PLAY BY PLAY - AN INTRODUCTION TO ESPORTS, MONETISATION AND IP RIGHTS
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PLAY BY PLAY –
AN INTRODUCTION TO
ESPORTS, MONETISATION
AND IP RIGHTS
JUNE 2020
PLAY BY PLAY – AN INTRODUCTION TO
ESPORTS, MONETISATION AND IP RIGHTS
The Coronavirus pandemic has brought traditional sports across
the globe to a standstill. High profile international and domestic
leagues and tournaments have been cancelled, suspended or
postponed. A void has emerged in which worldwide interest in
esports has intensified.
This article, which was written for, and first What is esports?
published by, LawInSport (the original is
There is still no single definition of
available to view here), provides an
esports. Esports is an umbrella term for
introduction to esports, the key
an industry covering hundreds of different
stakeholders involved and some of the
video-games. For the purposes of this
challenges facing an industry which had
article, we define esports as the playing
an estimated global audience exceeding
of competitive video-games by
440 million viewers in 2019 and is forecast
professional gamers, in an organised
to generate revenue between US $1.8
format (a tournament/league) and with a
billion and US$3 billion by 2022. In
specific goal (a title/prize money).
particular, we look at the monetisation of
esports, and how intellectual property (IP)
Despite esports differing from “gaming”,
rights (and the enforcement of such rights)
conflating the two is a common
will be crucial for the stakeholders involved
misconception. Gaming is a far broader
and will shape how the industry develops.
term, encompassing the playing of video
games, whether competitively or non-
Esports has not been immune to the
competitively, offline or online and
consequences of the Coronavirus
whether in single player or multiplayer
pandemic. However, interest in esports
mode. To draw an analogy with football,
has increased as traditional sports have
gaming lies on a spectrum that
turned to the esports environment to
encompasses a child practicing “Keepy
continue their engagement with fans.
Uppies” in their garden, a local football
Formula 1 motor racing launched the F1
team playing in a competitive five-a-side
Esports Virtual Grand Prix series, with
tournament and a football freestyler duo
virtual races running in place of every
streaming their latest skills and moves
postponed Grand Prix; in the U.S.
online. Esports is a competitive
NASCAR launched the iRacing series,
professional league or tournament,
with drivers competing digitally through a
analogous to the Champions League,
simulation platform and the English
Bundesliga or the FA Cup.
Premier League’s inaugural
ePremierLeague Invitational, in which
This distinction is also important when
celebrities and Premier League players
considering the two types of
represented their team in a knockout
professional gamers:
tournament to raise money for charity,
attracted 150 million viewers across 1. Competitive professionals – elite
platforms including YouTube, Twitch, gamers who participate in esports,
Facebook, Twitter and Sky Sports live. It whether as an individual or as a
has been suggested by the World member of a team, to win
Economic Forum that Coronavirus may tournaments/leagues; and
lead to the normalisation of esports,
2. “Lifestyle” gamers – skilled (but not
thanks to the “unprecedented (and
necessarily elite) gamers who
accidental) adoption of esports by
broadcast their day-to-day gameplay
broadcasters, leagues and athletes
on digital channels and live streaming
seeking to engage fans.
platforms to fans/subscribers, and
whose ultimate goal is to entertain
viewers, whether they win or lose.
2 CLIFFORD CHANCE
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
The majority of gamers will fall into either The International (a Dota 2 tournament) in
one of the two brackets. In this article, Shanghai, with the team sharing the
our focus is on esports, and the former. US$15 million first place prize and captain
However, this is not to understate the Johan “N0tail” Sundstein becoming the
importance to the esports industry of top prize-winning esports player to date,
lifestyle gamers to the esports industry, with estimated career winnings of almost
who may sign to professional esports US$7 million.
teams, as part of those teams’ broader
business models – for example, to attract Esports competitions are played in front
sponsors and fans, sell merchandise and of spectators, who can watch in-person
produce entertainment content. at a stadium or via online streaming.
