Tom Murray
Mishcon de Reya
Hi everyone and welcome to the 2024/25 series of the Mishcon Sports Law Academy. My name is Tom Murray; I’m a Managing Associate here at Mishcon in the Sports Group. I’m also the Founder and CEO of NIVO, which was the, the first ever esports agency to be founded by a law firm. For those who are new to Mishcons, the Sports Law Academy is a programme that we set up back in 2015. I was actually still doing my vacation scheme when someone came up with the idea to launch the Sports Law Academy and I’m pleased to say that we’re now in our ninth year and since its inception we’ve welcomed over 2000 participants from 50 countries around the world. Now the goal of the Sports Law Academy is to facilitate debate, to examine the key issues in the world of sport and esports and sports law and to share knowledge in order to improve industry standards to promote diversity and to nurture young talent, and with the amazing roster of speakers that we have this year, I hope that we will achieve that. Now it’s a real pleasure to help curate this course and I hope that you enjoy it just as much as we enjoy putting it together. And without further ado, I now pass you on to my colleague Harry Clark who will be the host of today’s session. Thank you very much for joining.
Harry Clark
Mishcon de Reya
Thank you, Tom, I appreciate the intro and thanks everyone again for attending. As Tom said, my name’s Harry, I’m an Associate in the Interactive Entertainment team here at Mishcon. I’m going to be hosting today’s session, focussing on esports. Just as a quick bit of technical housekeeping, if you’re an attendee, your camera mic will be disabled by default so if you’ve got any questions that you want to ask our panellists, please just use the Q&A function on Zoom any questions that you want to post them and we’ll leave time for them at the end where we can. And I think as Tom alluded to in his intro there, just as a bit of sort of context for today’s session, we usually get quite a wide range of attendees for sessions like these, there will be many of you in attendance who have been established in the industry for a long time now and there’ll be others who are non-endemics but are still interested in this space and during today’s session we’re going to predominantly be focussing on the sort of potential and future opportunities for the esport sector, including a few legal and regulatory developments that have popped up in the last few years that we think are worthy of bringing to your attention. To do that, I am delighted to be joined by three expert panellists for all of their insights from across a range of backgrounds from the sector and without further ado, I’ll hand over to each of the speakers to introduce themselves and all of the organisations they are affiliated with. So, Ellaine over to you first.
Ellaine Alexis Gelman
Head of Legal, Blast
Hi everyone, my name’s Ellaine Gelman; I am Head of Legal at Blast. So, Blast is a tournament organiser and a commercial rights holder so we work with publishers like Valve, Ubisoft, Epic and Riot and we host a number of different games, including Counter-Strike, Fortnite and Rainbow Six you know tournaments around the world amongst others.
Harry Clark
Mishcon de Reya
Excellent. Nicola, over to you.
Nicola Packer
General Counsel, Fnatic
Thanks Harry. I’m Nicola Packer; I’m General Counsel at Fnatic, THE esports global performance brand. I had quite an unusual route probably to esports compared to some people in the fact that my career to date or before joining Fanatic, had been a mixture of tech, live entertainment, media and traditional sports. The legal team at Fnatic, we’ve currently got three of us and we cover all aspects of the business from the pro players in the five core titles that we run, the gaming peripherals that we manufacture and distribute and also our fan engagement of, we’ve got over about 35 million social media fans at the moment.
Harry Clark
Mishcon de Reya
Mishcon de Reya
Amazing. Thanks Nicola, and finally Sam.
Sam Cooke
MD & Co-Founder, Esports Insider
Cheers Harry. Sam Cooke, I’m the MD and co-founder of Esports Insider, so we are the, the go-to B2B platform so we cover the industry day in, day out so the business of competitive gaming and esports worldwide across channels and we run B2B events as well. We actually started off our B2B events, Nicola, back in Fnatic in 2017 and have since, yeah, now run them in Lisbon, in Singapore and here there and everywhere. That’s me.
Harry Clark
Mishcon de Reya
Amazing, thank you all for joining us, I’m really excited to do as little talking as possible and just let you guys, let you guys roll it and share your expertise and your insights. I think in part due to the sort of potentially diverse range of attendants that we were going to have today, I kind of wanted to open with a very brief discussion on each of your reflections on the last five or so years of the sector to date and some of the sort of key historical trends you’ve each identified in your respective roles and things that you’ve been overseeing. Obviously, looking back five years takes us back to just before the pandemic, if you can believe it, and during which time you know engagement with the esports sector and parallel to the sort of broader video games market was starting to build on increased levels of investment and interest that was you know taking up pace in the late 2010s and then of course was greatly benefitting from you know stay at home orders and similar restrictions on traditional in-person activities and then the fallout of that boom in 2023 was coined the ‘esports winter’ and led to a sort of relative drying up of investment and challenging macroeconomic conditions and even now in 2024 the sort of broader games market, games industry and games market is still remaining somewhat volatile. So, I’ll open it up to the floor, what do you sort of see as the key trends and the lessons that you think have been learned over the last five or so years for the esports sector?
