Dota 2, Etienne came across a familiar story. Speed Gaming, a talented but untested Dota 2 squad, had been abandoned by its owner only days before MLG Columbus, one of the year's most prestigious Dota 2 events. Seemingly unaffected by their organization's collapse, the team won the tournament against all expectations. For Etienne, everything seemed right – here was a young team, seemingly in desperate need of stable and sane sponsorship, playing a game set on an upward trajectory.

Two months later, Speed Gaming became Cloud9's first Dota 2 team. Once again, Etienne struck gold. Over the next 18 months, Cloud9 would win over $1.5 million in prize money and became one of the most popular teams in all of Dota 2. Its charming players – especially the team's eccentric captain, Jacky "EternalEnVy" Mao – became superstars in the world of Dota 2.

Alongside the success of Cloud9's League and Dota 2 teams, the organization was able to expand into many other games, signing Super Smash Bros. Melee legend Joseph "Mango" Marquez in May 2014 and a Counter-Strike: Global Offensive squad three months later.

Cloud9's Dota 2 team disbanded amiably after a middling performance during The International 2015; some retired, and some moved on to other organizations. Etienne set out to find a new roster to represent Cloud9, and hopefully repeat the success of the organization's previous roster. This time, though, things weren’t destined to go as smoothly.

Dota 2's professional scene began in 2011 when Valve organized the world's first million dollar esports tournament, The International, which was held at the annual Gamescom convention in Cologne. Shortly after, Valve indicated that the company was only interested in running The International once a year, and that third party companies were free to organize their own tournaments of any format and any scale.

Within a year, professional Dota 2 resembled a virtual archipelago – nearly two dozen tournaments were held in 2012, organized by almost as many companies, all interested in leveraging the growing popularity of Valve's MOBA. At the time, Valve's laissez-faire approach to the professional Dota 2 scene made perfect sense and fit well with the company's broader approach to doing business. Not only was Dota 2's professional circuit free marketing for the game, but, like Steam, competitive Dota 2 was also a platform that Valve could provide to third parties and take a small cut of any revenues they might generate (in this case, in-game ticket sales and tournament-branded virtual goods). For Valve, this was almost pure profit.

Valve's approach stood in stark contrast to Dota 2's largest competitor, League of Legends, whose publisher, Riot Games, took great care to ensure that the game's professional scene was centered on the League Championship Series (LCS). Closely modeled on traditional, season-length sports and necessitating a major investment of both time and employees for little to no financial return (at least at first), the LCS became the closed model of esports par excellence. What it lacked in expansiveness and flexibility, the LCS made up for in having a consistently high quality product, stable viewership, easy-to-follow storylines, and major sponsors like Coca-Cola.

Etienne and Cloud9 actively looked for another Dota 2 team, but when no viable options emerged, he gave up the search. At the moment at least, Dota 2 was more trouble than it was worth

The "open circuit" of Dota 2 had its drawbacks, of course. Valve's calculated absence from the scene meant that there was almost no accountability for teams and tournaments that engaged in fraudulent activities. For years, many high-profile tournaments failed to pay out their prize pools, even as they organized subsequent seasons of competition. Fraud was rampant across the scene, as were bizarre business decisions, like the one-time CEO of Speed Gaming Marco Fernandez making his players contracts publically available without their consent in the name of "transparency" (and which, incidentally, kicked off the chain of events that led to Speed Gaming being signed by Cloud9). In and out of game, player conduct was (and is) demonstrably worse in Dota 2 than any other esport, save, perhaps, Call of Duty, but went largely undisciplined. Broadcast quality varied widely between tournaments, and oversaturation quickly became a major concern. During weeks in which multiple leagues ran concurrently, they often cannibalized each other's audience, depressing viewer numbers to everyone's detriment.

