HomeInsightsDo opportunities for growth start with an IP re-structure?

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With global audience figures during 2017 estimated to rise to 335m and as many 21-35 year olds now watching eSports as baseball in the United States, eSports can no longer be considered a niche market. The recent reported decline in traditional sports viewing amongst millennials also indicates that this age group is ripe for alternative engagement and entertainment in the sports and leisure sector.

As the value of prize money, sponsorship opportunities and streaming revenues all grow at pace, the natural question to ask is whether eSports will start to enjoy broadcasting revenues anywhere near the scale of some of its traditional counterparts? In the UK, Sky broadcast eSports for the first time in March 2016 and launched 24/7 eSports channel Ginx TV in June 2016 as part of a joint venture with ITV, but what does this mean for eSports teams and leagues? In the English Premier League, television deals are entered into by an entity collectively selling on behalf of the participating football clubs and revenue shared between them, meaning the top flight clubs in the 2015/2016 season were awarded an average of £96m. No such central licensing arrangements exist in eSports and there is plenty of content out there. Theoretically, given the number of platforms (and therefore potential licensees), there should be more competition for the acquisition of such rights, whether in the form of an exclusive output deal or on a league-byleague basis.

In eSports, leagues and tournaments are often owned and operated by developers, or at the very least publishers retain the broadcast rights, which means there is no central control over the tournaments themselves or the game-related IP. In this environment, a central licensing scheme for television rights seems complicated and unmanageable if every developer, as opposed to the participating teams, is required to license rights into a central organising body, with little incentive for the teams or individuals to participate. Whilst some eSports teams and gamers may have access to streamingderived revenues, especially outside of formal competitions from platforms such as Amazonowned Twitch, it would be unusual for them to have an interest in a high value rights deal.

As with all sports, intellectual property is a crucial component. Where traditional sports clubs tend to enjoy copyright and trade mark protection for their logos or crests, which can then form the basis of commercial partnerships or licenses for the creation of official merchandise or sponsorship, eSports athletes and teams do not actually own the avatars that represent them in-game – the IP remains with the ‘author’ of the artistic work, which is the developer. The traditional sports world has shown that there are opportunities for individuals to exploit and protect their IP, with players such as Federer and Ronaldo successfully protecting their identifying marks or characters. Whether this and lucrative broadcast rights or exclusive output deals can be replicated in the eSports arena remains to be seen.