Sam Cooke
MD & Co-Founder, Esports Insider
Oh I’ll jump in. Yeah, it’s a big question. I think the esports space is in a, in an ongoing period of force corruption I would say, I think when things did blow up in a big way, I think team valuations soared, for better or for worse, as did the valuations for a number of other properties in and around, in and around the sector which was based on some maybe optimistic projections of where esports would get to in a relatively short period of time. Obviously, Covid was a, a weird, a weird time for everybody, it was a weird time for the sector in that there was more awareness and more eyeballs on it than ever before but I’ve been asked the question plenty in terms of like was it a, a good or a bad thing for the sector as a whole and I’m not sure necessarily that it, that it was like that additional exposure in one way was a very good thing, right, like now I think the biggest change now is that when we speak to brands, non-endemic brands, a term we love in this space, and when we speak to brands about esports it’s far rarer than it was pre-Covid for people to say “What is esports again?” and also to now have a bit of a better idea of what League of Legends is versus CS, we still need a bit more work to get to that point to be the, not the exception to the rule but yeah, I do think post-Covid and how viewership, viewership is now I think on the increase again and this is speaking very generically across titles across esports, across competitions, but it did really blow up during that time and then you know brands that got involved etc, etc are like oh, amazing, this is going to continue to grow and continue to grow and then obviously when people were allowed outside again that did change a little bit. I’m still incredibly bullish on this sector and I think there is, you mentioned the esports winter term Harry, I think there is often, we’re often a bit unreasonably negative about our own sector or I think a lot of people in and around the sector are unreasonably negative about it, I think there are a lot of reasons to be optimistic and to be positive about its future now we are on more of that course correction path.
Harry Clark
Mishcon de Reya
Absolutely, and Nicola you sort of hinted at the outset that right now in your current role you’re having to wear a lot of different hats in terms of the business getting involved in all sorts of different areas, has that sort of historically been the case or how has the sort of organisation perspective changed on that front in the last five years?
Nicola Packer
General Counsel, Fnatic
Yeah, absolutely because for a number of reasons, teams in particular and other esports orgs are having to find different ways to monetise and work within different models and that comes with its own challenges, you’re having to look at things from different perspective all the time. I mean I agree with, I agree with Sam in terms of the, I still think there’s a long way to go for esports, I mean interest in invest is still growing, it looks slightly different but I think there’s certainly a long way from full market penetration here and I think the challenge that we have in some areas and why we’re maybe starting to look at things in a different way is that the, that esports is still kind of niche a little bit within gaming itself so, whilst there’s this sort of everyone quotes the numbers for this huge gaming industry, esports within that is you know is a small part of that still. In terms of that viewership side is, one thing that I think’s interesting that has outlasted Covid is that communities that were built over Covid on platforms like Discord, Reddit, they’ve actually outlasted the pandemic and they’re continuing to provide what they did then which is quite often just a sense of belonging, camaraderie and we’re continuing to see the inclusive spaces, well, increasingly inclusive spaces, to with efforts to promote diversity and that’s outlasted the pandemic as well. What’s interesting is that beyond those online communities, we’re now seeing continued investment in in-person experiences as well, so some of those online platforms coming together in person and bringing them together in real life and league and tournament organisers are looking for that as well from teams and other areas so, that’s quite a sort of a necessary shift on from those communities during Covid.
Harry Clark
Mishcon de Reya
Thank you, I think that’s a nice segue into kind of thinking about the present day and obviously like 2024 showed a lot of promise for some of the sort of near term opportunities for the sector and Ellaine, I’ll come to you first on this and unsurprisingly, one of the most predominant kind of point of discussion has been the Esports World Cup in Saudi Arabia, I think it was 250 million hours of viewed content and 500 million kind of visitors across its eight week run, you know staggering numbers and record setting but what are your sort of takeaways in terms of the, you know, the implications for the sector as a result of this event going forwards and, and the long-term impact it might have?
Ellaine Alexis Gelman
Head of Legal, Blast
Yeah, of course, I mean I guess everyone’s hope is that it’s going to lead to, you know, further growth, I think there’s definitely a huge amount of benefits that could come from it so, obviously I think there’s three that come to mind so, you know accessibility, I think you know bringing a new audience, you know when you turn on the Olympics and you’re watching dressage, which you’ve never seen before, you know you could have someone explaining from the beginning how it all works, I think sometimes esports can be intimidating and quite complex if you’re introduced to, you just walk into a, let’s say a Counter-Strike tournament so, you know could introduce new fans and players. I think also the move to incorporating governing bodies may have a lot of positive changes so, for example for us, things like making visas easier to obtain, you know that’s a huge legal impediment for us when we’re going around the world, funding from governments, you know increased commercial interest, you know which might open up to more non-endemic partners and sponsors and obviously getting you know different countries involved you know presumably making it more attractive for different markets. I think all those are really great things but I think you know it will be interesting to see how it plays out, you know what sports are going to be included, is it going to be two esports, you know or is it going to be electronic versions like golf simulators and static bikes, you know, where is it going to fit into the calendar, how will the events be operated or are they going to be running this themselves or are they going to bring in experts like Blast to help them run it? And then I think the key thing is going to be you know it has to attract the very best talent otherwise you can end up in a situation like you did with the Australian breakdancer in the Olympics, where actually you know the, the guys that are the top guys don’t want to be involved and it’s a bit of a joke so, I think there’s you know a lot of considerations and a lot of ways it can play out but certainly I think it will create more opportunities and interesting for the industry.