These indiscretions didn't reflect well on Dota 2. But, strictly speaking, they weren't Valve's problem. Why should Valve be responsible for the bad behavior of the players, teams, and tournament organizers when it was merely providing a platform for them to do business? Still, the company was culpable in creating an environment in which this kind of behavior could exist unchecked. Over time, fans began to grow weary of the slow drip of scandals that plagued professional Dota 2, which became all the more embarrassing alongside the professionalization of esports as a whole and League of Legends especially. The very flexibility that had once made Dota 2's open circuit so enticing was increasingly starting to resemble anarchy.

In August 2015, as Cloud9's classic Dota 2 roster dispersed across the world, Etienne started looking for a new squad to represent the brand in Dota 2.

By that point, Cloud9 had grown into one of the largest North American esports organizations around, and was one of the few teams capable of attracting big name brand sponsors, which still constituted the majority of the team's revenue. Given Cloud9's prestige and wealth, as well as the large number of unsponsored Dota 2 players in North America, putting together a new, elite Dota 2 team seemed perfectly reasonable.

But 2015 was not 2013, and Etienne quickly found that the Dota 2 ecosystem had changed dramatically, and that the North American scene was especially volatile. There was no shortage of talented players, but through most of 2015, they changed teams like they were changing clothes – no lineup seemed to last longer than a few weeks. Because most of these players now subsisted on prize money and streaming revenues – and not salaries – they were strongly incentivized to change teams whenever they thought they stood a better chance of winning. Why would it matter what name you're competing under as long as you're earning prize money?

Eventually, Etienne set his sights on an up and coming team of young, second-tier players from the United States and Canada. They weren't superstars, and most had never played for a legitimate organization before, but they had potential. With support and stability, Etienne reasoned, they could become a top team. And so, on September 1st, 2015, Etienne signed the second iteration of Cloud9's Dota 2 team.

For a while, it seemed like Etienne might have made yet another great bet. In its first two months of competition, the new Cloud9 qualified for multiple premiere LANs and even won an all-online tournament. Most importantly, though, the team earned a spot at The Frankfurt Major – the first event of Valve's new "Major" system – a series of multimillion dollar tournaments held several times each year.

But just days before the Major, player EternalEnVy leaked chat logs that showed one of Cloud9's team members, Ravindu "Ritsu" Kodippili, secretly sharing intelligence about Cloud9's practice partners. Though not technically illegal, the infraction was a huge violation of the Dota 2 scene's unwritten code of conduct, and many top teams announced that they would no longer scrimmage with Cloud9 – a death sentence for any serious team.

In the week after the revelations dropped, more allegations of bad behavior from Ritsu emerged, including stalking another player's sister and fraud. Because it was too late to sign a replacement player, Cloud9 ended up competing with Ritsu at the Frankfurt Major under a haze of scandal, but was unceremoniously eliminated early on. One day later, Ritsu was dropped from Cloud9's roster, and, a week after that, the team disbanded altogether, leaving Cloud9 teamless in Dota 2 once more.

Etienne and Cloud9 actively looked for another Dota 2 team, but when no viable options emerged, he gave up the search. At the moment at least, Dota 2 was more trouble than it was worth, and Cloud9 – now a powerhouse of esports with a deep portfolio of desirable sponsors – could do just fine without it.

The short-lived second coming of Cloud9 in Dota 2 transpired alongside a major shift in how Valve understood its role in the Dota 2 scene. Despite the company's initial, anti-interventionist stance, Valve reluctantly began to exert more of a guiding hand on the professional Dota 2 scene.

Signs of Valve's influence came in many forms, big and small. Before 2015, for example, if a player were proven to have fixed a professional Dota 2 match for their own gain, it was the responsibility of the corresponding tournament to investigate and discipline that player. But starting in March 2015 with the MalaysianTeam Redemption, which had been found guilty of fixing a match the previous fall, Valve began permanently banning any player caught fixing matches from its own events.

More significantly, though, Valve began organizing the Dota 2 Majors – $3 million tournaments intended act as mid-season championships in the year long leadup to The International. Alongside the Majors, Valve also announced designated periods when teams could add and drop players from their rosters. Though teams were free to ignore them, it meant losing a possible invite to the Majors and possibly The International, the huge prize pools of which made them far more important than any other tournament in the scene.

