The Stickeronomics of CS:GO
With Valve adding the team specific ESL One Cologne stickers in this week's update, we take look at the economics of stickers in CS:GO and how they affect the teams.
Stickers were initially added before EMS One Katowice and instantly became very popular as thousands of players purchased them and attached them to their weaponry.
Since then we've grown accustomed to them as a mainstay when watching games or playing ourselves, but there's a whole other mostly undiscussed side to the stickers.
Obviously with each sticker costing $1 there is money involved, and as Valve uses various companies' logos on them, it greatly affects the teams. Let's find out why.
|1. How stickers work and how everyone makes money|
|2. The first big payday for organizations|
|3. First problems arise - whose money is it?|
|4. Stickeronomics' affect on future negotiations|
These things have everyone going nuts
There may be more to the model but here's how it all basically works. Anyone can buy the ESL sticker capsules for $1, and they each contain one sticker. In short, every single sticker you've ever seen in the game of CS:GO has cost roughly a dollar - though exact pricing may vary with region - and that means everyone involved has made a killing on these tiny cosmetic modifications.
According to our sources, Valve takes a 66.6% cut from the stickers' initial purchase price, while the other 33.3% gets split up among the teams who belong in that capsule group -- either Legends or Challengers, depending on placing at the previous major. Additionally, Valve takes a 15% cut from all market transactions among Steam users, which obviously rakes in a reasonable amount of money for the company behind CS:GO as well.
Stickers get attached to CS:GO weaponry
How much money is there to be made via stickers then? Again, since this information isn't public, we're going to have to quote our sources, who prefer to remain anonymous. According to them - and we've had multiple confirm this to us - teams in the Legends capsule, featuring top eight finishers from the previous major - made somewhere around $17,500, or slightly more, from EMS One Katowice, while the Challengers capsule teams pocketed around $7,5k or a little more -- before taxes.
Quick math shows that if teams made - using conservative estimates of $17,500 and $7,500 per team - $200,000 combined. That is one third of all the money, which means Valve must have made twice that much, or at least a minimum of roughly $400,000. Needless to say, that is a whole lot more money than the $250,000 of the money gathered via skin sales from the community that they put in these prize pots in the first place.
Naturally those amounts of money mean different things for organizations of various sizes and backing levels. Making $7,500 or even $10,000 hardly changes mousesports' bottom line, and same can be said for many teams raking in the higher amount of money, such as fnatic, dignitas, compLexity or NiP. Those organizations are well-enough off that it doesn't change things too much for them.
However, for teams such as Vox Eminor, Reason, 3DMAX or Clan-Mystik - each of whom made the lesser amount of money from the Challengers capsule - it can make a big difference in their annual budget. Same can be said for teams such as HellRaisers or LGB - who don't have great backing - out of the teams who finished in the top eight. Let's not kid ourselves here - not everyone has massive corporate sponsorships, and this will mean more and more going forward as teams such as dAT surprise others and qualify for these majors.
ESL One stickers will bring more money for everyone involved
More money, more problems, right? Since the stickers were first introduced in the first quarter of 2014 and teams most likely had no idea about them prior to the end of 2013, it's likely there were no clauses in anyone's contracts to stipulate who would be entitled to this money. Others claimed them as merchandise and interpreted their contracts as the organization owning all of it, while others went for different measures.
Obviously the best example of things going south is compLexity. By all accounts they were relatively happy with their organization, and likely would have extended their contracts this August had the sticker-situation been solved adequately. Instead coL kept all $17,500 or so of the sticker money, leading to some unhappy players, and ultimately to the team migrating over to Cloud9 at the end of their contracts.
Other teams have opted for what would seem like fairer approaches. fnatic, for example, gave their players part of the profits. fnatic Chief Gaming Officer Patrik "cArn" Sättermon told HLTV.org he believes the players are a pivotal part of the stickers being sold in the first place, and that in general the players' best interests should be aligned with the company's best interests.
That makes sense - in coL's situation the players earned the spot at the major, and now that they're no longer a part of coL, the organization makes none of that money. Without the players, that money doesn't exist. American iBUYPOWER have been the most generous, as they've decided to give all of the money to their players, as their goal isn't to make money off the team, as they're a company on their own, not a gaming organization, but the market their brand.
Vox Eminor put the $2,000 of prize money from Katowice in the same pool with their just under $10,000 of sticker money, and are using the fund to backpay their travel to EMS One Katowice. Without this, they couldn't afford attending these costly events from Australia. It is also why they can afford to attend ESL One Cologne next week, as the guarantee of some money coming in greatly reduces the risk-profile of the investment in the team. Knowing money would be coming in is also a way we could start getting teams from Asia to majors in Europe -- but only if Valve makes this known to teams.
Of course, there are also teams who were initially unhappy after Katowice, but made a change in their contracts to not leave the players out to dry come the next major event. The former compLexity squad also sort of fits this profile, as Spencer "Hiko" Martin said in our interview that their new contracts with Cloud9 include a clause regarding the sticker money.
Most surprisingly, when contacted about this issue, we found out some teams hadn't even known how much money was involved with the stickers, and had received none of it. That goes to show how different organizations are in how they function, and probably means there will be some hard discussions in the future. You can be sure every team will have had a talk about this by the time the dust settles from Cologne, and Valve starts redistributing the wealth.
Stickers led to coL.CSGO not renewing their contracts
This is something each team and organization has to think about before signing the next contracts. If we assume there will be two majors a year - which based on the current pace seems conservative - and the money coming in stays relatively the same, it would mean a top eight team without any organizational backing would net somewhere around $40,000 a year from stickers sales alone. Without any growth, while CS:GO as a game continues growing rapidly.
Considering how much more popular CS:GO continues becoming, it seems likely those numbers will inflate over the next few majors, and it's possible soon those teams would be looking at over $50k on an annual basis. For top sixteen finishers that would mean just under or around $20,000, which is also solid money -- especially for an organization not swimming in dough.
On the other hand, with many of the same teams qualifying for each major, eventually the value of each sticker will start diminishing as the market starts getting flooded. Valve will have to combat this, and they've already started with the Cologne 2014 Pick 'Em Challenge. They may also shift their focus away from stickers and insert some other merchandise, such as jerseys, into the game. There are no almost limits.
In our article from roughly a year ago titled How can Valve support events, we outlined the skins idea, and suggested jerseys as another add-on. You can also use this for other means -- FACEIT has already funded one league through their skin sales, and Valve could easily support smaller tournament organizers as well, by picking up their skins and giving them a share of the proceeds. If you put enough people in charge of this, it could fund a lot more than two majors a year.
Valve's new idea to keep stickers relevant
That's our first look at the sticker economics of CS:GO. It's an interesting issue that will surely gain more attention in the future, with more major events featuring stickers.
It also goes to show just how much money Valve are raking in through CS:GO - which recently became the top seller in Steam. Each major seems profitable to Valve, so they're likely here to stay.
We might even get a The International-type event for CS:GO. Fans raised $10,000,000 with the Compendium for TI4 and Valve pocketed a cool $30,000,000. Why not try it with CS:GO?
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