These audiences can be vast. For
Esports, whilst a relatively nascent example, 60 million viewers watched the
industry, challenges established Grand Final of the 2018 Mid-Season
conceptions of what constitutes a “sport” Invitational, a League of Legends
(although whether esports can be tournament hosted by Germany and
appropriately classified as a “sport” France. According to a recent report by
remains a controversial topic), but also Goldman Sachs, esports has been
offers new and varied investment elevated “into mainstream culture as a
opportunities to current and prospective legitimate professional sport with a
market participants. Esports undoubtedly massive global following.” This global
shares many of the fundamental following includes major celebrities and
characteristics of traditional sport, professional sportspersons, which in turn
however its idiosyncratic features require further raises the profile of esports. For
a more bespoke approach in a number example, in early 2020, Real Madrid’s
of respects, particularly in relation Gareth Bale launched his own esports
to monetisation. team, Ellevens Esports.
The rise of esports Who are the key
In 1972, the first known esports event stakeholders?
took place at Stanford University, with • Video-game publishers: video-game
students competing at “Spacewar!”, a publishers produce, release and own
combat video-game. The winner took the IP in the games they publish, and
home a year’s subscription to the thus control the content of the games
magazine Rolling Stone. Fast-forward to (including updates to the games
2019, and 16-year old Kyle “Bugha” subsequent to initial release). For
Giersdorf scooped US$3 million for publishers, esports represents a way of
winning the Fortnite World Cup solo final deriving revenue from their principal
– the largest prize ever for a single player assets – their IP rights in the games –
at an esports tournament. To place this by licensing the use of those rights. The
into context, Bugha’s prize exceeds that primary purpose of such licensing may
awarded to Novak Djokovic for winning be direct (a distinct revenue stream
Wimbledon 2019 (US$2.91 million) and under the licensing contract), indirect
Tiger Woods for winning the 2019 (using esports to generate interest in
Masters (US$2.07 million). Moreover, the the game to drive sales) or a
US$3 million won by Bugha was a combination of the two.
fraction of the US$100 million prize pool
set aside by Epic Games, creator of • Competitions and leagues:
Fortnite, for all Fortnite esports publishers may also run esports
tournaments held during the course of competitions and leagues (for which
2019. Less than one month after Bugha’s they control the structure and rules) or
victory, five-man team “OG” triumphed at alternatively license the rights to run
CLIFFORD CHANCE 3
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
and broadcast such competitions to obtain IP rights in relation to their
third parties. High profile examples of players under the contracts with those
the former include the creation of the players. As with traditional sports
Fortnite World Cup by Epic Games, the athletes (such as elite footballers,
formation of the League of Legends golfers and tennis players), esports
Championship Series and the League players have become increasingly
of Legends European Championship attuned to the fact that they are not just
(the North American and European professional gamers, but also valuable
leagues, respectively) by Riot Games media assets.
and the subsequent launch of the
• Players: the number of professional
Overwatch League by Blizzard. An
esports players has grown rapidly in
example of the latter is ESL (formerly
recent years. They can earn income
the Electronic Sports League), which is
through sponsorship, prize money and
the largest organiser of esports
team salaries (for members of a team
competitions worldwide (e.g. ESL One).
which pays a guaranteed salary).
• Team owners/franchises: for those Substantive player salaries are likely to
video games for which leagues have encourage more gamers to consider
been created, the publishers can also pursuing esports as a professional
sell “teams” that can participate within career, which in turn results in higher
those leagues to third parties (similar to quality gameplay and increased fan
the US sports “franchise” model). For interest. Furthermore, unlike in
example, Activision (Blizzard’s parent traditional sports, lifestyle gamers can
company) sold the first twelve teams in also earn income through streaming
the Overwatch League for US$20 services. The highest profile example is
million, and subsequently sold eight Richard Blevins, better known by his
further teams for a reported US$30 to online alias “Ninja”, who earns an
US$60 million each, with each team estimated US$500,000 per month
based in a major city, and the teams from streaming and commenting
split into a Pacific Division and Atlantic on gameplay.
