I agree regarding the time issue. In lots of 2D/3D artist sites/forums, these kinds of competitions only run for 1-2-4 weeks tops, but you have to take into account that many of the people on that kind of site/forum are either doing this professionally, or are studying to become professionals, so are much more proficient.
The main issue I see with this idea is that imo established addonmakers would be tempted to enter, but that starting/lesser skilled people (the target audience) would think that they aren't good enough anyway, so why bother (I've also noticed this when recruiting, people saying stuff like "I'm not good enough to join such a high quality mod" quite wrongly). Thinking of the possibility of failure more (or valuing it higher) than the possibilities to learn.
Because of this, it would seem to me more as time spent on things outside of people's main areas of interest (addon projects, mods etc), slowing progress rather than speeding it up (by getting more people good at making addons). People can of course work on whatever they want, but on the point of making people better addonmakers, I don't see it happening.
Also how are you going to minimize the chance of someone entering with stolen content? (after all, you can't track check every 3D forum just to be sure)
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But on your main point: The main idea of this is to actually get the people that are less experienced but want to experiment on their own time without mod team pressure at the cost of gaining some recognition. I have participated a couple of times in 3dtotal competitions where most of the guys there are waaaaay beyond my reach, the kind of guys who get interviewed but it was still a fun experience and a learning one for sure. If the community is positive about the whole idea then there should be no problem.



