The $1M is an advertising expense. HoN/LoL are very well established and you need a big entrance to draw players away from those titles. This is such an entrance.
Also - for people comparing Blizzard and Valve and saying Blizzard doesn't care... c'mon. They're delivering everything people ask for with the exception of LAN for obvious, logical reasons.
I haven't looked into the DOTA2 LAN protocol, but I'm going to assume it requires (online) steam authentication prior to launch, therefore the benefits of low ping and stability are present, without the ongoing issue of piracy. If this is what they've done, it's a clever move, and requires an established platform like Steam to execute. It's a good idea, and if it proves to be effective (for both parties), then it's one that all major developers would be inheriting in future.
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