Division, respectively. Activision
• Online streaming services: major
targeted current owners of major sports
technology companies including
teams as prospective team owners,
Amazon (Twitch), Google (YouTube) and
including Kroenke Sports &
Tencent (Douyu and Huya) own or have
Entertainment (Los Angeles Gladiators)
heavily invested in streaming services
and the Kraft Group (Boston Uprising),
which can broadcast competitive and
who have experience in generating
lifestyle gameplay. Facebook has
revenue from local and global fanbases.
recently launched a dedicated
• Teams: in addition to the “teams” Facebook Gaming app in an attempt to
which are sold to third parties, teams challenge these dominant players and
exist in the more conventional sense, establish itself in the gaming and
i.e. a collection of players competing on esports world. Twitch is the largest
the same side against other groups of streaming platform, averaging in excess
players. Teams often compete across of one million concurrent viewers
various platforms and video games. watching its subscription-based
The top three highest earning teams to content every second over the course
date are “Team Liquid”, “OG” and “Evil of 2018. Online streaming services
Geniuses”, with cumulative prize contract with publishers (whether on an
winnings totaling almost US$90 million. exclusive or non-exclusive basis) for the
Team Liquid, which has multiple rights to stream gameplay. Live
divisions dedicated to the most popular streaming platforms have experienced
esports games, is majority owned by a surge in growth as a result of the
aXiomatic, an ownership and Coronavirus pandemic; for example,
management group created by an array Twitch exceeded three billion hours
of top traditional sports team owners watched (in a single quarter) in Q1
which offers investment services in the 2020 for the first time.
esports industry. Teams may seek to
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PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
• Traditional broadcasters: some gameday income, respectively), with the
traditional broadcasters, in addition to expectation that in the coming years
online streaming services, have also esports will be far more reliant on media
begun contracting with publishers in rights, and far less reliant on gameday
order to broadcast gameplay. However, income, than traditional sports.
such broadcasters have thus far had a
difficult task in converting fans of Media rights
esports away from streaming services;
As the popularity of esports increases,
research conducted by Nielsen found
the number of streaming services and
that 61% of esports viewers on Twitch
traditional broadcasters seeking to secure
did not watch TV on a weekly basis.
distribution deals to broadcast esports
Whilst Disney, ESPN and ABC began
competitions and leagues, and the value
broadcasting the Overwatch League in
of those distribution deals, is expected
2018/19, it was exclusively licensed to
to increase.
YouTube by Activision Blizzard in
early 2020.
Distribution deals have already been
• Traditional sports team and signed for significant sums. In early 2018,
leagues: professional sports teams Twitch secured exclusive rights to
and leagues have also started investing broadcast the first two years of the
in esports, capitalising on their unique Overwatch League worldwide (bar China)
IP rights (by licensing them to for US$90 million, representing a higher
publishers), brand awareness and annual figure than the US$300 million
experience to find new audiences paid by BamTECH (Major League
through esports. For example, NBA Baseball’s video streaming company) to
and Take Two Interactive (the publisher Riot Games in late 2016 for the streaming
of the NBA 2K franchise) entered into a rights to League of Legends until the end
joint venture to create an esports of 2023. Facebook has also entered the
league for NBA 2K; 23 of the NBA’s 30 fray, securing an agreement with ESL
teams currently participate in the NBA for exclusive broadcast rights for
2K League. In 2019, all NBA 2K ESL’s Counter Strike: Global Offensive
League games and tournaments were Pro League.
livestreamed on the NBA 2K League’s
Twitch and YouTube channels, with the One advantage that streaming services
NBA 2K League Finals rebroadcast in and traditional broadcasters currently
China through Tencent. have over publishers in negotiating
distribution deals is that the esports
Monetising esports – industry is fragmented, with the IP for
each video-game belonging to the
revenue streams relevant publisher. Thus, a traditional
In 2019, the total annual revenue for the sports league such as the Premier
esports industry was projected to reach League or the NFL can collectively
about US$1.1 billion; 42% from bargain on behalf of all teams within their
sponsorship, 23% from media rights, league, in a way that is not applicable in
17% from advertising, 9% from the gaming industry.
merchandise and tickets and 9% from
publisher fees, representing year-on-year However, streaming services and
growth of 34%, 42%, 15%, 22% and broadcasters have had to adapt to
-3.0%, respectively. The fastest growing address the challenge of seeking to
esports revenue stream is expected to be monetise an industry which has always
media rights, with a compound annual operated on a freemium model – i.e.
growth rate (2017–2022) of +39.6%, esports have always been free to air.
compared with sponsorship’s +28.4%. Implementing subscription models risks
Esports’ revenue generation therefore losing audience members – which has
differs from traditional sports’ widely knock-on implications for sponsorship.
recognised 40:40:20 revenue split model Striking the correct balance is a complex
(covering media rights, sponsorship and commercial path to navigate.
