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Can disruption shape the future of sports?

Posted on 8 July 2020

Sports' return is big news for fans and sponsors alike.

When sport went dark, a Herculean effort was required to get the ball rolling again. The alternative was unimaginable. Properties like the Premier League and the Olympics faced considerable costs if they couldn't deliver for fans, sponsors and broadcasters. Following in the footsteps of the Bundesliga's 'Geisterspiele' ('ghost games' played in empty stadiums), the Premier League made a return on 17 June with a host of health and safety measures in place and punditry (in some instances) via Zoom. Matches will be played behind closed doors, all broadcast live through Sky, BT, Amazon and the BBC in lieu of live attendance. With the change in the rules of engagement, the sports industry is exploring further how virtual reality (VR) and augmented reality (AR) can transform fan engagement and advertising.

VR and AR in sports advertising

The use of VR and AR in sport is nothing new. In 2015, the Rugby World Cup used a number of VR experiences such as O2's Wear the Rose ad, which had an Oculus Rift version of the ad developed into VR so fans could experience clips of the live game in the most immersive way possible. Ahead of the Rugby World Cup 2019, MasterCard unveiled a first of its kind VR tackle with the help of Chris Robshaw, Jason Robinson and Maggie Alphonsi. This year, BT and Scottish Ruby launched a VR experience that put fans at the heart of a Scotland training session.

As well as VR, the Rugby World Cup has used AR in its ticketing services. All of the tickets sold for the 2015 Rugby World Cup featured AR content designed to bring the experience alive for fans. Using the Blippar image recognition app, fans could scan their tickets to reveal exclusive behind-the-scenes material hosted and delivered by Rugby World Cup 2003 winners Jonny Wilkinson, Lawrence Dallaglio and Will Greenwood. Last year, Spark Sport, a streaming service based in New Zealand, implemented AR into its platform for Rugby World Cup broadcasts to give viewers access to in-depth analysis before, during and after the games. Spark Sport aims to bring the studio to the living room and making consumers sports pundits in their own home.

Despite this, VR and AR has not yet gone mainstream; due to a combination of technological limitations and social habit, it has always remained niche. It is possible however that lockdown may involve the behaviour change that will prompt people to put on their VR headsets to get an interactive and immersive experience in the safety of their own home.

How will VR and AR evolve in the future?

According to the Worldwide Quarterly Augmented and Virtual Reality Headset Tracker, the market for AR and VR products is predicted to end the year with growth of 23 percent globally.

Even before the current global pandemic, the future of sports was already changing with the rise in e-sports and a drive towards producing more immersive and engaging content.

Beyond Sports, a Netherlands-based virtual reality company, is building an app that would allow fans to design their own viewing experience, down to allowing them to insert a virtual avatar of themselves into the virtual world. As a fan, you could be in your favourite team's home stadium; hear the roar of the crowds as a near scoring opportunity unfolds; and the shouting of the program vendor to get your program. All you need as a consumer, they say, is a phone and a pair of headphones.

Extreme E, the forthcoming all-electric SUV off-road racing series, has also announced that it will offer 'virtual hospitality' around its races when it launches in 2021. Fans would never be able to attend many of the races, even without lockdown. As part of this, Extreme E has confirmed that it will send VR goggles to guests who will be able to watch footage filmed with 3D cameras as well as being given access to driver interviews, track walks, drone laps and hot laps. VIP guests will also have the opportunity to put questions to drivers and celebrities at the races.

The potential to increase reach for brands will result in the technology being exploited to achieve better levels of consumer engagement. There is a sizeable amount of brand revenue available and stakeholders need to determine business models which properly apportion revenue based on the contributions of each party.

Legal issues

As with any disruptive technology, AR/VR has the potential to create a host of new legal issues and challenges. Future disputes will likely include arguments about the ownership of AR/VR rights under pre-existing contracts entered into long before AR/VR became realistic platforms for broadcasting sports content that don’t address these “new media” rights. These arguments have pervaded the entertainment industry for decades as new technologies developed – films to videocassettes, then discs and now streaming, broadcast television to cable and satellite and various forms of video on demand.

Issues to consider

  • Rights Grant - It may be the case that existing distribution contracts do not contemplate AR/VR distribution. Content licensees who wish to exploit licensed content via AR or VR will need to check the hygiene of their existing distribution contracts to determine whether amendments are necessary. It may be that any rights grant for usages is for “any media now known or hereafter invented.” Similarly, licensors will want to determine whether they have inadvertently granted wider rights, in which case they may well lose out on a potentially lucrative new revenue stream.
  • Devices and Platforms - With the technology being in a constant stream of development, rights holders need to think carefully about the scope of the device limitation in order to maximise potential revenue and perhaps limit a grant of rights to particular manufacturer devices, if appropriate. Licensees however will want to ensure that they have the right to distribute AR/VR content on as many devices as possible.
  • Insurance Coverage - Depending on the features provided by the AR/VR technology to users, companies will need to ensure that consumers have all the safety information they need to safely experience AR/VR gaming and don’t risk getting injured or causing damage to any property. It is advisable to review commercial general liability insurance policies to make certain that potential product liability claims are covered. While many general liability policies provide coverage for personal injury and product liability claims, the scope of that coverage can vary widely, and the laws applying to coverage will likely vary from state to state. For example, a policy may not cover injuries caused by “intentional acts,” and the line between “accident” and “intent” can be difficult to ascertain in a gaming world where physical movement has supplanted simply pressing the “A” button on a controller. As such, AR/VR companies should review their policies with their brokers and insurance counsel to determine if there are any gaps in coverage.
  • Privacy Concerns - The ability to draw from publically (and potentially privately) available information banks in real-time adds a new dimension to privacy and data protection concerns. Companies will need to consider inherent vulnerabilities in a quickly evolving technology ecosystem and implementing privacy by design.

Final thoughts

While there is no doubt that VR and AR will continue to enhance commerce in the coming years, and companies on both sides of any contract for the use of these services would do well to consider addressing issues around confidentiality obligations ownership in any new IP created, and undertaking due diligence in order to avoid infringement of third-party rights. On top of this, as history has shown, it is sensible for interested parties to look at the future exploitation of rights, exclusivity and territorial scope, as well as reviewing insurance policies and undertaking appropriate steps to secure users' privacy and any inherent security vulnerabilities in the system.

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