This change in policy was widely understood to counteract what many saw as volatility in lineups among high-level players. As prize pools in Dota 2 grew – especially in Valve's own multimillion dollar tournaments – players increasingly came to depend on winnings over salary for the majority of their livelihood. If a player thought they stood a better chance of qualifying for or winning a Valve event with a team other than their own, they were quick to jump ship. This instability among top teams reached a breaking point in early 2015, when teams would swap rosters after virtually every tournament they did not win; between January and April 2015, for example, the Swedish outfit Alliance cycled through nearly a dozen players before settling on a long term lineup.

'Any Dota 2 player who isn't willing to do content and interviews just isn't the right player for us,' said Immortals CEO Noah Whinston in a recent interview.

But solutions often create as many problems as they solve. While Valve's designated roster swaps did, in fact, increase the stability of elite teams' rosters, the Major system also had deleterious effects, particularly on third party tournament organizers, who now had a regular series of multimillion dollar events to contend with. Despite Valve's best intentions, the Dota 2 circuit increasingly seemed as if it were becoming open in name only.

"It's a challenging ecosystem that we struggle for relevance in, and, by we, I mean pretty much everyone," a senior official at a major esports company tells me. "Or everyone but Valve. When there's $20 million on the line, you just can't compete with that. These simply aren't economics that independent companies can compete with."

Not only have third party companies on which the Dota 2 scene once relied found themselves overshadowed by Valve's own events, they've sometimes been in direct conflict. Last fall, Valve announced that the Boston Major would take place in early December 2016, one week after the LAN Finals of DreamLeague Season 6 in Stockholm. Though DreamLeague had scheduled their event months in advance, more than half the teams set to attend dropped out in order to prepare for the Boston Major, forcing DreamLeague to stock its bracket with lesser-known teams.

"We knew the time conflict was a possibility, but Valve announces the Majors so late that if you want to run an event you either have to gamble or not do anything," explains Matt Weber, who organizes tournaments at DreamHack, which organizes several Dota 2 events on top of DreamLeague each year. "What happened with DreamLeague was a worst-case scenario. I'd imagine that people looking on the periphery are even more scared of running Dota 2 events if they were watching that."

Small wonder, then, that the number of premier tournaments began to fall in late 2014, not long after The International 4's prize pool ballooned to $11 million, far more than any other organizer could hope to match, even with crowdfunding. The Major system has only accelerated this decline, and unless more tournaments are announced for the fall, 2017 will have only 13 premiere events, an all time low. Consequently, players are even more dependent on Valve's events than they were before. In 2014, 68% of the year's prize money came from The International; in 2016, a full 81% of prize money was handed out at Valve events.

Still, the amount of prize money in Dota 2 has than doubled over this period, from $16 million in 2014 to $37 million in 2016. It's hard out there for tournament organizers, but it's a great time to be a Dota 2 player (or, more accurately, it's a great time to be a great Dota 2 player).

In the weeks after The International 6 in August 2016, top Dota 2 teams from across the world began shuffling rosters, looking for the ideal lineup of players to ensure victory in future tournaments. Many in the world of Dota 2 expected Cloud9 to sign Team NP, a newly formed organization whose players had all played for Cloud9 at some point. At the same time, multigame organizations like Cloud9 were looking for teams to sponsor. But once again, they found that the Dota 2 scene had changed in ways that made it more hostile to organizations than ever before.

'Very few of these teams are profitable,' said an investor from a venture-backed organization. 'Most teams are holding out in hopes of getting a share of broadcasting television revenue in a few years.'

With so much money tied to prize pools in both absolute and proportional terms, very little now mattered to top Dota 2 players besides winning. Even if it guaranteed a salary, signing with Cloud9 or Immortals also meant contracts demanding regular interviews, media appearances, mandatory streaming sessions, all of which threatened to get in the way of practicing. No salary was worth risking a spot at a lucrative Valve event, and so more teams decided to compete without the support of a sponsored organization. In a sense, top Dota 2 teams weren't just exploring the best way to play Dota 2 – they were figuring out how to game the Dota 2 system. Metagames exist at least as much out of game as they do in game, and many Dota 2 teams started to realize that signing with an organization like Cloud9 simply wasn't an optimal strategy anymore.