CLIFFORD CHANCE 5
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
Sponsorship Gaming generate substantial revenues
through advertising, with streamers also
Sponsorship is the primary revenue
able to monetise their activity, whether by
source for many key stakeholders and
charging flat fees or entering into
lends credence to the suggestion that
partnerships with streaming services.
esports is currently over-reliant on
sponsorship as a revenue stream,
There is also a prospective line of
although this is expected to change as
monetisation for publishers: in-game
revenue from media rights increases.
advertising. This would require the video-
Sponsorship deals may be struck with
game publishers to code adverts, or even
individual players, teams, competition
team sponsorship, into the games
organisers and/or video game publishers.
themselves. This could be done generically
or specifically for esports competitions.
Until relatively recently, the vast majority of
sponsorship came from endemic brands
At the end of May 2020, Riot Games
(i.e. brands that create products required
announced that they would display
to produce or used to play esports), such
in-game digital sponsorship banners (the
as software manufacturers and consumer
“Summoner’s Rift Arena Banners”) during
electronics brands. In 2017,
League of Legends esports broadcasts,
approximately 65% of event sponsorship
with MasterCard and Alienware among
deals and 88% of team sponsorship
the first brands that will feature. The
deals were signed with endemic brands.
sponsorship banner will appear in multiple
In 2019, Intel extended its partnership
locations across the in-game map and
with ESL through to 2021, with the two
can change appearance throughout a
parties intending to invest over US$100
match. Moreover, Riot Games has given
million over a three-year period.
each of its twelve regional leagues the
ability to have different in-game sponsors.
However, as the popularity of esports has
Riot worked with Nielsen to evaluate its
increased and the infrastructure of the
approach to in-game sponsorship, with
competitions/leagues has become more
the data allegedly indicating that “It will
established, sponsorship has come from a
become one of its most valuable
broader range of sources including
deliverable assets.”
mainstream brands. “The fact that esports
audience members are a coveted
In-game advertising is not currently
demographic – with approximately 79%
covered by any specific broadcasting or
aged under 35 – has undoubtedly played a
advertising code, but issues remain that
role in this increased interest, particularly
could affect this potential revenue stream
given that this demographic is one of the
for publishers, including:
hardest to reach through traditional media”.
• The extent to which publishers are
Mastercard become the first global reticent to change the aesthetic look
sponsor of League of Legends (a game and feel of their games by allowing
already sponsored by Coca-Cola), in-game advertising.
T-Mobile and Toyota sponsor the
• The potential backlash from gamers in
Overwatch League and Paypal partners
response to in-game advertising.
with Rainbow Six Siege. Esports teams
Cloud9 and Ninjas in Pyjamas are • Limitations on the types of advertising
sponsored by Puma and Betway allowed due to the advertising laws in
respectively (with the company’s logos certain countries (e.g. restrictions on
emblazoned on the teams’ kit), whilst advertising alcohol, gambling, tobacco,
Jian “Uzi” Ziaho (a League of Legends etc) and the demographic of video-
player) has signed an endorsement deal gamer users (i.e. minors).
with Nike.
• The hesitance of brands to advertise
within certain types of games, such as
Advertising violence-based video games.
Esports currently offers a range of
advertising opportunities. Streaming Riot Games’ approach indicates it is
services such as Twitch and YouTube particularly attuned to the first two issues
referenced above. Whilst the sponsorship
6 CLIFFORD CHANCE
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
banners will be visible to those watching through the inclusion in the footage of
the esports broadcast, it will not affect opening clips, anthems and trade marks
the professional gamers themselves. In to demonstrate a breach of IP rights.
addition, David Higdon, Riot Games’
global head of communications and In contrast, in the world of esports, the
esports, noted in response to fan “sport” (i.e. the video game) typically
concerns about the level of in-game consists of a number of separate copyright
sponsorship integration that: “We’ll be works, each of which can be controlled by
very careful on how we innovate around the owner and/or its licensee(s). For
it… Let us know what you think when instance, under English law, these may
you watch it this summer. We’ll adjust include: source code in the game or parts
as needed.” thereof; in-game text; in-game images;
in-game films; characters; musical score;
If in-game advertising grows as publishers and music recording.
seek to monetise further by leveraging
in-game “real estate”, this will create a In addition, logos and brands used to
host of issues surrounding advertising distinguish the video-games may be
standards and the enforcement of protected as trade marks (whether
IP rights. registered or unregistered).