Harry Clark
Mishcon de Reya
Yeah, absolutely, obviously a lot of parallels in the discussion between you know Olympic esports games as well, there was a major announcement from this year, quite a notable step up I think in a lot of the discussions and the framing of this rather than compared to some of the sort of previous attempts like the Olympic Virtual Series in 2021. Sam, I know you’ve had some really interesting discussions with those who have been like at the heart of kind of trying to shape what this is going to look like and some pretty high-level discussions on that front. What do you think the sort of Olympic angle might contribute here to the sector?
Sam Cooke
MD & Co-Founder, Esports Insider
Yeah, there are, it’s quite a polarising topic in the esports sector, the Olympics, Olympics and esports full stop, right, like I am most definitely in the camp that thinks it has enormous potential to be a very positive contributing factor towards like esports’ further growth and development long-term. I think there have been some missteps by the IOC in the past around game selection, like as I say they had, it was previously called you know the Virtual Series and then they had the, the esports showcase in Singapore and I was at the opening ceremony for that, it was amazing, the opening ceremony was truly amazing, like no, no expense spared. I don’t know what the viewership or in-person attendance and/or viewership was of those events but it was, a lot of the criticism was that it was games that aren’t really esports, right, it was like an obvious example was a mobile game called Tic Tac Bow, right that no one really played, let alone watched and that was a big part of the criticism. I, I personally don’t see Counter-Strike as an example being included in the Olympic Esports Series anytime soon, potentially in the future. I do think games such as Rocket League are a beautiful and perfect example of fantastic, strong esports that align with Olympics values and all the bits around, we don’t have to go down the rabbit hole of those values aligning with games and whatnot but I think it has a massive potential to be a real contributing factor to people just knowing what esports is more, understand that it’s a real thing, different ways of engagement with it, I’d love to see the Great Britain and the UK whatever play against France, Germany, what have you, right that’s cool if that’s done at a level where it’s meaningful, like the Asian games before, had I think it was Faker, like one of the legendary league players playing alongside a player in, from 15.44 so he’s Team 1 and he was playing alongside a player from 15.48, so one of their rival organisations. And that’s cool, right, I think that’s really great and I also don’t think the Olympics esports needs to be a copy/paste of the Esports World Cup or others in terms of every single one or each of the big five lets say esports titles. I do think we can have, maybe involve everyone that were chosen previously but I do think it’s not necessarily a bad thing that we have more niche let’s say esports in the Olympics series, seems silly to call chess niche but chess.com being one example there, right. I think that’s, I think that’s cool, like when I watch the Olympics I’ll watch sports that I most certainly, I don’t follow archery at any other time of the year but there would be esports events that I would watch but I wouldn’t necessarily follow year out so I think it has the potential to be such a good thing and I do hope the, the esports sector gets behind it a little bit more. They’ve got people like Alban, the G2 CEO is involved in the IOC committee now, so that’s going to make a world of difference as well.
Harry Clark
Mishcon de Reya
Yeah, I definitely feel… oh sorry, go for it, Nicola.
Nicola Packer
General Counsel, Fnatic
Sorry, sorry Harry, I was just thinking along, along those lines in terms of esports really is quite a fragmented industry and there are all these amazing tournaments, leagues, clubs, teams that exist in esports and if we look at the World Cup or the Olympics with a guiding principle of bringing that all together in way that it never has before, you know with a fresh injection of energy and revenue then it is something to get excited about. I think the, an important point needs to be thinking about the sustainability of it, especially like thinking about the World Cup itself, yes, lots of numbers going around, around viewership and obviously the benefits that that can bring but given the high productions costs of the event, the prize pool, the organisational fees, there is a question of sustainability that comes with that and where else it can be hosted and what it could look like in other jurisdictions.
Harry Clark
Mishcon de Reya
Absolutely, I was only going to add that I agreed with Sam’s sentiment, the Rocket League was a major omission on my part, I would have loved to have seen the Olympians spamming what a save it against each other on the big screen but no, thank you. I think one of the other kind of interesting components of the sector, especially when you compare it to sort of traditional sports, is the fact that you know there’s always going to be opportunities for kind of new titles and games to break ground and you know alongside the new leagues and tournaments that are being announced with the sort of you know traditional kind of major games that are being publicised at the moment, there’s releases on the near horizon, Valve’s Deadlock is probably the most notable example that have got a real potential to kind of support the competitive landscape. I’d be interested to hear each of your thoughts on kind of how you go about identifying which of these upcoming releases that are potentially showing promise sort of actually meet the threshold of demonstrating to you there’s potential and it’s worthy of your own investment and support and time as a sort of you know realistic esports title.
Ellaine Alexis Gelman
Head of Legal, Blast
I think just from Blast’s perspective, I guess this is very much publisher led, you know I think you know we are quite good at working with publishers and setting up different models depending on what they want but it’s very much directed by them. I think a good game doesn’t necessarily make a good esport and obviously some publishers have certain requirements in regard to violence and other things like you know create kind of barriers to entry in that respect. I think obviously the key things are you know the size of the player-based viewership, commercial appetite for that game in an esport environment, but yeah we would certainly be very excited to see some new games, it’s been a few years I think since a big one broke out and I think also interesting to see how mobile devices will you know accommodate the gaming experience and whether that will change kind of what those new big games will be.
