Reflectzyn

Disclaimer:  Gambling can be dangerous and, like it or not, gaming tournaments are a form of gambling.  Skill based games are definitely different than games of chance, but when money is on the line anyone putting cash down should be a responsible adult aware of the consequences.  Please gamble responsibly.  With that said, here we go:

One of the biggest things people will talk about when discussing professional gaming is that the players simply don’t make enough money to make it a career.  This tends to be a pretty hot topic as we’ve started to see players and leagues find new ways to help make their players money outside of prize winnings.  When we first started playing Gears of War competitively in 2007 we participated in just about everything – local LAN tournaments (anything within 6 hours drive), MLG events, WCG events, CPL events, WSVG events, and of course, online tournaments.

You would think that playing online for money would be a pretty solid way to make some extra cash.  After all, you’ve got a lot more potential players online than you would have at any LAN tournament and more players means bigger prize pots.  So over the past few years we’ve seen a bunch of sites like GamerSaloon, BringIt, and Galaxy4Gamers all try a “Head to Head” model where you could play a money match against an opponent and more recently sites such as Beyond Gaming and Virgin Gaming have sought to make a push holding mini-tournaments for money with an entry fee.

There are also a bunch of sites dedicated to playing “casual” games for money with the two big ones being King and WorldWinner which hold various styles of tournaments and events with cash entry fees.  Of the sites mentioned, these are actually the most successful as well – King has an estimated value of around $300 million and is considered a top startup company.

Most of these sites rely on business models which are very similar to another skill based game which blew up online – poker.  Poker sites make money by taking a small amount of any money spent while playing.  So every time you put money into the pot at a table, the company is taking a small percentage of it for themselves and leaving the resulting pot.  This is referred to as the “rake”.  Generally for larger tournaments, you might pay $11 to enter where $10 goes into the pot and $1 goes to the company.  Gaming sites also follow this model and all of the sites listed above take a percentage of entry fees.

The Rake Breakdown

Logo	Rake Percentage of Standard Tournament	Additional Information
	8 %	Offers bonus program to win back some of the rake (rakeback) through extensive play
	10 %	Offers bonus program to win back some of the rake (rakeback) through extensive play
	10 %	Head to head and mini-tournaments
	14 %, 5 % with $7.95/month subscription	Only site on list to charge the fee when you deposit vs when you enter a tournament
	14 %	Head to head and mini-tournaments
	20-25 %	Casual competitive gaming, generally micro entry fees
	25 %	Casual competitive gaming, generally micro entry fees
	30 %	Head to head and mini-tournaments
	50-65 %	Only site on list to feature a "credit" system instead of cash (more below)

All values are for standard “tournaments” at each website.  This provides a better basis of comparison rather than focusing on special events where prize money is coming from a different source.  In all of the sites listed, these are for events where the only money to be won is what is put in through entry fees.  The Gamebattles amount seems to vary and I came up with this range through doing the math for three tournaments on two different games: Black Ops 2v2 (32 teams), Black Ops 4v4 (12 teams), Modern Warfare 2 2v2 (32 teams).

Follow the Money (Hint: MLG makes more than the winner)

To further explain how I came to the number for Gamebattles, lets look at the Black Ops 2v2 tournament up there currently set for 32 teams.  This tournament charges an entry fee of 15 credits.  Credits can be purchased in increments of 10, 25, 50, and 100 and one credit works out to .70 cents regardless of how many you buy (more on this in a bit).  Of course, you can’t buy exactly 15 credits for the tournament but I’m still going to use the .70 cent amount to determine the entry fee.  In this case it is 15 credits, or $10.50 per player for a total of $21 per team in this 2v2 event.

• 1 credit=70 cents
• 15 credits = $10.50 Entry Fee
• 2 Players = $21.00 Entry Fee
• $21 x 32 teams = $672 Total Pot
• Prizes  = $263 ($200 cash and credit refunds for top 3 teams)
• 672-263=$409 for MLG
• $409 divided by $672 = MLG takes 61% of the pot

Vegas would KILL to be able to take 60% of the money spent in a casino and pocket it.  Gamebattles also reserves the right to change those prize amounts if they don’t get the full 32 teams to sign up and from my experience they tend to do just that.  Generally the rake stays about the same in those scenarios, anywhere from 50 to 65%.  Then there is the fact that of the 64 players that entered, only two will make any money.

