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MATCHMAKING
Placement
Before being seated in a league, players must play a number of placement matches. Battle.net uses these placement matches to estimate your skill level and give you a starter point. The number of placement matches is set to 5. This means that although the system will seat you in a league more quickly, it may do so less accurately. Being placed in a league doesn't cement you within that league, and if you are able to prove that you can hang with players more skilled than Battle.net initially estimated, the system will promote you to a higher league. Conversely, the system will relegate you to a lower-level league if the opponents you are initially grouped with prove to be too difficult. It is not possible to be placed into the highest league, only promoted into the highest league.
Matchmaking Ratings
The prevailing theory behind the matchmaking system is that each player is assigned a hidden "matchmaking rating", or MMR. MMR determines who your opponents are, as well as whether you are promoted or demoted. When you win or lose a game, your actual rating is compared with the MMR of your opponent and points are awarded or deducted as necessary. MMR is only affected by the end result of a match, not the means used to achieve those results. In-game details such as APM, unit composition, and tech path of either player are irrelevant.
An important reference point for understanding this theory is the WoW Arena Matchmaking System (http://forums.worldofwarcraft.com/thread.html?topicId=14910422788&sid=1).
Examples
As Battle.net most closely resembles the WoW Arena system, we'll use those values as a baseline. Remember that you cannot see your matchmaking rating in SC2, but you can in WoW Arena. This becomes easier to estimate when using WoW Arena as a reference because your MMR is what your team's rating is expected to become if you continue playing at your current level, and there are no hard separations between players.
It's generally accepted that the hierarchy of WoW Arena participants looks like this:
0-1499: Newb
1500-1799: Average
1800-1999: Fairly skilled
2000-2199: Very skilled
2200-3000: Extremely skilled
If we expand that to SC2, we would get Bronze, Silver, Gold, Platinum, and Diamond, respectively.
In WoW Arena, your MMR - which is persistent across arena seasons - starts at an average level while your team rating starts at 0. If you go 10-0 for your first 10 games, your MMR would probably skyrocket to 2200. The reason for this is that the system is unable to accurately determine your skill level, so your MMR rises more rapidly (called "volatility") in the hopes that it finds an upper bound. Even though your team rating will only be about 460 after going 10-0, you at that point would be playing against the most skilled players because your MMR is so high. The longer your win streak, the more your MMR increases until you are playing people that cause you to win 50% of the time. Once you start losing more games than you're winning at a certain level, your MMR starts falling until it can comfortably seat you. As you get closer to a 50% win rate, your volatility drops and therefore your MMR doesn't rise and fall as dramatically as it did at first.
The system acknowledges that just because your MMR is a certain level, you may not always perform at that level. There is some allowance involved.
Search Functionality
The Battle.net matchmaking system will find opponents that are close to your skill level. The degree of accuracy had yet to be determined by Rob Pardo according to this interview (http://www.escapistmagazine.com/news/view/99211-Battle-net-StarCraft-II-Matchmaking-Too-Good). You will notice after a short time that the message "EXPANDING SEARCH..." will appear when searching for a game. This means the system is searching for opponents that may be higher or lower than your intended level.
What is not clear is whether the system eventually and continually expands the search until any opponent is found, or whether it merely widens the allowable MMR variance.
LEAGUES
League Overview
Leagues are divided evenly, comprising 20% of active players across the board. The inactivity period has not been announced by Blizzard. Note that it is not possible to be placed directly into Diamond league, and that players can only be promoted into Diamond league.
Promotion and Demotion
In order to be promoted to a higher league, your MMR must sit comfortably within the boundaries of that league, meaning you'll need to be averaging a 50% win rate against those kinds of players. If you are a 2250 MMR Platinum player who typically faces Diamond players, you will need to not only average a 50% win rate against those Diamond players, but also maintain a much higher win rate against any Platinum players you may encounter. Once your MMR reaches a certain threshold you may be eligible for promotion.
The system takes a moving average of your past X games and uses that to determine your eligibility for promotion. If the moving average crosses a certain league threshold, you can be promoted to that league.
Dropping down to a lower league works the same way, only by losing.
You do not need to reach #1 (or any particular rank) in your division to get promoted.
Divisions
Leagues comprise a number of divisions that are not ranked equally. Divisions cap out at 100 players.
Divisions are loosely grouped by skill at the time of placement. Note that you cannot move laterally within your league, so in order to move to a new division you must get promoted or demoted out of your league.
Want to learn more about division tiers? Read this post: http://www.teamliquid.net/forum/viewmessage.php?topic_id=169830
RATING
The important thing to know is that rating only determines your standing within your own division. And even then, only indirectly, because you are playing against opponents beyond your division's player pool.
Team Ratings
Your team wins or loses as a whole. If your partners left the game early and you stuck around to defeat your opponents, your entire team will be credited with a win.
"Rating Inflation" and the Bonus Pool
The Bonus Pool is a pool of points that are awarded whenever players are placed into a new League. The Bonus Pool also accrues over time. Whenever a game is won, an amount equal to the rating earned is deducted from the Bonus Pool and added to the player's rating.
This has the effect of increasing player ratings over time. On the surface, this appears to be a negative thing. However, War3's Ladder system had XP decay beyond a certain level. Rather than forcing players to play games in the fashion War3 used, SC2 encourages players to play by generating a Bonus Pool.
The Bonus Pool accrues at a rate of 1 point per 2 hours, whether the player or team is active or not. The Bonus Pool also begins building based on when the ladder season began. That is, if Player A was placed into a division and started with a Bonus Pool of 100, then 24 hours later Player B placed into a new division, Player B's Bonus Pool would be 112.