Merchandise and tickets Esports stakeholders are therefore
afforded multiple layers of protection that
Whilst a smaller portion of the annual
can be used as part of an enforcement
revenue of the esports industry comes
campaign to protect commercial
from merchandise and ticket sales, this is
interests. However, the competing
nonetheless a revenue stream that has
interests of the different stakeholders (as
seen strong growth. In 2018, the
highlighted below) is a major factor to
Overwatch League entered into a multi-
take into account in relation to
year deal with sports merchandise
enforcement, and which may have a
company Fanatics, whilst for esports
concomitant impact on the monetisation
team 100 Thieves its apparel business
of the esports industry.
line is one of its three primary revenue
sources alongside competitive gaming
Further complexity is introduced where
and entertainment and media.
the video-games feature real players, who
themselves may have rights in their
Monetising esports – the likeness. In addition to rights under
importance of IP rights licences with publishers, esports leagues,
and their enforcement competition organisers and broadcasters
will also have their own distinct IP rights –
Esports has an advantage over traditional
for example, esports broadcasters
sports in respect of monetisation; the
typically film game screens and the
video games underpinning the esports
players themselves, meaning they own
benefit from significant copyright
copyright in that footage and broadcast
protection. The Court of Justice of the
(which in turn is dependent on the
European Union has held that the act of
broadcaster having the rights to feature
performing a sport cannot be a copyright
the game in that footage). There are
work in and of itself as it does not satisfy
therefore a broad variety of rights that
the requirement of “originality.” This has
may be infringed upon.
historically created major issues for
traditional sports broadcasters in dealing
When you consider that the fastest
with online piracy for unauthorised live
growing esports revenue stream is
streaming of fixtures. Broadcasters of
expected to be media rights, the
traditional sports rely on the fact that the
importance of stakeholders being able to
broadcasts of footage of sports events
adequately enforce their IP rights when
are protectable as copyright work.
infringed is underlined. However, given
Broadcasters also bolster their protection
the myriad of rights and competing
CLIFFORD CHANCE 7
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
interests involved, it is critical that esports simultaneously asserting its right to
stakeholders have a clear understanding monetise its IP. The gaming community
of and properly negotiate: disagreed. Following an outcry, Nintendo
set up the “Creators Program,” which
• The extent of (and limitations to) their
offered video creators between 60% and
IP rights.
70% of the advertisement revenue
• Their ability to take enforcement action (depending on whether the creator
when IP rights are infringed. registered and posted the video to
Nintendo-specific channels) generated
• Their responsibility to take enforcement
from the video. In 2018, Nintendo pulled
action when IP rights are infringed.
back even further from its position,
• The implications of taking, or failing to announcing that it was halting the
take, enforcement action. Creators Program in its entirety and that –
provided video creators followed a new
Streaming set of “basic rules” – they could retain
Streaming serves as a useful illustration 100% of any advertisement revenue
in this respect. Unlike traditional sports, generated. In the associated press
which have generally taken an assertive release, Nintendo seemed to
approach in enforcing their IP rights, acknowledge the role played by such
enforcement activities in esports and video creators, stating: “We appreciate
videogaming have often been and encourage the continued support of
more restrained. content creators, and thank them for their
dedication to helping us create smiles”.