Sam Cooke
MD & Co-Founder, Esports Insider
Yeah, I think, I completely agree it needs to be publisher-led right, and obviously from Ellaine and the tournament organiser side and Fnatic, the team 20.15 organisation side, they’re going to have very different perspectives as to when and why and how they get involved in, esports titles, right. For us, we cover all of them as best we can and we, yeah, try to bring all of them into the B2B events we do and of course coverage-wise, as best we can. One that I think is I think fairly undoubtedly most exciting right now because it’s a Riot Games title and we know that they’re very serious when it comes to building esports ecosystems, is 2XKO, so the new fighting game which I actually don’t know when, I think, I think it’s coming out in full next year but I might be wrong on that, but anyway it’s, it's a new fighting game title and it’s from Riot Games and like the, the fighting games community, the FGC space, is one that I’ve always thought more could be done esports-wise and that more brands should get involved etc, etc, etc, there’s EVO which is the enormous fight games competition that happens every year, more than once now, but I’m hoping that this could be the THE fighting game that really makes, that becomes that breakthrough fighting game title as an esport, but we will have, we will see, but yeah, I think if anyone could do it, that will be Riot.
Nicola Packer
General Counsel, Fnatic
From a team perspective it’s so broad in terms of what we have to look at for the whole ecosystem for a title so, the potential longevity, the current viewership, publisher relations are extremely important, the marketing fanbase that already exists for the title in a team’s core jurisdiction, obviously revenue opportunities, I mean we’ve entered some titles that might have fewer immediate revenue opportunities but have the marketing potential for us because of where the fanbase is, where the fanbase is. And I think this is an area that potentially events like the Esports World Cup and the Olympics can really help because it would be interesting to see more Tier 2 and Tier 2 titles showcased at those sort of events, help them reach a wider audience, give the success potentially off the back of it and the EWC programme enabled teams, orgs, to branch out into different game titles and that does in turn help the overall esports community so the investment programme that they ran which was channelled through the teams actually then goes into the ecosystem itself as well so, people looking at new regions, new games, new players, new audiences and just brings a slightly different dynamic to lesser known titles.
Harry Clark
Mishcon de Reya
Absolutely, thank you. I actually read an interesting article that ESI put out shortly before this on I think it was the GeoGuessr World Cup which was due to take place or just taken place, I was like fancied my chance at that but no, obviously niche titles are rising but more opportunities 23.17 as well so sort of establish themselves.
Sam Cooke
MD & Co-Founder, Esports Insider
We love a bit of GeoGuessr. They had their, their event in like the in-person attendance in, it was in Stockholm again right, it went really well from what I heard so, yeah. In esports like that like the properly niche ones like Farming Simulator as well, love ‘em, need more of those for sure.
Nicola Packer
General Counsel, Fnatic
I was going to Sam as well, I mean I had a trainee who was very proud of his Tic Tac Bow record so, I mean let’s not, let’s not do that down, he’s got…
Harry Clark
Mishcon de Reya
You could have an Olympian on your hands.
Nicola Packer
General Counsel, Fnatic
Exactly.
Harry Clark
Mishcon de Reya
But thank you all for that, I think we’ve got a really good sort of snapshot on where the sector has been, where it could be going and as I sort of mentioned at the outset, I also said that I think there’s been a handful of quite interesting legal and more regulatory focussed elements that I sort of wanted to, to discuss. The first I kind of wanted to focus on was the sort of franchise league model more broadly so, obviously unlike traditional sports, esports are ultimately powered by the IP rights holders for each of these titles, the publishers and the developers and we’ve spoken a little bit about the, the relationship that needs to happen between each of the stakeholders in order to get the games distributed and commercialised. A particularly interesting legal case that caught my eye earlier this year were the two former Call of Duty pros that filed a suit against Activision Blizzard in LA. The complaint had a lot of different components but you know notably it was alleging that some of the terms of participation and these franchise league models were in some way anticompetitive, you know they used player salary caps, restrictions on sort of third party tournaments and the terms restricting you know commercialisation opportunities outside of you know the core CDL, you know, thinking about those kind of issues in the round, do we genuinely think that the franchise league model is sustainable and going to be the playbook of how things are going to be run for the foreseeable future and as a sort of follow on to that, you know, what’s the, what’s the role that you’re looking for from a publisher in order to kind of support that competitive landscape? Ellaine, I’d be interested to hear your thoughts particularly obviously on from the tournament organisation side.
Ellaine Alexis Gelman
Head of Legal, Blast
Yeah, sure. I mean, I do think there has been a change, I think there is, there are less examples of big franchise leagues that we work with but obviously that’s on a, you know, different game by game but you know, there’s also different types of franchises that you can have, you know a true franchise, a part franchise, one would you know and then obviously the fully open model. We obviously recently have experienced you know working with Valve and their decision to go from kind of a part franchise to an open model so, we’re working through adjusting our tournament’s structure with that. I think you know there is pros and cons to both, I think initially you know for example Blast Premier you know gave a guarantee to teams that they would receive a certain amount of cash which was useful for them to start with, you know I think it helps with forward planning and covering costs. Nicola could probably talk to more about that but you know it could help you know paying staff wages etc and I guess also if done properly, like you know you see in US sport, it could be hugely commercially successful but as you mentioned you know over time, you know there could be you know developments where those teams within that model are no longer the best teams in the ecosystem and so you know by not being fully open you could lose some of the best competitors and that’s where you know those issues, the anti-competitive issues, could creep in and also I guess from a fan perspective, you know it might be more interesting to have an open system where you know you have always have the best of the best competing so, I think you know something I’ve heard is you know maybe the franchise model came a bit too early for the industry, you know maybe in ten years’ time it will be a bit more appropriate to reintroduce it but I think from our perspective it’s just a kind of a philosophical choice for publishers, you know we can design tournaments in whichever which way they want and it’s just how, which way do they want to go with it.