Some more information from ZapRoffo:
With a matchmaking rating system, the way points are assigned is as follows. There is a default point assignment (was +/-12 for wow, seems similar in sc2) for an "equal match result". The amount won or lost in any given match, though, is determined by comparing your displayed rating to your opponent's matchmaking rating. This is why many people are experiencing huge gains for wins and small losses. It's because they haven't played enough to raise their displayed rating to their matchmaking rating. They may be matched as an 1800 matchmaking rating, but are at 1300, so if they win against an equal opponent (1800 matchmaking), they get the points of a 1300 beating an 1800, which may be +20 or something. The opponent compares his displayed rating to your matchmaking rating to calculate his point change, if he's displayed 1600 and you are also 1800 matchmaking, he will lose -10 or so (slightly less than -12 default).
One huge misconception people I feel like people need to learn the truth about:
The bonus pool WILL NOT cause inflation of ratings in the long run as long as it only modifies your displayed rating and not your matchmaking rating, which appears to be the case. In the long run, displayed ratings converge to matchmaking rating, so if matchmaking rating is unaffected there is no long term effect.
An example:
I start with a big bonus pool and win up to 1600, and my matchmaking rating is 1700. Alice wins the same amount against similar quality opponents but with no bonus pool and goes to only 1350 or so, but also with 1700 matchmaking rating, because matchmaking is totally unaffected. Now in my games I will only be looking at winning +13 or so from my opponents who are 1700 matchmaking, while Alice is looking at something like +16 or +17 from her 1700 matchmaking opponents. I'm looking at -10 or -11 from losses, while she's looking at -8 or so from those same people. Eventually the result over a long enough period is we both end up at 1700 if no change in skill happens.
Even if I got enough of a bonus pool to get to 1900 or something, once that runs out I'm going to lose more for losses than I get for wins against people who are my skill level until I get to the appropriate level. The bonus pool just functions to get people's displayed rating jump started so if they took a break they can jump to their rating more quickly.
One huge misconception people I feel like people need to learn the truth about:
The bonus pool WILL NOT cause inflation of ratings in the long run as long as it only modifies your displayed rating and not your matchmaking rating, which appears to be the case. In the long run, displayed ratings converge to matchmaking rating, so if matchmaking rating is unaffected there is no long term effect.
An example:
I start with a big bonus pool and win up to 1600, and my matchmaking rating is 1700. Alice wins the same amount against similar quality opponents but with no bonus pool and goes to only 1350 or so, but also with 1700 matchmaking rating, because matchmaking is totally unaffected. Now in my games I will only be looking at winning +13 or so from my opponents who are 1700 matchmaking, while Alice is looking at something like +16 or +17 from her 1700 matchmaking opponents. I'm looking at -10 or -11 from losses, while she's looking at -8 or so from those same people. Eventually the result over a long enough period is we both end up at 1700 if no change in skill happens.
Even if I got enough of a bonus pool to get to 1900 or something, once that runs out I'm going to lose more for losses than I get for wins against people who are my skill level until I get to the appropriate level. The bonus pool just functions to get people's displayed rating jump started so if they took a break they can jump to their rating more quickly.
Antiquated information:
+ Show Spoiler +
"Tough" Divisions
Because divisions are generated as necessary, invariably the most skilled and most dedicated players will rise to the top and be placed in the low-numbered divisions. Directly speaking, this doesn't inherently mean players added to this division will encounter tougher games, just that they are less likely to reach the tournament qualifier cutoff of Top 8 because their rating is unlikely to be as high as the top players, who are expected to carry higher point totals due to their expected higher win rate.
TOURNAMENTS
The Top 8 players within each division automatically qualify for a tournament run on Battle.net. The frequency of these tournaments is unknown. Warcraft 3's tournaments ran weekly, for reference. The rewards for placing highly in tournaments is also unknown, but may involve league promotion or special Battle.net icons. It is likely that tournaments will be limited to the Top 8 players within that division, rather than across all divisions in a league, if they are to be scheduled with any regularity.
Part 2 of our Ladder Analysis can be found here: http://www.teamliquid.net/forum/viewmessage.php?topic_id=142211
EDIT 11/22/2010: Edited information about divisions in light of the new division tiers discovery.
EDIT 11/1/2010: Corrected League Overview section (again). It actually is set percentiles, but they apply only to active players.
EDIT 8/11/2010: Added more information about the Bonus Pool.
EDIT 8/10/2010: Added a link to Part 2.
EDIT 8/7/2010: Corrected League Overview section, removing the part about set percentiles per league. Evidence from http://sc2ranks.com/stats/
EDIT 8/3/2010: Added link to the Blizzard Leagues and Ladders FAQ for supplemental information. Also added a note about teams winning or losing as a group.
EDIT 7/28/2010: Minor edits to reflect the released game.
EDIT 6/11/2010: Clarified scoring, emphasizing that upon conclusion of a game, your actual rating is compared to your opponent's MMR and points are awarded or deducted based on the difference. Also removed some relatively ambiguous and potentially confusing wording on streaks.
EDIT 6/4/2010: Added new Patch 15 info about Diamond league being locked from placement matches.
EDIT 5/27/2010: Updated League names to reflect Patch 13 changes. Also added "rating inflation" analysis.
EDIT 5/11/2010: Removed outdated information. Added ZapRoffo's supplemental analysis (this is good stuff).
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Thanks to Vanick.ejb for analytical help and proofreading.
