How to monetize fan creativity worth millions of dollars

How one of the richest gaming companies made its fortune at the expense of fans, and they are happy

IT companies don't necessarily need to hire expensive specialists to make a million-dollar fortune. It's enough to delegate some authority to users. That's what gaming company Valve did at one time. The result: 70% of the digital distribution market for games and millions of dollars earned from fans.

Two Valve fans brought the company $40 million

Valve has always kept an eye on fan communities. This was reflected in the selection of employees. Valve could not hire experienced specialists – they had no connections and no money. Therefore, they hired talented newcomers who made amateur modifications for games. They were cheap and in a couple of years they were able to grow into cool developers.

So the company had a chemist who wrote the largest amount of code for the game, a restaurant manager who developed all the artificial intelligence of the characters, and a sound effects specialist who wrote the entire soundtrack for the game.

When Valve released its first game, Half-Life, in 1998, it caused a sensation. It sold over 2 million copies in the first two years. It won over 50 Game of the Year awards and gained a community of fans around the world.

On the wave of Half-Life's popularity, fans began to develop their own modifications to the game. They changed the game's concept, added new weapons and monsters. Among these fans were Jess Cliffe and Minh Le.

Minh Le was finishing university and was working hard on a Half-Life modification in his last semester. Le was into weapons and military themes, so he chose the fight of special services against terrorists as the main theme of the game.

After the release, the beta version of the mod began to gain popularity, and Valve contacted the developers. They offered to buy the rights to the mod, improve it and release it as a full-fledged game.

This is how one of the most popular games in the world appeared – Counter Strike. The game brought Valve 40 million dollars in the first two years and eventually became the largest eSports discipline.

They wanted to make an anti-cheat, but made 7.4 billion dollars

By 2002, Valve had several popular online games: Half-Life 1 multiplayer, Counter Strike, and Team Fortress 1. The company wanted to improve these games, fix bugs, and update the anti-cheat. But releasing a separate batch of disks for each update was expensive.

Valve came up with an idea to create a digital platform where people could buy and download games online, as well as upload their own games. Valve was afraid to create such a service on its own; it needed money and software development specialists. So the company approached Microsoft and Yahoo with this idea, but neither was interested in the project.

As Valve's vice president of marketing Doug Lombardi recalled, “We went around to companies and said, 'Are you guys doing anything like this? We need this for our games, and soon other people will need this, too.' And everyone was like, 'Blah, blah, blah… No one needs this service for decades.' We said, 'We need it now,' and everyone was like, 'Well, there's nothing we can do for you.'”

Valve decided to make this service themselves, and that's how the largest digital games platform, Steam, appeared. Now any fan can publish their game and get money for it. That's why you can find a wide variety of games on Steam, from something like Farm Frenzy to…

Steam is currently Valve's main source of income. Valve receives 30% of every game sold through Steam. Considering that 70% of all computer games are downloaded through Steam, and there are more than 50,000 games in the store, the numbers are impressive. For example, in 2021, Valve earned $10 billion, of which Steam brought in $7.4 billion.

Valve made a tournament for their game, but with fans' money

The first part of Dota was a regular fan map for Warcraft 3. It became so popular that at one point people started buying Warcraft just for Dota. Players honed their skills and formed teams, and Dota gradually turned into a major eSports discipline.

By releasing Dota 2, Valve wanted to strengthen Dota's position among other eSports disciplines. Therefore, already during the game's release in 2011, the company organized a Dota 2 tournament with the largest prize in the history of eSports – 1.6 million dollars.

Over time, the costs of organizing the tournament and the prize fund grew. So Valve came up with an interesting way not to lose, but to earn on the main Dota 2 tournament.

They started releasing battle passes before the start of The International. The pass was divided into levels, for leveling up which unique rewards were given. And to level up, you need to complete tasks or pay money.

All the money spent on the battle pass was distributed: 25% went to the prize pool of The International, and the rest went into Valve's pocket. The company only put $1.6 million in the prize pool, the rest was collected by fans. At the same time, fans themselves paid for tickets to the tournament, the price of which reached $699.

In total, from 2013 to 2023, players spent $730 million on battle passes, and Valve earned $600 million. And if you also take into account the income from tickets and merchandise for The International, then Valve's income grows to $700 million.

Players drew guns, and Valve sold them through loot boxes

In 2007, Valve released Team Fortress 2. One of the features of the new part was cosmetic items. They changed the appearance of the game character and gave unique bonuses.

Drawing items yourself is time-consuming and expensive. That's why Valve created the Workshop, where users could share custom maps, modifications, and items. Valve added the best works to games and shared the profits from sales with the creators of the items.

Then the same principle was tested on CS:GO and Dota 2. And third-party developers were allowed to open their workshops on Steam. According to Gabe Newell, top 3D artists earned up to $500,000 a year on items for Team Fortress 2. And in total, for the period from 2011 to 2015, creators of cosmetic items generated about $228 million in profit.

Valve set the trend for loot boxes with different drop rates. The system worked in such a way that even from a hundred loot boxes the player might not get the desired item. Because of this Valve loot boxes recognized as gambling in Belgium and the Netherlands and banned.

Valve bet on fans — and it paid off. Fan games, items, and modifications have brought the company millions of dollars. According to Valve's CEO, neither they nor any other company can compete with such a force.