Publishers have been historically reluctant Nintendo came to understand that the
to stop what are known as “let’s play” reputational damage of taking
videos; videos distributed online where enforcement action outweighed the
gamers commentate on themselves advertising revenue claimed.
playing a particular game. For publishers,
this constitutes free promotion and By contrast, competitions and
advertising and can boost the popularity broadcasters may take a very different
of their games, which can in turn increase approach to enforcement than video
revenues by: (a) facilitating sales of the game publishers, which is reflective of
games; and/or (b) increasing the number their differing commercial interests.
of in-game microtransactions. Esports broadcasters typically film both
Furthermore, assuming in-game game screens and the players
advertising becomes a more widespread themselves; they therefore own copyright
phenomenon, “let’s play” videos will in the filming and broadcast itself and are
increase exposure to such advertising, able to use the content of the game
which may lead publishers to try and under licence from the publisher.
leverage such exposure in contract
In January 2018, esports competition
negotiations with advertisers.
organiser ESL had an exclusive deal with
However, even for publishers, there have Facebook to stream ESL’s Dota 2
been limits to their tolerance for such competition. When gamers began
videos. “Let’s play” videos are typically streaming gameplay from the tournament
governed by the terms of the relevant (overlaid with their own commentary) on
End User Licence Agreement, which rival streaming platform Twitch, ESL
often set out an exception for “non- elected to issue “takedown notices”
commercial” use. In 2013, Nintendo pursuant to the US Digital Millennium
began claiming all advertisement revenue Copyright Act (DMCA), informing Twitch
on user-generated “let’s play” videos that it was hosting copyright-infringing
uploaded to YouTube that featured material. In order to shield itself from
Nintendo’s content. Nintendo publicly liability, Twitch removed the offending
positioned this as a reasonable balancing streams. However, Valve (the publisher of
exercise; allowing fans to continue Dota 2) responded by announcing that
enjoying Nintendo content on streaming only they were able to issue such
platforms (i.e. not blocking gamers in takedown notices in relation to the
totality from using Nintendo’s IP), whilst “infringing” streams.
8 CLIFFORD CHANCE
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTS
This confusion stemmed from the fact licence that affords adequate protection
that whilst both ESL (the competition to their broadcasts, the value of such
organiser) and Valve (the publisher) held licences substantially diminishes. At the
IP rights in elements of the broadcast of same time, video game publishers must
the competition, the ability to issue a also be careful not to alienate the
takedown notice was dependent upon gamers upon whom they rely to
the specific nature of the material being promote their content and who may
“infringed”, as well as the terms of the encourage criticism of the publisher
licence provided by Valve to ESL. ESL within the gaming community. If
held an array of copyrights in various publishers are unwilling to engage with
elements of the broadcast of the this issue by formulating a clear policy
competition, but the gamers were not on the permissible content of streams
violating these rights through their of competition gameplay, and continue
streams. Whilst the gamers were to take a back seat approach to
streaming the same gameplay that ESL enforcement, their interests will come
was broadcasting (with its own into direct conflict with those of other
commentary overlaid), they were not stakeholders. This potential conflict is
streaming the ESL broadcast (or elements particularly pertinent in circumstances
of the broadcast) itself. Thus, absent the where the video-game publisher is
terms of a licence granted by Valve also the competition organiser, and
specifying that ESL had rights vis-à-vis therefore has a direct relationship with
the actual gameplay, ESL did not have the broadcaster.
the ability to issue takedown notices in
• Streaming platforms hosting
relation to the streams.
“infringing material”: streaming
platforms (Twitch) should continue to
This incident demonstrates the
comply with takedown notices when
importance of esports stakeholders
presented, as they are reliant upon the
having a comprehensive understanding
safe harbour afforded by the DMCA
of IP rights and being aligned on the
(and equivalent legislation elsewhere) to
approach to enforcement. It stressed
shield themselves from liability. There is
the importance of clear contractual and
simply too much content on streaming
practical mechanisms to ensure the
platforms to proactively identify all
smooth exploitation and enforcement
infringing content. Streaming platforms
of the broadcast. It also highlights the
should also comply with any counter
attendant implications for the growth
takedown notices properly filed by
of media rights revenue in the
streamers. As an industry, stakeholders
esports industry:
should cooperate to develop fast and
• Competition organisers: if effective mechanisms to identify illicit
competition organisers (ESL) cannot streams, building on work such as
enforce their IP rights, there is little digital watermarking which has been
commercial sense in broadcasters undertaken in the context of traditional
(Facebook) paying substantial sums for sports broadcasting. This is particularly
exclusive streaming rights. This will relevant in the context of Article 13 of
affect the monetisation of such the EU Directive on Copyright in the
competitions. Competition organisers Digital Single Market, which will require
therefore need to carefully assess their service providers (i.e. streaming
IP rights to ensure their commercial platforms) to implement measures to
interests are adequately protected, as protect content and ensure effective
well as obtaining appropriate content recognition technologies.
permissions from other rights holders to
• Streamers: streamers should look to
address any lacunae in such protection.
policies issued by publishers to
• Video game publishers: if video understand the limitations on the
game publishers (Valve) are unwilling to content that their streams can contain.
enforce their IP rights to protect the If a streamer believes their content has
interests of competition organisers, or been improperly removed through a
alternatively to grant competition takedown notice, they should file a
organisers rights under the relevant counter takedown notice.