Harry Clark
Mishcon de Reya
Sam, anything to add on that?
Sam Cooke
MD & Co-Founder, Esports Insider
Yeah, I mean I think the, I do, I think I agree with the premise that it, it came a bit too early but I imagine it’s been tried in the past as well. It depends, it depends on a number of things, right, it depends on which game, which esport, how it’s done, like speaking as, as a fan and you know like a, a British football fan first and foremost, like the idea of promotion and relegation is everything, right, like you don’t get the Leicester City’s stories if you just have a very safe league right, and a very safe pool of, of teams but then again I do understand it from a commercial point of view, I do think depending on how they’re structured that they risk shooting themselves in the foot a bit in terms of Tier 2, sorry mate, no one cares, being left out in the cold and then teams not, teams outside of the franchise system not bothering with that esport which in turn is self-defeating for the further development of continued growth of the esport, right, so there’s that to consider but I do see there being some form of happy medium between the open and closed systems working and ticking all those boxes. I think there’s a reason that a lot of people across the esport space are entirely sceptical of this league system and that’s the Overwatch league, right, which was a catastrophe and which had incredibly overblown team or was resulted in incredibly overblown team valuations and it was a mess and is now gone and that also burned the fingers of a lot of investors from sports, entertainment, who were like oh amazing, what’s this new esports league and I can buy into the, I can get the city spot for what have you, right. That has had a lasting negative effect on the esports industry at large but that again is just one example and that was a franchise league for a game but at the time was pretty brand new, let alone an esports ecosystem, so it matters massively which esport the model, how it’s done and like I think it can be a success, for sure.
Nicola Packer
General Counsel, Fnatic
I think your point about football and that difference is quite key because I think the, what makes it more interesting potentially in esports is because we’ve got this changing title popularity, unlike football, which maybe helps with that need for stability, I mean I think originally the franchise models did bring this consistency that was, still is, struggling with unpredictability and that protection for players in terms of salaries and welfare as well that Ellaine mentioned is really key. I think in some areas, and again totally depends on the title and the publisher or the league organiser, sometimes actually moving out of the franchise model creates, and this is slightly surprising where something that we’ve seen and actually helps a bit more with the we’re in this together and actually that increased collaboration to make the ecosystem work outside of the franchise model can be really helpful, sort of more of a sense of partnership than what minimum guarantees are you going to pay us.
Harry Clark
Mishcon de Reya
Thank you. I think having that conversation’s kind of talked around the obviously the commercial and funding issues that are kind of always tied to discussions on league structures, another one of those is advertising. I think an interesting development we had in the UK was the Advertising Standards Authority was sort of stating that featuring esports athletes and gaming content creators more generally and for example gambling ads is going to pose a risk that they may be in breach of the CAP Code and we know that, you know, alternative revenue streams and branding opportunities are going to be critically important towards like yours obviously Nicola. What do you think the sort of near-term kind of market looks like for advertising opportunities in this sector and do you think there’s any concerns with regards to the, you know, increasing complex regulatory restrictions and sort of global nature of advertising laws that can kind of apply in that field?
Nicola Packer
General Counsel, Fnatic
Just a small question there, Harry. Where to start with that? Just, I mean taking a step back, it’s interesting because esports teams have been so heavily reliant on sponsorship income and that sort of, that method of advertising as well for brands, it’s, and that’s been difficult over the last few years for everyone and sort of moves into other areas of the ecosystem sort of like digital content sales that might be more resilient to economic downturns is quite interesting and then that has a wider impact, you know, for asset value and investment opportunities as well. I think that the real opportunities that come for advertising for brands and non-endemics is looking at fan engagement so, you know the building of the content together, presenting interesting, you know, analysis, insight into games, I think we’ve found that even where gaming enthusiasts might not yet watch esports and going back to my original thought that you know esport still is quite a niche within gaming, they still want to watch gaming content, you know whether that be how to guides or something. I was reading that YouTube, gaming is the second largest content category after music, which is huge and Minecraft was one of the most searched terms on TikTok so I think the key thing is esports then reshaping the way its been engaging with fans to try and unlock some of that monetisation mechanic. We are not going to drive our business through media rights and advertising in its traditional form because that’s such a passive experience and we know that younger audiences engage with content in a different way and it’s an area that we’re still trying to address and so making sure that we’re adequately you know monetising the audience we have, a key part of that is translating the audience perhaps from fan based, sorry game based fandom to actual org based fandom and obviously, Ellaine will have a different view on that as well and what that, you know, what that looks like or whether that’s a good thing. Sorry, that was a bit rambling.
Harry Clark
Mishcon de Reya
Ellaine.
Ellaine Alexis Gelman
Head of Legal, Blast
Yeah, I mean I think, you know, the reality is that some publishers do allow gambling sponsors and advertising in some don’t, so you know for some games it makes the game sustainable having that injection of cash. I think the reality for us for example as a tournament organiser is you know these, we’re actually going through this regularly you know is you know legal issues that crop up in different jurisdictions and so I think the reality in the short term will be that tournament operators will end up choosing to go to jurisdictions where they are able to accommodate the sponsors that they have, whether that is you know betting or anything else so, I think that is a reality of what will happen but I think there’s, there’s you know for advertising, there’s also interesting things you know that, that are happening with the products and other things that I think we’re going to touch on later but yeah both endemic and sort of non-endemic sponsorships I think you know the industry I think we at Blast are certainly looking at every opportunity and that includes you know betting sponsors when that’s allowed by the publishers.