• 1st Place = $100 per player
• 2nd+3rd Place = $0 per player (technically lost money since the credits they got back can’t be transfered for cash)
• 4th-32nd = (-$10.50) per player
• MLG Makes = $6.40 per player ($409)

Of course, Gamebattles has its own expenses.  A portion of the staff are paid to promptly handle any tickets which pop up during tournaments to make sure the event goes smoothly.  Combining that with the usual server expenses, it is entirely understandable for there to be a sizable rake like the other sites have.  The reason poker sites can keep the costs down is because the vast majority of it is done automatically and doesn’t require employees to resolve disputes.  An argument could be made that some of the procedes go to fund the larger sponsored events, but if that is the case there is absolutely no transparency there regarding why the rake is so high.  Plus in my experience with those events I’ve been paid directly by the sponsor and not MLG.

No matter how you look at it, the 60% figure is absolutely absurd and is a slap in the face to the GB community.  I believe it is a large reason why tournaments have rarely been filled over the past few years, and now it seems as if the only active online tournaments being run on Gamebattles are for Call of Duty.

The Issue with Credits

1 Credit = 70 Cents Regardless of Price....Why not let us buy individually?

The idea of virtual currency is something which has been done to death in gaming lately.  Some examples are Microsoft Points, Riot Points, and currency from Facebook games such as Farmville Cash.  General idea is that you buy a set amount of points and then spend them instead of spending cash.  A lot of these companies use the system so they can reward points through things like referral programs without handing out cash.  The points are non-refundable and can only be used for the game itself, so it cuts down any actual costs by not handing out actual currency.

From a player perspective, there is absolutely no reason to support credits, particularly when the amounts of credits don’t coincide with the entry fees.  It is annoying to have to buy 20 credits for a 15 credit tournament simply because there is no option for just 15. I wouldn’t even mind them keeping the credit system in place if they gave us more flexibility with it.  Currently it just seems odd when a cash system would be much more effective and less of a nuisance for the user.  I wouldn’t be surprised if we actually see Gamebattles do away with the credits soon.

How GB Can Improve

Will the Gamebattles redesign bring some changes with it?

First thing I need to acknowledge: I, in no way, shape, or form, know the financials behind Gamebattles.  All I can calculate is how much they make off these tournaments and look through to note that there are only three titles currently supporting these tournaments.  It wasn’t long ago that Gamebattles was pushing these tournaments hard in half a dozen titles and new releases.  I think the lack of tournaments (and the fact a lot of them don’t fill up) goes to show that the system can be improved.

The site is due for a redesign and will get a bit better functionability in April/May according to the article released back in September.

Upgraded GameBattles: New look, easier to use, and a brand new achievement system that will allow you to show off your accomplishments. Achievements will be a huge part of the new MLG Network and they’ll really show off your skills. There will also be much better team management and matchfinding tools. And it’s all tied into your new MLG profile.

Of course, functionability and achievements aren’t really going to change the fact that the paid tournament system doesn’t work, and there has been no mention of revamping the pay structure for these tournaments.  The emphasis seems to be more on a virtual trophy case which is also linked to your MLG account.  The real changes I’d like to see happen in regards to the tournament system are:

• Lower that absurdly high rake to something like 25-30% at least.
• Deeper Payouts (Take the extra 30% to pay out through 3rd or 4th at least)
• Blind Tournament Entry (No surfing through list of teams sizing up odds)
• Large, Cheap Tournaments (Less to lose, introductory tournaments)
• Small, Pricier Tournaments ($20 Entry Fee, 4 Teams, winner takes $60, 2nd takes $20)
• Skill Matching (All that ladder info could mean well matched mini-tournaments)
• Low cost FFAs (Maybe “Double or Nothing” format for finishing in top half)

All of these are aimed at making sure as many people as possible win something and have a chance to compete on a more equal footing.  There are a ton of teams that are very close in skill level which never have a chance to compete with each other for cash since the top teams are always going to beat them and place at the top.  Having smaller tournaments and lower fees means that there can be a “mid-range” of competition so that more people can make a bit of money and have some fun doing it.

Presently the question is: Why would you play a Gamebattles tournament?

Unless you are absolutely sure that you are the best team in the tournament, you have zero reason to register.  There is no money in getting 2nd place, and on the off chance that you pull the upset of the century, you aren’t even getting paid that much based on the risk and time involved.  Sure, you could play for the fun of it, but then you’d be a lot more responsible to keep your credit card in your wallet and play the ladder or a free tournament.  I’ve written about this subject several times since 2009 when I pointed it out in the Gears of War 2 pro forum, and I haven’t played in a “Pay to Play” GB tournament since 2007.

Gamebattles has the potential to be a great place to play for both fun and for money.  Currently I do believe they’ve made some strides in regards to their ladders and free events, but the tournament system needs to change or disappear entirely.  It stands as a potential area for more revenue for MLG, however the stigma associated with players losing money playing games is something which is hard to combat.  The redesign is an excellent time to either make some changes or get rid of the abusive system entirely.  Presently, the kids are getting screwed and don’t even seem to know it.

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