The Meteoric Rise of Esports: What Legal Issues Threaten the Growth of This New Industry?

*Taylor Kitzmiller

I.  Esports’s Popularity Explosion

The playing and watching of video games has gone from a casual hobby enjoyed primarily by kids to a brand-new multibillion-dollar industry.  See Wayne Duggan, Breaking Down the Incredible Rise of Esports, Benzinga (Jan. 26, 2019, 4:06 PM),  Esports is the fastest growing spectator sport in the world.  See id.  “The total number of esports viewers has more than tripled from 124 million in 2012 to 335 million in 2017” and “[t]he number could surpass 550 million by 2021.”  Id.

Increased popularity brings the promise of major investment opportunities.  See id.  In 2018 alone, esports generated $906 million in revenue.  See id.  This number is projected to vastly increase:

Research firms like Statista estimate that global revenues for the wildly popular, still nascent sector may even surpass that milestone this year — particularly because of the number of companies and investors getting in on the esports market.  Estimates from Newzoo project that the global esports market will exceed $1.6 billion by 2021.

Annie Pei, Here’s Why Esports Can Become a Billion-Dollar Industry in 2019, CNBC, (last updated Jan. 23, 2019, 10:04 AM).  Eye-popping revenue projections have attracted famous investors such as Michael Jordan, Mark Cuban, and Robert Kraft.  See id.  The culmination of sponsorship deals, streaming services, and the creation of leagues and teams has given esports the credibility enjoyed by other leagues like the National Football League (NFL) and the National Baseball Association (NBA).  See id.  The budding industry of esports has great potential, but at this early stage in its life, when there are few regulations and oversight, it is unclear what legal problems the esports community will face.

II.  The Intellectual Property Dilemma of Esports

The major difference between esports and traditional sports is that the “games” of esports are the creations of video game companies.  See Isaac Rabicoff & Kenneth Matuszewski, The Rise of ESports Creates a Complicated Relationship with IP, IPWATCHDOG (Mar. 25, 2017),  Unlike the NBA, which does not have intellectual property (IP) rights over the sport of basketball, creators of video games such as the uber-popular Fortnite have IP rights to any content created by the Fortnite game.  See id.  Thus, the creators of video games are able to exclude players, teams, and leagues from copying original artistic content from the game.  See id.

Currently, that control “is exercised by way of contract.  In the world of online video and streaming gameplay, individuals typically license the right to play a video game from the game publisher by way of an end-user license agreement or applicable terms of service.”  Richard P. Flaggert, Copyright in Esports: A Top-Heavy Power Structure, but Is It Legally Sound?, DLA PIPER (Sept. 27, 2018),  However, these agreements do not allow players to distribute content created through the game.  See id.  Some publishers have created exceptions that allow players to live stream gameplay “as that content is available without charge, and as long as the use of the game is non-commercial.”  Id.  Because members of the esports community may not easily discern which game publishers allow users to distribute their content from game publishers who prohibit sharing, it is likely this lack of uniformity in game developers’ policies will encourage members of the esports community to make mistakes, possibly leading to litigation for copyright infringement.  See id.

Furthermore, how much control do videogame publishers have over the distribution of content created through their games?  See id.  The esports industry acts as though they do not require publisher permission to publicly display content from the games.  See id.  However, if this presumption was challenged and reversed, it would alter the entire industry.  See id.  For example, esports tournament producers would not need to gain consent from a video game publisher or pay a licensing fee to stream the game, and individual streamers would be free to use game content in any form.  See id.

III.  The Lack of a Central Governing Body Threatens the Future of Esports

Esports is a unique industry because it involves many types of games, takes place in a virtual world, and involves players from all across the globe.  See Jacqueline Martinelli, The Challenges of Implementing a Governing Body for Regulating Esports, 26 U. Miami Int’l & Comp. L. Rev. 499, 502–05 (2019).  Regulating this industry has been a struggle because it lacks a single, central governing body.  See id.  Currently, there are several regulating bodies of esports—the Esports Integrity Coalition, the World Esports Association, and International Esports Federation.  See id. at 506–08.  Despite these regulatory bodies’ attempts to create regulations that end issues such as match-fixing, cheating, doping, etc., these issues are still prevalent in esports.  See id.  Unlike a professional sports league, such as the NFL or NBA, that has unified oversight to the rules of the game, player policies, licensing agreements, and league structure, esports lacks unified oversight, which places the future of esports in jeopardy.  See id. at 509.  Esports will not be legitimized in the eyes of viewers if cheating and corruption are allowed to run rampant in the sport.

Many esports enthusiasts believe an organization similar to the Fédération Internationale de Football Association (FIFA) should be created to regulate esports.  See id. at 515.  FIFA is the governing body of the World Cup that oversees the teams and games all over the world.  See id.  Creating a FIFA-like organization would “define an overreaching parent organization that can delegate regulation to smaller more ‘game specific’ bodies.”  Id.  Creating oversight will be difficult, but if esports ever wants to be considered a legitimate sport, it will need a standardized set of rules and regulations.

*Taylor Kitzmiller is a second-year student at the University of Baltimore School of Law, where he serves as a staff editor for the Law Review.  Taylor is a Distinguished Scholar of the Royal Graham Shannonhouse III Honor Society.  This summer, Taylor will be working for Staples Law Group in Annapolis, Maryland.











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