In a previous article, I discussed the rise of esports, in this article I will explore the proprietary nature of esports, the deep control afforded to game producers over their IP, and the role that the gaming community plays in regulating their behaviour.
As previously mentioned, esports share many of the common elements found in traditional sports. There are professional leagues, teams, sponsorships, media deals, agents, and fans. However, unlike traditional sports, esports differ most significantly in the proprietary nature of the activity. Major League Baseball does not own baseball, the National Hockey League does not own hockey, the National Basketball Association does not own basketball, but in the Overwatch League (OWL), someone does own Overwatch. Overwatch is, therefore, eligible for copyright protection as an audiovisual work. In Canada, the Copyright Act does not identify video games as a specific category of work. However, the courts have recognized video games to be protected by copyright, both as a whole and in its individual elements such as the soundtrack, voice acting, character design, and level design. For the most part, the owner of the copyright in a video game is the game’s producer.
Similarly to most copyright owners, game producers assert their exclusive rights by controlling reproductions, distributions, public performances, and creations of derivative works that involve or stem from their copyright-protected work. In esports, these exclusive rights provide game producers with significant power over the direction of the industry. Game producers possess the ability to dictate not only the use of their games in tournaments, but also the way the tournaments will function, and even who can participate in the tournaments. Game company Activision Blizzard’s recent decision to switch from a merit-based league to a franchised league for its game Call of Duty is one recent example of a producer exercising this control. This decision was ultimately met with criticism after the iconic Call of Duty World League (CWL) team 100 Thieves backed out of the estimated $25 million franchise fee required to join the new franchise league. Their decision effectively concluded their participation in the game Call of Duty for the time being.
Given that tournament organizers, teams, players, broadcasters, spectators, and advertisers all rely on access to a publisher’s IP to participate in esports markets, there is a concern that a publisher’s behaviour could constitute anticompetitive IP exploitation. As one legal scholar noted, a game publisher’s IP in a game effectively grants them a permissible monopoly, and publishers will rationally seek to minimize competitive pressure from other entities in the market through vertical integration of the downstream market. However, the issue of whether a single videogame could constitute a relevant market under competition law is unclear. Currently, there are many different esports leagues, numerous publishers, and countless current and emerging games, as opposed to just a single league with monopoly power. Moreover, it would be difficult for any would-be plaintiff to demonstrate that a publisher’s actions were anything not otherwise already afforded to them through federal IP protection. While it’s unlikely there would be any clear violations of competition law, those within the esports industry need to be cognizant of these issues, particularly in an era in which publishers are demanding franchise fees in the tens of millions of dollars for games yet to be released.
While publishers will often flex their IP muscle at the expense of tournament organizers, leagues, teams, advertisers, and broadcasters, there is one particular area where publishers typically turn a blind eye – streaming. When a user purchases a game, what they are buying, in addition to the physical copy, is a copyright licence to make use of the game subject to certain terms and conditions. Generally, streamers receive a “carte blanche” from publishers when it comes to streaming on services such as YouTube and Twitch because it makes commercial sense given the promotional value that streamers provide to the game.
The recent launch of the game Apex Legends is a testament to the influence that streamers have on the industry. Much of the game’s early success can be attributed to clever marketing on behalf of the publisher. Reports indicate that the game’s publisher, Electronic Arts Inc (EA), paid a number of streamers, including a reported $1 million to top streamer Tyler (Ninja) Blevins, to play the game for the week. The game was an instant success, within the first week of its release the game generated over 25 million players, with nearly 64 million hours of live viewership on the streaming site Twitch. All this success occurred even though the game was not announced to the public until a day before it was actually released!
While the gaming community is certainly capable of giving a game life, it also possesses the power to take it away. In 2017, fans organized a boycott of EA’s Star Wars Battlefront II to protest the game’s unfair use of “loot boxes”. As a consequence of the boycott, EA failed to meet sales targets by roughly one million copies, their stock price fell, and their reputation was permanently damaged. Needless to say, the gaming community plays a significant role in this emerging industry, acting as a type of de-facto regulator in a mostly unregulated industry.
From an outsider’s perspective, there often appears to be unbridled control on the part of game producers in the esports industry. Still, it should not be forgotten that a game’s real success depends on its reception in the gaming community. If a game producer chooses to deploy exploitative IP strategies, copystrike its players, or engage in manipulative profit-maximization, the community will be aware, and a game publisher will suffer.
Written by Alexandre Dumais, IPilogue Editor and JD Candidate at Osgoode Hall Law School. Alexandre is also the Director of Sports, Osgoode Entertainment and Sports Law Association.