Esports: Evolving Business, Evolving Legal Questions

by Adam Bruder-Wexler

In less than a decade, Esports have gone from a little more than a hobby to a multi-billion-dollar industry. Competitive video-gaming sees players compete on popular consoles such as the XBOX, PlayStation and via computer. Games such as Fortnite, League of Legends, CS-GO and Call of Duty attract millions of players from around the world. With its growing fan base and rising popularity, Esports has become a staple source of entertainment in South Korea and China and has seen huge growths in the U.S and across Europe. As competitive gaming continues to become more mainstream the rest of the world will attempt to resolve the business and legal challenges that come with it.

Competitive Gamers and Gaming Personalities

Millennials and Gen Z have changed the way we interact with our athletes. The fact that fans, want to see their favorite athletes have a personality, an image and consumer culture has dictated that those with the strongest images also receive the biggest advertisement deals and sponsorships. Esports has allowed for their athletes to better the connection and experience they have with their fans through interactions over gaming headsets and the ability to play with players from across the globe on online platforms. With online streamers the world of video games has seen the formation of two types of gamers, namely competitive gamers and gaming personalities. Competitive gamers are players admired for their pure skill in the game and reveal their skills in competitions and tournaments of their preferred games. Players that take up the status of a gaming personality use the video games they play to produce popular content which attracts millions of fans who tune in to watch their gameplay and listen to their commentary.  As such, the Esports industry now considers both skill and fan appeal when negotiating player contracts and advertising deals.

This has also led to complications with regards to professionalism as the line between athlete and entertainer is often blurred. This difficulty complicates Esports efforts to institutionalize itself and develop its own league like the NBA or the NFL as the difference between talented and popular is often blurred by Esports fans. Despite these setbacks Esports is on the rise and many corporate leaders are taking notice. Although, the video game industry has been growing since the late 90’s, revenue from competitive gaming tournaments has exploded in recent years with the League of Legends bringing in over 1.5 billion dollars USD and Fortnite reaching a record 1.8 billion USD. With a fan of base of over 200 million, advertisers realize the serious potential that comes with Esports gaming. However, breaking into the industry does bring about some legal challenges.

Legal Challenges

Establishing any organized league is challenging enough, however the technological element of Esports poses even more complications. Unlike traditional sports, video games have owners and their interests may not always align with the Esports league commissioners. This leads to some tensions as there will be legal questions as to who has control over how the tournaments are played. Will game developers have the final say over the rules of the competitions or will it be league commissioners? 

Additionally, streaming platforms and social media have blurred the lines between competitive gamers and gaming personalities. Influencing personalities have shaped the market for gaming with millions of fans following video games due to the engaging nature of the player rather than their gaming skills. This has already led to some tensions in the world of Esports as athletes are signed to competitive gaming teams not for their athleticism but because of the fans that they bring with them. In turn, the Esports gaming contracts will become much more complex as they try to account for the new factors at play including fan base, advertising deals, developer interests and league rules.

Finally, given that Esports has a primarily younger demographic legal and ethical questions will be raised about targeted child advertising. While there are laws in place that limit advertising to children, institutionalized gaming will provide ways to market to younger demographics through player commentary, gaming additions and other unique methods of targeting younger audiences.

As gaming only continues to grow and become more popular we can expect that new legal and business challenges and developments will transform Esports into a unique and profitable industry that will rival the film, tv and sports industry.