CLIFFORD CHANCE 9
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTSWhat next for esports? by participants as the sport with the
highest potential to grow revenues
There is no sign of esports’ rapid
globally, beating both football and
expansion slowing. A recent report by
basketball into second and third place,
Goldman Sachs highlights that the
respectively. When you consider the
industry remains heavily under-monetised
audience demographic for esports, in
relative to its audience potential.
conjunction with the fact that more than
According to the report, the total online
70% of participants believe the biggest
population is over 3.65 billion globally, 2.2
threat to the traditional sports industry is
billion of whom are gamers; esports
the shift in the consumer behaviour of
viewers currently represent only a fraction
younger people, it is unsurprising that
of the online population (c. 5%),
esports has become too commercially
suggesting there is plenty of scope for
relevant to be ignored.
audience growth.
The International Olympic Committee has
As revenues increase, fuelled by larger
recognised esports as a “sporting activity”
audiences and audience engagement, we
and is exploring the possibility of including
expect to see the industry mature, with
esports in future Olympic Games. Esports
further investment driving the
may be a demonstration sport at the
implementation of greater organisation
Paris 2024 Olympic Games and it will be
and more sophisticated infrastructure, the
a medal event at the 2022 Asian Games.
entrance of further major brands into the
And in May 2020, the Commonwealth
arena and larger prize pools. Activision
Games Federation agreed an exploratory
(through Blizzard) and Tencent (through
partnership with the Global Esports
Riot Games) have led the way, targeting
Federation to develop a Commonwealth
the investment of current owners of
Esports strategy.
traditional sports teams, in order to use
their knowledge of how to generate
The esports industry is an attractive and
increasing financial returns, including
exciting market that transcends both
revenues from those teams’ regional
sport and technology. However, the
support bases. As the professionalisation
industry remains an emerging one. At this
of the industry continues, increased
stage of its development, it is absolutely
monetisation will follow. Global betting on
critical that adequate consideration is
major esports titles, already estimated at
given to the legal and commercial issues
US$5.5 billion in 2016, is now projected
raised by the interrelationship between,
to approach US$13 billion this year.
and enforcement of, various industry
stakeholders’ different IP rights. The
According to PwC’s Sports Survey 2018,
industry will need to wrestle with these
the traditional sports industry is keeping a
complex issues as it continues its
keen eye on the esports industry; over
rapid expansion.
70% of participants from the global
sports industry say that they would
develop a strategy to enter esports, with
the main reason for hesitation being a
lack of understanding of the business
model. Moreover, esports was identified
10 CLIFFORD CHANCE
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTSCONTACTS
Chris Yates Yves Wehrli Jennifer Mbaluto
Partner Partner Partner
London Paris London
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E: chris.yates@ E: yves.wehrli@ E: jennifer.mbaluto@
cliffordchance.com cliffordchance.com cliffordchance.com
Leigh Smith Rory Scott Jonathan Coote
Senior Associate Lawyer Trainee Solicitor
London London London
T: +44 20 7006 6235 T: +44 20 7006 2303 T: +44 20 7006 1910
E: leigh.smith@ E: rory.scott@ E: jonathan.coote@
cliffordchance.com cliffordchance.com cliffordchance.com
Aliona Potapova
Senior Client & Market
Development Executive
London
T: +44 207006 4494
E: aliona.potapova@
cliffordchance.com
CLIFFORD CHANCE 11
PLAY BY PLAY – AN INTRODUCTION
TO ESPORTS, MONETISATION AND IP RIGHTSThis publication does not necessarily deal
with every important topic nor cover
every aspect of the topics with which it
deals. It is not designed to provide legal
or other advice.
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