This set top Dota 2 teams squarely at odds with major esports organizations like Cloud9 and Immortals. Creating behind-the-scenes content, player documentaries, and exclusive interviews were all crucial for building these teams' brands, but Dota 2 players balk at the strong incentive to take part if it gets in the way of practice.

"We see ourselves fundamentally as a media company," says one high-profile investor for a major North American team, speaking on condition of anonymity. 

"Any Dota 2 player who isn't willing to do content and interviews just isn't the right player for us," said Immortals CEO Noah Whinston in a recent interview. "That kind of content is super important to help build a connection between fans and players."

Organizations interested in getting into Dota 2 were left with only a few options, none of which are especially desirable. Cloud9 could offer a heap of cash to a top team and expect little in return in the way of content, or sign a second or third tier in need of a salary because their modest tournament winnings wouldn't cover their operating costs.

Etienne eventually settled on the latter approach, and, in January 2017, he signed Danish Bears, a mid-level European team with almost no results to their name. It was Cloud9's third venture into Dota 2. This time, though, the team was a dud. "We ended up taking a shot with the Danish Bears, and we're trying to support them and make a strong team," Etienne says. "But it hasn't been easy. They haven't qualified for events like we hoped they would."

It's disappointing, of course, but it's a low risk bet for an organization of Cloud9's stature. Even if their new Dota 2 team never qualifies for a major tournament, it's not the devastating blow it might have been several years ago. Cloud9, like many other multigame organizations, have their eyes on something bigger – even bigger than The International – and, for them, Dota 2 need not be a part of it all.

'I would love to see Valve attempt a franchise system,' says Etienne.

Last month, Cloud9 announced that it had raised several million dollars in Series A funding from investors like Alexis Ohanian, co-founder of Reddit, Joe Montana, legendary San Francisco 49er quarterback, and Chamath Palihapitiya, co-owner of the Golden State Warriors.

In an interview with Glixel, Etienne explained the goals behind the new round of funding, for which he sold a minority share of the company. "Esports could stay as it is now indefinitely," Etienne says. "But if we want it to grow and become competitive with traditional sports, if we want to get to the next stage for a focus for the future, we need to start seeing franchises. We don't really participate in the media rights revenue, which is what carries traditional sports. Until we're part of a league where that's part of the revenue share, where all the media rights are sold, we're not realizing the whole potential of our viewership."

This is even more true of the generation of venture-backed teams founded in the mid 2010s, who do not have the deep portfolio of sponsorships that teams like Cloud9 and TSM do.

"Very few of these teams are profitable," an investor from a venture-backed organization told me. "Most teams are holding out in hopes of getting a share of broadcasting television revenue in a few years."

The cloud hanging over all of this is the Overwatch League, Activision Blizzard's upcoming mega-league built entirely on the principles of franchising and media rights. To subsidize the startup costs for its massive venture, Activision Blizzard has been selling permanent franchises that are estimated to cost up to $15 million in major cities like Los Angeles. Virtually no teams have the capital handy for this buy-in, and the recent spate of multimillion dollar investments is a prelude to a bidding war for a spot in the Overwatch League among top teams. That's certainly the case for Cloud9.

"That money is set aside to make sure we can be involved in some of the franchising going on," Etienne says abouts Cloud9's recent infusion of funds. "Blizzard is getting people to invest into the Overwatch League, and there's going to be a significant buy in."

A closed ecosystem premised on franchising and media rights is not necessarily the "correct" or even the only model for esports. There are real concerns about player exploitation and monopolistic practices. But, at the moment, this is the model with the most money behind it, and therefore likely to define the face of esports going forward. The International may indeed net Valve a cool $100 million (at least) each year, but one recent Morgan Stanley report estimated that the best-case-scenario for the Overwatch League could see it worth up to $700 million.