Harry Clark
Mishcon de Reya
Amazing. Cue up Sam.
Sam Cooke
MD & Co-Founder, Esports Insider
Yeah, I’m just chuck an extra bit in here. I think one, when it comes to advertising more, more generally, one challenge across the space is still the same it’s kind of ever been, is timelines, right and that a lot of the time, next year who’s going to be hosting the Counter-Strike Majors, when are they going to be? Where are they going to be? We’ll let you know. And that’s not easy when you’re speaking to brands and you want to get into their budgets for next year and you want to do a big activation, it’s a challenge across the space and again, as always the caveat that it varies with right game so, you know, control and operate their, at least their top tier competitions etc, etc and things like EWC, very much become intempo event, we know that isn’t going to move anywhere else, right, that’s in Riyadh forever, right and dates-wise and games-wise will change but we know that that’s going to be there and I know that COs such as Blast are moving more towards getting those tentpole events in the ground but it’s also often out of their control and in the hands of the publishers like with the example of the, the CS Majors, so it is somewhat nature of the beast that makes it, the nature of the beast currently anyway, that makes it somewhat difficult to work with brands regardless of the sector they’re in.
Harry Clark
Mishcon de Reya
Absolutely, and it’s definitely a tenant in, in most sort of influencer agreement you know discussions and negotiations for both parties, right, the influencer wants to know what they can post when, get their content pipeline set and make sure that they know what’s expected of them and equally the brand wants to make sure that there’s a, there’s a you know core commitment there and they’re getting what they want for, from the athlete or from the influencer in return so, timeline’s always been a big issue.
Really engaging so far, thank you all. At this point, we’re going to take a quick break from the sort of panel format and hand over to my colleague Adam from our Employment team who will build on this nicely and give a bit of a spotlight on some of the more prominent employment law issues that we’ve seen from the sector. So, Adam, over to you.
Adam McGlynn
Mishcon de Reya
Hi everybody and thanks Harry and thank you to all of the speaker as well, I’ve been so engaged in the content so far that to be honest I kind of forgot that I need to speak in a minute but yeah, no thank you, it’s been really interesting so far. I don’t have much time because I certainly want to shift back to all of the panellists and hear some more thoughts so I’m just going to give a couple of high level themes of what we’re seeing in the esports industry in terms of employment law and I think the first them, and really the reason why it’s worth touching on this topic in the first place, is the rise of employment in esports, you know, gone are the days where there were teams of convenience built you know for the sole purpose of competing at a random tournament, you know, at the back end of nowhere. Now, at the top level especially, you know, the majority, the vast majority of esports athletes are categorised as employees when we look at any of the you know relevant legal tests for that in terms of, for example, integration. These athletes are representing their teams on the global scale, you know they are wearing their branded shirts and working for a particular team, you know, you can recognise an athlete as a fanatic player for example. In terms of control, the teams are exercising far greater control over the players and what’s expected of them and in terms of financial security too, you know with the rise of salaries in the industry, players can benefit from financial security that indicates them as an employee rather than self-employed or another status. And remuneration has evolved you know rapidly, very dramatically, players are not just benefitting from salaries but you know a wide array of prize money, commission based on team success or sale of in-game items, sponsorships, and it’s not just team-based remuneration as well, you know a lot of these players are benefitting from their own personal trade, you know sponsorships in their personal capacity and streaming revenue, which is particularly prevalent as well. So, revenue streams can be quite creative, quite lucrative but they do require clear drafting, clear delineation of where the income is coming from, how it’s generated and then the consequential tax treatment of that as well. One of the most common issues that arises out of the esports industry is relating to this remuneration and, and the timeliness of it and whether or not it gets paid at all to be perfectly honest in some cases. This is really the second theme that I think is worth touching on and that’s the co-dependence of stakeholders in the esports industry. Each stakeholder promising to provide services or payments to another but then in turn, in order to do so, relying on another stakeholder higher up the ladder so there’s you know a heavy amount of reliance on timely performance in order to fulfil their own obligations and I’m sure that some of the speakers will be able to, you know, will have thoughts on that. But you know from time to time delays beget further delays and it’s often those further down the ladder that end up in the most jeopardy, usually the players themselves so, remuneration for players is one of the most common issues that arise, certainly from the player’s perspective anyway. So what can be done? And that I think is the, is the third thing to touch on and that’s reform, you know what kind of reform or steps could we see in the esports industry? And if we focus on tackling you know remuneration and timely payment of, timely payment between stakeholders, one thing that could arise is unionisation. Now at the moment we haven’t seen a strong stand on unionisation so far, we’ve seen a lot of calls for it but at the moment we’re, we don’t have too much in the way of you know structured unionisation and I think that one of the problems with unions getting off the ground and getting a really enforceable and clear foothold is the volatility of the industry as well as the kind of unique and powerful role of publishers in the industry as well. If we did have some, some unions in play then perhaps they’d be able to support with swifter payments or provide some awareness of and standardisation of contracts and rights and it’s important to remember at this point as well that while I’ve spoken quite a bit about, about pay, it’s not just about pay when we talk about employment rights, there are a litany of other rights that each of these players and employees in the industry benefit from, from you know holiday and sick leave to health