Esports broadcasting – a difficult balance to strike

05 May 2017

Will Deller, George Khouri

Esports has a large, global and rapidly growing viewership. In December 2016, 43 million unique viewers tuned in to watch the League of Legends world finals. By comparison, back in June, the final game of the NBA season was watched by 31 million. As excitement continues to build around the esports phenomenon, these viewing figures are likely to increase significantly.

However, growing as it has out of a culture of fan-created, ‘community’ content, there are important differences between the way that fans view traditional sports and esports, from both a commercial and legal perspective. This article provides a brief overview of some of the key differences, and how they highlight two potentially competing commercial imperatives at the heart of esports.

Broadcasting rights in traditional sports

There is no 'broadcasting right' in a traditional sporting event per se. As such, if an event organiser is staging a football match, there is no underlying copyright or other IP right in the event itself that they can rely on in order to prevent others from recording and transmitting footage of it. Instead, event organisers have to create protectable rights by virtue of contractual restrictions. Typically, this is done by restricting access to the event to those that have tickets, and making it clear in the ticket terms and conditions that spectators may not record their own footage and/or exploit that footage commercially. In this scenario, the event organiser can then license the right to create footage of the event to broadcasters, and that recorded footage can potentially be protected by copyright.

This type of broadcast licensing regime has helped to create a lucrative global market for traditional sports leagues and events such as the FIFA World Cup or the Olympic Games. Recent advances in communication technology, such as the ability to stream video onto smartphones, have served to increase the scale and variety of rights that rights holders can license.

Broadcasting rights are typically broken down territorially and licensed in tightly-controlled ways to maximise their value. For example, the rights to broadcast a sporting event 'live' and/or 'on-demand' could be licensed to just a single television broadcaster on an exclusive basis in a certain territory; rights to 30-second highlight clips intended for use on mobile devices could be licensed co-exclusively to two mobile operators in Europe; global rights to stream a highlights programme on social media might be granted to a single channel such as Facebook only; rights to show archive footage of previous events might be licensed non-exclusively to various licensees; and so on.

As an example of the values that can be achieved under this model, in 2015 the Premier League licensed live UK television broadcast rights to Sky and BT Sport for the 2016/2017 to 2019/20 seasons, for a total fee of £5.1 billion (or an average of £10.2m per match).

Broadcasting rights in esports

In stark contrast to traditional sports, within esports IP rights subsist in the game itself. So, for example, while the rules of football are not protected by copyright or any other form of IP, meaning anyone can play without obtaining any form of prior permission, in esports the publisher of a game, such as Sony or EA, owns the underlying IP in that game/esport. This means that, generally speaking, anyone wanting to play esports will have to obtain a licence to do so.

This licence (the software licence) sets out the terms on which a licensee (whether a member of the public, esports team or league organiser) can play the game, permit others to play and watch others play through the game's interface. In some cases the licence also allows users to stream their gameplay online to sites like Twitch. In fact, Riot Games, the developer and publisher of blockbuster game League of Legends, actively encourages users to share gameplay with other users in its terms and conditions, even if this gameplay is used by users to generate ad revenue.

By taking such a permissive approach to streaming user gameplay (and even low-level, fan-organised tournaments), publishers look to create a bigger buzz around their games so that they can engage with their fans, with a view to then selling more games, merchandise, etc. However, permitting all players (particularly professional players with a large fan following) to stream gameplay and monetise it in this way has the potential to reduce the value of the broadcasting rights to a competition that a publisher might wish to license to a streaming platform/linear broadcaster itself. As a general rule, exclusivity as per the traditional sports model creates higher rights fees.

There are legal implications of this streaming system as well. Players may, for example, look to assert IP rights in the commentary that they record and play over their gameplay, and potentially in the actual footage itself (though the latter would be somewhat speculative (at least under English law)). Meanwhile, players have been known to sign exclusive streaming deals with third party platforms. For example, while a Dota 2 player might compete for a professional team in a high profile international tournament that is streamed exclusively through Twitch, that player might also have sold the exclusive rights to stream their non-competition play (training) to YouTube. This sort of arrangement has already led to high profile disputes.

The future of esports broadcasting

Ultimately, there are currently two key – and potentially competing – commercial imperatives at play in esports broadcasting. On the one hand, by virtue of owning the underlying IP rights in their games, publishers have the power to impose tight controls on the broadcasting of their games without having to put in place the contractual arrangements that an event organiser of a traditional sport typically does. This makes it easier for a publisher to grant rights on an exclusive basis to licensees and broadcasters and to charge significant rights fees as a result. The move of major broadcasters into the eSports arena could well incentivise publishers and league/event organisers to more tightly control and more actively enforce their rights.

On the other hand, esports has grown out of a culture of players and fans creating and sharing content with one another, and the exposure that such sharing provides helps publishers to gain exposure for their games. Moving too far towards a traditional sports model runs the risk of alienating the large core of fans that have been the bedrock on which esports has grown.

As esports enters the next phase of its evolution it will be interesting to see where publishers, league/event organisers, teams and players decide to strike the balance, and they will need to think carefully about the legal and commercial structures that they put in place to share their content with the tens of millions tuning in.