That report has its critics, many of whom see Morgan Stanley's bullish estimate as dangerously overinflated, and if the history of esports has taught us anything, it's that the success of Overwatch League is far from assured. Many unknowns remain about the potential consumer base for esports – will fans ever accept pay-per-view content? If so, at what price? And what’s the normal price points fans are willing to pay for merchandise? Does premium content matter to this audience? And how, if at all, should live events be integrated into a franchise esports league? Still, it's also not hard to see why new investment into esports has concentrated around teams and games interested in franchising and media rights – which lend themselves to as opposed to the wild west of Dota 2.

Theoretically, any third party organizer could create a franchise league in Dota 2. But in practice, the only entity with the capital to do so in the Dota 2 ecosystem is Valve itself.

"I would love to see Valve attempt a franchise system," says Etienne. "There just don't seem to be any plans to have a franchise system and Valve just hasn't really opened up and had much of a dialogue with the teams yet."

"I think the best way to get them interested would be for Overwatch League to be really successful."

If you read Valve more closely, however, it's hard to be as sanguine as Etienne. Even if Overwatch League is the resounding success that Morgan Stanley thinks it could be and so many investors and teams are betting that it will be, Valve has strong reasons for refusing to become involved in a closed circuit league with franchising and ongoing negotiations over media rights. Though the Major system constitutes a move toward an imperfect hybrid model, it's extremely doubtful that Valve is willing to go as far as setting up a franchise league, no matter how successful Overwatch League is. It simply isn't in the company's DNA.

'Our job is to maximize productivity in creating digital goods and services,' Gabe Newell explained.

When Valve was founded in 1996, Gabe Newell and Mike Harrington, two former Microsoft engineers, conceived it as a new kind of technology company unburdened by creativity-stifling corporate hierarchies and meddling shareholders. True to this vision, Valve eventually instituted what the company calls "flatland." As the company's new employee handbook explains it, flatland "removes every organizational barrier between your work and the customer enjoying that work." No managers, no hierarchy, and desks on wheels so that employees can form and disband working groups at will.

Flatland is dogma at Valve, and it has every reason to be. Reportedly, Valve has the highest profit per employee of any company in the United States. As a private company, Valve is under no obligation to release its financial information, but a low estimate of the company's yearly revenues is around $1 billion on a workforce of 250, or $4.4 million per employee. (For reference, Blizzard earns around $1.1 billion on a staff of 4700 – about $234,000 per employee).

Valve's unmatched efficiency is the result of the company's emphasis on services and platforms with extremely high profit margins. Steam controls an estimated 50 to 70 percent of the PC gaming market, and Valve takes a 30% cut on every game sold with relatively little overhead. Valve's cut from purchases on Steam is almost pure profit, as is the company's stewardship over Steam's robust economy of virtual goods – "hats," as most players call them – for Valve's own games. Valve also takes a small cut from every transaction on the Steam Marketplace, where users and buy and sell virtual goods. The constant movement of Dota 2, Team Fortress, and CounterStrike: Global Offensive items and skins generates tens of millions of dollars annually at almost no cost to Valve.

"Our job is to maximize productivity in creating digital goods and services," Newell explained of the philosophy behind Steam-as-platform in a recent interview. "The markets will determine what the marginal value add of each of those activities are. The kinds of ways in which people create value and creativity and creating frameworks for that are going to vary."

Quantitatively, Dota 2 still looks very good in number reports for both players and viewers.

The "open circuit" approach to Dota 2 that Valve originally employed is an extension of this strategy, an extremely labor-efficient way of outsourcing the Dota 2 scene to third party companies. Running a franchised system on the scale of Overwatch League, on the other hand, takes a tremendous number of people; by the time it launches later this year, Blizzard-Activision will have have hired dozens of employees dedicated solely to the project. Moreover, managing a league like this more-or-less demands a clear organizational hierarchy. Flatland is great for making games and software platforms, but not operating esports leagues. Even if this hypothetical Dota 2 league is profitable, it's all but guaranteed it won't be profitable on the margins that Valve has made its reputation on, but, more importantly, cutting every employee's effective earnings since Valve, a private company, shares profits among its staff.