and safety obligations and protection from termination which you know can be quite onerous on the teams and, and all of the businesses involved in the space. Particularly when we’re working with younger professionals as well, the sports industry quite unique in its prevalence of young people between the ages of 13 and 18 working in the industry and when they are you know performing services at that age, often benefit from stricter employment rights and stricter health and safety obligations. So, if we did have some unions though, they would need to look a little bit different to unions that we see elsewhere like I say because of that publisher, publisher position but I don’t, I do think that unions could be a reform we see in the not too distant future though. While we have seen them struggle to get off the ground kind of on, on the whole so far, we’ve also seen a shift in publisher ambition and publisher direction, you know in the past a lot of publishers saw esports as you know more of a marketing strategy, whereas now we see leading publishers you know in particular you know those like Riot Games striving towards you know facilitating a more sustainable esports ecosystem, you know some of the things that we’ve seen Riot Games implement, for example were the salary caps that, that Harry mentioned earlier and but with that of course comes anti-competition legislation and you know concerns about competition rights. So, with that in mind, unions could actually be a solution to, to some of the things that you know publishers like Riot Games are trying to, are trying to implement. If unions were to be involved in the conversation for example, we could have things like salary caps being negotiated on a far more two-way, in a far more two-way conversation rather than you know more being unilaterally imposed by you know a powerful publisher and there, you know we could have a conversation, an open dialogue, a more open dialogue with greater representation between players, teams and publishers in order to you know facilitate salary caps and other reforms that might progress that sustainability in the industry. But I’ve spoken quite a bit about you know players, teams, publishers, you know the kind of core of the esports industry but what about non-endemics as well and you know the businesses that service the esports industry? Well, they also have employees and with every industry, you know, esports is going to bring some concerns for everyone getting involved as well and one of the particular themes that I think non-endemics and those servicing the esports industry should bear in mind is its volatility. Sam said for example about timelines, things happen very quickly in the esports, in the esports sphere, often without much plan or pipeline. I’m sure there is, there’s a plan on the inside but it’s not often communicated to the rest of the world until a little bit further down the line, you know, players, non-endemic brands trying to activate in the space, you know, everybody could benefit from a little bit more notice that this might happen but then in speaking of notice, it’s not just the start of things where we often see little notice, it’s also the end of things where we can see little notice. Players retire, teams pull rosters, games lose popularity, you know an esports relationship can end with very little notice and so redundancies in that case are something to bear in mind, you know businesses entering the space and servicing the space should come in with optimism, the marketing opportunities are incredible but also have a strategy in place for what happens if the market changes, what happens if a player, a team or a game suddenly changes and we need to change our direction, you know, so if you’ve got a team for example dedicated to you know a, a dedicated marketing team dedicated to marketing within the space, then you know that team could see some very rapid changes without very much notice. And it’s also, in the same vein worth looking into automatic transfer provisions for example if work is moved around rather than being kind of cancelled completely then automatic transfer provisions like the UK’s TUPE and others that are very prevalent in the EU could, could also apply to your teams. So, worth getting strategies in place, worth protecting the business and in terms of other business protections that are worth thinking about in employment cases, IP, Harry spoke about the importance of IP, it’s incredibly important in the esports industry in particular and so it’s worth navigating employment and transfer of IP to employers but also reinforcing that transfer of IP and understanding when IP is being transferred because it’s been created in the course of employment but also versus personal capacity, like I said there’s a lot of esports athletes who also have their own interests, perhaps they are streaming as well you know separately from their employment and so understanding what constitutes the course of employment and what happens with the IP both within employment and outside of employment, understanding where that goes and where that sits is particularly important. Finally as well, another business protection is restrictive covenants so, understanding that you can use restrictive covenants to kind of protect the stability of your team, is fantastic, you know is really important to do but there are limitations on that, you know we spoke about you know anti-competition laws and they can apply to restrictive covenants as well so they’re not a silver bullet, they’re not a protect-all and, or a panacea, sometimes they can go too far particularly if you’re trying to substantially limit somebody’s livelihood or if their, their specialised skills aren’t as transferrable so for players for example, it might be quite difficult to restrict their transfer to, to other teams but if you’re thinking about restrictive covenants or anything that I’ve spoken about today, I’d definitely recommend getting in touch, getting some legal advice and we’d be more than happy to help.
Harry Clark
Mishcon de Reya
Perfect. Thank you so much, Adam. Great snapshot, whistlestop tour of a whole different host of issues there. We’re almost out of time and but before I kind of give an opportunity to turn to audience questions and if you’ve got any, please, please do drop them in the Q&A, I just sort of wanted to end with an open-ended question to each of our panellists on, on you know where you think you see the sector is going in say the next five years from now and closer to 2030. We’ve discussed a handful of issues and talked about you know increasingly Saudi’s involvement and their own sort of 2030 vision and how much that’s tied to the creative industries but for the sector as a whole, globally, what, what, where do you sort of see things going within the next five years?
