I have been into this game called DOTA2 since high school. My friends introduced me to the game and I was pretty bad at the game before because I was new to the genre. As I got better the game became more enjoyable for me. I have spent not only a lot of time on the game, but also money.
DOTA2 is not a pay-to-win game. There’s no advantage to spending money in game. It might sound silly, but a lot of people buy numerous in-game cosmetics in-game cosmetics. They want to have the latest and the best one out there. Some cosmetics are really cheap($0.03) and some can cost up to more than $1000. I did not realize when I started that this is related to status signaling.
The company behind DOTA2 is Valve, currently valued at $10 billion valuation. Valve owns their own online game store called Steam whilst also developing their big titles like Counter Strike Global Offensive, Half Life, and Team Fortress. Valve's CEO is Gabe Logan Newell or people usually called him Gaben. He used to work for Microsoft for 13 years before started Valve in 1996. One of the reasons he built Valve is because he believe that video games were the future of entertainment. Currently, his net worth is around $4 billion according to Forbes.
In this blog post, we will take a deep dive into signaling in Video Games from the perspective of DOTA2.
Some resources to read more about Signaling:
Defense of the Ancients (DOTA) began as a mod for Blizzard's Warcraft 3 in 2003. By the late 2000s, DOTA became one of the most popular mods worldwide, as well as a prominent esports game. Valve's interest in the original DOTA intellectual property began when several veteran employees, including Team Fortress 2 designer Robin Walker and executive Erik Johnson, became fans of the mod and wanted to build a modern sequel. After IceFrog (the original creator of the mod) announced he was joining Valve, Dota 2 was announced a year after that.
DOTA2 was planned to be a Social Network so in 2012 Gabe Newell announced that it will be a free-to-play game. They were planning that community contribution would be a cornerstone feature. And this decision paid out: by 2015, sales of Dota 2 virtual goods had earned Valve over $238 million in revenue, according to the digital game market research group SuperData.
DOTA2 is huge in the Esports industry. In fact, they have the biggest price pool in Esports history. Last year the prize pool was $34.3 million, this year it has already reached $37.8 million and it's still increasing.
There are 2 ways you can signal in DOTA2: in-game cosmetics and Battle Pass. Let's dive into every single one of them:
This is the most popular one and a lot of games have done similar things, for example: Fortnite, Counter Strike Global Offensive, PUBG, and many more. Companies gain a lot of revenue from in-game cosmetics because people are willing to spend a lot of money on it. But this kind of monetization might not make sense for a lot of people. People always wonder why would you spend your money on something that can only be seen online?
There are a lot of reasons why people are willing to do this. According to this paper:
Players want to be different and unique, and one way to do it is by having a rare and expensive cosmetic item.
Also, the player's avatar or in-game cosmetics act as
not only the extended self but also a more distinctive self as opposed to the offline self.
all of these are signaling amplifiers with different signal messages to uniquely express yourself in the game. - Julian Lehr
In Fortnite cosmetics will change daily. So, everyday the cosmetics in the store will be unique. The rarest skin right now is called Aerial Assault Trooper. It costs 1200 V-Bucks (1000 V-Bucks = USD$7.99). People can spend this money easily because the skin is relatively cheap. But it has not been available in the store for a very long time. It’s impossible to purchase a certain skin or cosmetic whenever you want to. You have to log in every single day to check whether the item that you want is available in the store.
Besides that, Fortnite usually uses an event to release cosmetics that are only available for a few days. Recently they released a collaboration with BTS. They released 2 emotes that are only available for 2 days.
In DOTA2 you can buy skins/cosmetics whenever you want to. They sell some of them on their official store or you can purchase them through the Steam Market, but some of them are only available through a Battle Pass purchase reached at a certain kind of level (we will get to this later on the Battle Pass section). The most interesting thing about this is that prices may fluctuate over time. I owned an item that used to cost around $5 and now it costs $16. Sometimes a certain kind of item gets really rare after a hero is buffed (gets stronger) or the price may go down if the hero is nerfed (gets weaker).
Another thing that makes DOTA unique is that you can create your own skin or item then sell it on the market. In fact, people have made six figures just by creating skins and selling them on the market.
DOTA2 was the first game to introduce battle pass. According to Wikipedia, a battle pass is a type of monetization approach that provides additional content for a game usually through a tiered system, rewarding the player with in-game items for playing the game and completing specific challenges.
Basic level 1 Battle Pass in DOTA2 costs $10, with 50 levels costs $30, and with 100 levels goes for $45. Each additional level unlocks something new. People usually buy the level 100 bundle to save time because it can be hard to level it up yourself. You can also add levels after it by spending more money.
On Fortnite, the base-level Battle Pass costs $9.50. You can add an additional level by paying 150 V-Bucks (around $1.2). You can add this up to level 100, but after that you won't get any additional items.
The most interesting part about DOTA2 battle pass is that you can add as many levels as you want to. The highest one right now is level 20,000. I don't really know how much he spent to reach level 20,000. The maximum reward that you can have is only up to level 2,000 and beyond that you only receive a treasure boxes with random items. So adding more level is unnecessary and it's probably just for fun or signaling purposes.
On DOTA2 every time you enter a lobby you can see 10 players, all with their Battle Pass and their level visible. In contrary, on Fortnite each player's level will be shown even when they don't purchase Battle Pass. It is interesting since showing level doesn't seem necessary and doesn't really show anything important for other players. One can only assume they show the levels to encourage others to buy battle pass and level up the level.
I think this goes back to signaling, the higher the Battle Pass level, the more it indicates that player's spending and dedication to the game. Even you can see your friend's level like a leaderboard. This way, besides showing random strangers your Battle Pass level, you can also show it off to your friend list.
Beside showing off your level, the items from Battle Pass are limited and really cool too. People are willing to spend money on Battle Pass to acquire these cosmetics because it will be only available for that year's Battle Pass. You can't buy or sell it on the Steam Market and makes them rare.
Other than cosmetics, there is a thing called chat-wheel in DOTA2. These are basically texts that are pre-made that you can send to your team or to the game's lobby. Basic chat-wheels are free. Some of the chat-wheels from Battle Pass are limited and it's not just a text, it's a text with a sound. It might sound silly but people are into this kind of thing and DOTA2 realizes this. They put their legacy chat-wheel on higher level of Battle Pass and the most unique chat-wheel is the evolving chat-wheel, it gets longer the higher your level is. If you're curious about the chat-wheel, these are the videos.
These chat-wheels come from iconic game commentaries, so most people that play the game know these moments. It can be used to taunt and mock opponents too. chat-wheel is being used not just in public games, but also in professional matches.
One last thing that DOTA2's Battle Pass differs is that 25% of the money you spend contributes to The International (DOTA2 biggest tournament) prize pool. Making players feel a sense of contribution to the game and community.
I think DOTA2 realizes the role of signaling and how to gain benefits from it. People might not realize the main reason why they choose to spend a lot of money on virtual products. They will keep using cosmetics and Battle Pass to monetize because it just works. The International will always be held yearly and of course, the Battle Pass is the best way to monetize on this kind event, especially right now they can't held a live event because of the Corona Virus.
Video game companies can use status signaling to monetize better. I haven't seen another company use the same approach as DOTA2 right now. And I think can adopt some of the things that DOTA2 has successfully benefited from status signaling and implement them accordingly.
This is one of the hardest article that I have written and it took me a long time to finish. If you have any feedback on this article you can message me on twitter or email me. Thanks a lot for reading!
Thanks to Julian Lehr, Cullin, and Kalani Scarrott for reading the draft of this article.