eSports – a new type of competition, same old legal issues (but different?)

One of the defining features of the generation dubbed “Millennials” is their love of all things digital.  Nothing exemplifies this better than the explosion in popularity of eSports.

What are eSports?

Rather than traditional sports, the sport of choice for younger generations is often eSports – competitive video gaming (yes, it’s a real thing).  In late 2017, even the International Olympic Committee (IOC) declared that eSport could be considered a sporting activity,¹ though further regulation and governance would be required for it to become an Olympic event. The 2022 Asian Games, to be held in Hangzhou, China, will feature eSports as a medal event,² and this year’s Asian Games in Indonesia will include eSports as a demonstration event. It is estimated that the audience for eSports in 2018 will reach around 380 million, and the global eSports economy in 2018 will grow to US$905.6 million (a 38% increase over 2017).³ Revenues are anticipated to reach US$1.4-2.4 billion by 2020.⁴

Like traditional sports, eSports feature skilled competitors (athletes) playing each other in live events. Like any other sport, there are official leagues and teams at amateur and professional levels specialising in particular games. Unlike traditional sports, the competitors do not need to be in the same space in order for there to be a competitive match, and their equipment of choice is a computer rather than a bat or ball.

Issues in eSports

As an emerging industry, eSports faces a range of legal and commercial issues. Some of these issues presenting challenges for eSports are the same as those faced by traditional sports while others are more unique.

The basic structure of professional eSports centres on teams (akin to traditional sporting teams, many of which are brands in their own right), athletes, publishers, events and leagues and has streaming at its core.⁵ Contractual relationships between the involved participants are key.

The interesting legal issues raised by eSports include:

• Governance of the sport: There are various organisations purporting to take a leading role in the sport, but for there to be a cohesive sport one officially recognised and sanctioned governing body is needed. The International eSport Federation (IeSF)⁶ is a global organisation headquartered in South Korea, whose aim is to have eSports recognised as a traditional sport and achieve recognition as the global governing entity. There also exist other global alliances and federations for eSports, including the World Cyber Arena Global eSports Alliance and the World eSports Consortium. IeSF is a signatory to the World Anti-Doping Agency, and its 47 (to date) member nations all have national organisations (most of which are also members of the other global alliances/federations). In Australia, the Australian eSports Association⁷ works to promote and develop eSports in Australia and to this end is developing a Code of Conduct for the sport in Australia;
• Sponsorship and merchandising: One of the unique challenges raised by eSports is the fact that the valuable intellectual property associated with the sport may lie with parties other than the leagues and teams that in traditional sports are the owners. Specifically, game publishers and studios will own the IP associated with the games being played in a competition tournament, rather than organisers who in traditional sporting contexts may own the valuable trade marks and branding associated with a sport. eSport players will have no rights in the avatars they adopt whilst playing. A player’s image in traditional sports can be a valuable merchandising and endorsement asset, but in eSports the issue is murky as rather than an eSport athlete’s real persona, audiences may associate him/her with his in-game representation, meaning any value in the avatar to exploit for commercial profit rests with the game owner is not available to the athlete/his-her team to exploit, absent a contractual arrangement with the game owner to this effect; and
• Broadcasting: Major tournaments are broadcast online through channels such as YouTube and Twitch, as well as on traditional television networks including ESPN and Fox Sports. As well as these official broadcasts, anyone who can live stream can in theory broadcast their own participation in eSports. Broadcasting of eSports raises interesting intellectual property law issues, as the streaming of the video game involves a broadcast of copyright-protected material and therefore will require game publisher approval. There have been instances of tournament organisers utilising intellectual property violation take-down mechanisms to have player streams shut down, despite not being the owner of the video game being streamed.

As eSports continues to grow these issues (and more) are all being dealt with by the industry as a practical matter (or will need to be, to enable the sport to continue to develop and reach its full potential). Lessons can be drawn from traditional sports, but for some issues participants will need to dip their toes into previously untested waters. It is certainly an interesting time to be a sports enthusiast.

This article was written by Luke Dale, Partner and Niomi Abeywardena, Special Counsel.

¹https://www.reuters.com/article/us-olympics-summit/olympics-e-sports-could-be-sports-activity-says-ioc-idUSKBN1CX0IR
²https://www.abc.net.au/news/2017-04-19/e-sports-to-be-medal-event-at-asian-games/8452458
³https://newzoo.com/insights/articles/newzoo-global-esports-economy-will-reach-905-6-million-2018-brand-investment-grows-48/
⁴Ibid.
⁵https://www.lawinsport.com/topics/features/item/an-overview-of-esports-explosion-and-legal-issues-arising-from-it
⁶https://www.ie-sf.org/
⁷https://www.aesa.org.au/