More than Just a Game (Report 1): eSports

The AmeriKat trying to get in on the big eSports
prize money...

Now in its fourth year, the More than Just a Game conference organized by Queen Mary University of London brings together academics, practitioners and industry members to discuss the key legal trends in, and issues facing, the gaming and interactive entertainment industries. For the first time, an edition of the conference is being held in Paris. KatFriends Daniel Lim, Alex Woolgar and Shohta Ueno (Allen & Overy) report on the proceedings from a rainy Paris:

"The gaming and interactive entertainment industry has come a long way since the days of Pong and Space Invaders. From 8-bit graphics and humble beginnings, the industry has become the fastest-growing of the creative industries (annual global revenues are forecast to grow from $116 billion in 2017 to $143.5 billion by the end of 2020, an annualised growth rate of almost 7.5%). The scale of, and investment in, some of the flagship game franchises rivals (and in some cases even outstrips) that of major motion picture productions: for example, the development and marketing budget of Grand Theft Auto 5 was reportedly $265 million, approximately the same as the production budget for Avengers: Age of Ultron. The proportion of the UK population that play games has increased to 49% and, when mobile gaming is included, the split between male and female players is approximately 50/50.

As the sector grows, so too does the value and importance of the industry’s IP assets. As a complex medium, with multiple software, hardware and creative components, games can raise challenging rights, infringement and licensing issues, across the range of IP rights. Additionally, the changing nature the ways in which gamers play, and how gaming companies make money from this, has attracted interest from regulators in some countries.

eSports

For those less familiar, eSports is the competitive playing of videogames, most commonly in multiplayer and/or team format. Now a sub-industry in its own right, eSports competitions now sell out arenas, offering prize money of up to $10 million for a single competition (the author wonders whether he made the right career choice). In 2017, eSports accounted for $693 million of revenue, a figure set to double by 2020; 100 million people played one game (League of Legends) monthly; and in China alone there were 11.1 billion streams of videos showing eSports events.

eSports didn’t really take off in their present form until the early 2000s, so their growth has been stratospheric. In general, this part of the industry lacks specific regulation, but its possible societal implications and fast growth rate have attracted the interest of some governments and regulators. The first session of the conference dealt with some of the relevant issues. With Anne-Sophie Uccello-Jammes (LexCase) chairing, Emmanuel Martin (SELL), Alex Rudoni (Allen & Overy), Andreas Lober (Beiten Burkhardt) and Axelle Lemaire (former Innovation and Digital Affairs Minister in the French Government), compared and contrasted the attitudes of the French and German legislature to eSports.

In 2017, France introduced specific laws to regulate eSports (by way of two decrees, here and here, implementing a more general legislative recognition of eSports in 2016). Alex pointed out that the French government had some potential ills in mind when drafting the decrees (e.g. insecure, unfair and/or excessive working practices; payment of large sums of prize money to minors; profiteering by organisers by charging entry fees in excess of organisational costs), but Axelle emphasised that the main aim was one of legitimisation. France recognised the economic status and potential of the sector in France, and sought to clear away uncertainty for interested parties by e.g. carving eSports out from the statutory definition of gambling / a lottery, and providing stability of employment (minimum term of 12 months) for professional players contracted by commercial eSports teams. 

In contrast, Andreas noted that Germany does not feel specific regulation is necessary. Existing laws – media and advertising, employment, gambling, broadcasting and IP – regulate most of the key areas. The Christian Democratic Union (CDU) party has however indicated that (if a coalition is formed) it wants to promote eSports, potentially with a view to making it an Olympic sport. This will require national and global governing bodies (which, largely, do not yet exist), and clear harmonised anti-doping and anti-cheating rules. It seems however that eSports are more likely to self-regulate to achieve this aim, rather than face legislative intervention (although there may be intervention in relation to e.g. sports betting rules, and potentially immigration – unlike “traditional” sports, there are not currently special regimes in place to allow leading eSports players to travel easily to competitions).

In the second session (chaired by Alex Rudoni), Anne-Sophie, Virginie Gringarten (Ubisoft), Delphine Langlet (Electronic Arts), Stéphan Euthine (France eSports) and Jan Pommer (Turtle Entertainment) discussed IP issues relevant to eSports. Anne-Sophie noted that EU law is clear that both the whole and component parts of videogames (i.e. the software plus other elements subsisting within a game e.g. literary, artistic, musical and dramatic works) are protected by copyright, provided that they are original. Typical end-user licence agreements exclude commercial uses of such copyright works. This was not previously a serious commercial issue but, as eSports have evolved and exploded in popularity, such licence restrictions are increasingly coming into tension with the activities of both professional and amateur eSports enthusiasts. Anne-Sophie noted that it is not desirable for rightholders completely to refuse use of their games for eSports purposes, because eSports are mutually beneficial: game developers/publishers benefit from the publicity and strong community built up around competitive gaming, whilst gamers benefit from technically commercial uses of the relevant game.

Following on from this, Virginie and Delphine agreed that rightholders should draw a distinction between truly amateur, informal eSports events (which should be monitored but tolerated) and professional events (which must be licensed or prevented). The difficulty is where to draw the line in defining an event as “grassroots” or “amateur”. A combination of different factors feed into the analysis e.g.m prize money and number of players.  However, there are currently no universally accepted thresholds and no single factor will necessarily be determinative, as some amateur events have very large prize funds. Thus, currently each individual rights holder (typically the game publisher) will apply their own criteria and standards to the assessment. The lack of an industry-wide standard leaves amateur eSports event organisers in an uncertain position. 

Where events are truly professional, licences will typically be temporally limited (to avoid clashes between significant eSports tournaments), prevent damaging brand associations (e.g. by exclusion of certain sponsors), and contain provisions to ensure consistent and reliable events (which Jan agreed is crucial) e.g. determining responsibility for venue and infrastructure. Licences will also restrict broadcasting rights (in the form of streaming via e.g. Twitch; broadcast in public places e.g. “Meltdown” bars; interfacing within the videogame itself; and, recently, television broadcasts) to the relevant game’s rightholder. The panel appeared relatively comfortable with the status quo on broadcast rights.

Stéphan noted that eSports is a grassroots movement, and a heavy-handed approach to rights enforcement will likely stifle a market which is currently beneficial for all. He argued that the prevailing licence terms are too complex and the process takes too long (1-3 months) to be realistic for the timeline of most eSports events, and suggested standardised licence terms as a possible solution. Delphine stopped short of agreeing that standardised terms are the way forward, but suggested that Electronic Arts is working on guidelines to ensure that appropriate uses of its IP are identified and “whitelisted”. A more extreme suggestion from the audience was a collective management society. Delphine noted that this is unlikely to work in practice because of significant differences between the creative proposition and business models of game developers/publishers, and the differing terms on which they in-license IP (e.g. football league rights), if applicable."