Thus, arguments that Valve could very likely boost revenues by running its Dota 2 scene with a firmer hand are not necessarily wrong, but are missing the point. Valve has little reason to change its approach to Dota 2's professional scene because the institutional changes needed to ensure that Dota 2 will thrive in the new esports ecosystem would require the company to radically alter both its prized flatland and philosophy of business. Put plainly: as long as Gabe Newell is alive and Valve is a private company, there will probably never be a franchising league in Dota 2.

This is not to say that Dota 2 is dead, or even dying. Though its player base has shrunk by around 20% since February 2016, Dota 2 still has the largest player base of any Steam game by a huge margin.

"Quantitatively, Dota 2 still looks very good in number reports for both players and viewers," Matt Weber from DreamHack notes.

In 2017, professional Dota 2 finds itself at an impasse, increasingly isolated from the rest of the esports world with no obvious way forward. When it comes to franchising, third party organizers like DreamHack have a clear incentive for professional Dota 2 to succeed, but do not have the capital. Valve, by contrast, has the capital but not the incentive. Meanwhile, the Dota 2 scene is stuck in a gilded limbo of explosive crowdfunding, sponsorless teams, and bounced checks, while the game's market share erodes and and the rest of the esports world builds around it like the Lorax.

Years ago, the influential baseball writer Bill James set out to answer, once and for all, the timeless debate over whether or not baseball is really a sport or a business. James resisted the temptations of cynicism and instead sided firmly with the idea that baseball, at its heart, is a sport. If Americans' passion for baseball dried up, he reasoned, then baseball would surely be relegated to the vast junkyard of failed sports, like ski ballet and Slamball (and, for that matter, Heroes of Newerth). But if Major League Baseball someday found itself bankrupt even while some people found meaning in the act of putting bats to balls, then baseball wouldn't die, per se. It would simply change, and be reinvented to fit the contours of its new situation.

If Dota 2 stays on its current trajectory, the latter is the best its fans can hope for. Without the exposure offered by major broadcast deals, it's unlikely that Dota 2 will benefit much from the new audiences esports will reach in the coming years. This is a future for Dota 2 in which small, but dedicated, community of spectators still find meaning in watching Dota 2, and professionals play not for money or fame, but because they love the game. This is not necessarily a bad thing; a fantasy of "pure" competition, unsullied by greed, is alluring indeed.

What seems more likely is that in 2020, Dota 2 will look a lot more like today’s fighting games circuit than the LCS. In contrast to the vast apparatus of sponsors, media rights, and franchises that make up LCS and will make up Overwatch League, Dota 2 will mainly be built on the passion of fans who are willing to share their eyes (and, of course, their wallets). As long as this is the case, then there will be professional Dota 2, but it will be increasingly isolated from the rest of esports.

None of this is written in stone though. For the most part, Dota 2 fans, an ornery bunch under the best of circumstances, have reacted to the idea of franchising with outright hostility. They see franchising as imposition from on high, and worry that it would snuff out the very volatility that makes Dota 2's professional scene so fascinating and infuriating to follow. Valve may yet surprise us with a firmer hand on professional Dota 2 than anyone thought possible, and work to cultivate a structured, professional circuit, as well as as amateur and collegiate scenes. The company may indeed decide that the changes in its organization and philosophy are worth – financially or not – seeing Dota 2 become a "professionalized" esport, or it may delegate this work to a third party.

In the meantime, it's worth reflecting on why Dota 2 is the way it is, and why it steadfastly refuses to change. Things are the way they are because of the ways they were. Being honest about the precarious state of Dota 2 can help us avoid disappointment later if franchising becomes the norm and Dota 2 is relegated to the margins of esports. But more importantly, it can remind us that things could always be otherwise.