Sam Cooke
MD & Co-Founder, Esports Insider
I might jump in. I mean it’s a, it’s another big question Harry, you’re testing us today, mate. I mean it’s a, there’s a thousand answers to this question, right, I think one that is, one that has been talked about a reasonable amount at least in the past and that I think has never really quite gained the traction is VR esports. I finally when I was out at EWC in Riyad actually, despite been a French company, I finally tried EVA or E.V.A. which is Esports Virtual Arenas. I think there’s, although don’t quote me, but I think there’s maybe like 30 worldwide now and I think a good amount of those, those virtual arenas are in France and it’s a franchise business but that’s one of the first times I’ve tried and they’re very focussed, it’s a, it’s a VR shooting game and they’re very focussed on the competitive mode and I’ve always been maybe a little bit of a, a naysayer largely about VR not being quite there yet, at least esports-wise but EVA is really good, we had a great time and it’s definitely one of those that I would go back to as well and they’re very focussed on developing a competitive circuit. It was, it wasn’t one of the feature games but it was a part of EWC’s, World Cup sorry, experience. I think that has a lot of potential and if we’re talking five years from now, I would hope that by then we have a you know a serious, competitive VR site sort of for sure.
Harry Clark
Mishcon de Reya
Nicola.
Nicola Packer
General Counsel, Fnatic
Hello. I love, I love how the sort of different angles that we come at this from because an area that I’ve been particularly focussed on and looking at is the esports industry continuing to explore regulation which is obviously what we were just talking about because this, esports not having its own specific regulations certainly in the UK, despite much wider regulation being applicable to the sector and I think if this continues to be quite fragmented in terms of rules being imposed by games publishers, tournament organisers separately, it comes with its own challenges because we look at the unmatched position at games publishers in the ecosystem and the element of or I guess the total control they have over certain developments, decision-making and that can have major consequences on an esports scene and I think we’ll see that maybe start to naturally change with things like the Olympics because national governing bodies are going to have to have more input and get to grips a little bit more with what things look like you know even if it’s in the small capacity that will influence in terms of those events.
Harry Clark
Mishcon de Reya
Absolutely. We’ve got an audience question which I want to turn to on that front very shortly but just before I do, Ellaine, any, any final thoughts on your, on the way you see the sector in five years’ time?
Ellaine Alexis Gelman
Head of Legal, Blast
Yeah, definitely. I mean I think from our side as a tournament operator, you know we think the future for the sector is with publishers outsourcing more of their events to tournament operators. I think five years ago you know publishers tried to do more themselves and I think you know at Blast you know gives them the ability to do what they do best which is to just create the games and then for us to run the tournaments so I think we’ll definitely be seeing an increase in that. I think we’ve got you know twelve live events next year with you know hundreds of thousands of tickets already sold so I think you know as we talked about with the Olympics, I think you know viewership will increase, I think the amount of nations being more open and interested in hosting events will increase and I think that will bring with it some additional legal complexities for different legal markets and I think it will be really interesting to see how artificial intelligence comes into play and whether that will create some interesting legal complexities for all of us and you know as we touched on before, I think you know mobile esports could be, could be very interesting.
Harry Clark
Mishcon de Reya
Thank you and just a tie in to a nice audience question that we’ve had, so that was talking about sort of you know the central form of regulation and the possibility the Olympics might drive that. We had a question from Adam which talks about the Olympics’ recognition of the Esports Integrity Commission and whether this is going to be seen as a sort of stamp of approval and a recognition that you know the sector is growing in legitimacy and it could kind of act as a furtherance for having that sort of central, global framework that kind of governs each title or is that actually going to, you know, have the inverse effect and possibly lead to too much kind of concentration of decision-making in one area. Interested to hear your thoughts in that regard.
Nicola Packer
General Counsel, Fnatic
I just, yeah, it is really interesting and I think this takes us back almost to the push and pull with traditional sports that esports always challenges with so that sort of influx of interest of what we can learn but also a hesitancy to get to, into bed together and I think a real desire in esports to be different. I think as, as we move on it’s sort of understanding that we don’t need to copy traditional sports but there is certainly a lot to be learned from traditional sports teams when it comes to things like player welfare, player development, I mean obviously a lot of other learnings don’t naturally apply just to because of how fragmented the sectors are and I think that is a challenge that some of these governing bodies are going to have in terms of getting a hold of it and bringing everything together but I…
Harry Clark
Mishcon de Reya
Sorry, you’re on mute Nicola.
Nicola Packer
General Counsel, Fnatic
Oh I’m so sorry, must have nudged it by mistake. I was just saying I can’t see that ESIC’s involvement is going to be anything but positive for the, for the, for the sector in general.
Harry Clark
Mishcon de Reya
Yeah, it touches on another issue which came up in our audience questions as well which is those of match fixing, ensuring it’s kind of fair play you know in a playing ground and just you know more broadly I think obviously there’s a lot of stakeholders involved here and we’ve talked a lot about kind of publisher responsibility. Do you think that same responsibility lies predominantly with them or, or where do you see the you know other stakeholders like team organisations, teams and organisations and the you know people operating the leagues kind of have a responsibility to try and handle this issue as well, any parallels with the sports sector there?
Sam Cooke
MD & Co-Founder, Esports Insider
I mean I think from my side that we’ve worked with, not that we’re involved in the event ops or the team side or anything right but we’ve, we’ve had a relationship with ESIC since 20, since 2016 I think, if not 2017 when Ian was, was on our very first ESI panel actually, Ian Smith, being the Commissioner. I, I know they got a lot of, catch a lot of heat for not doing enough etc but I think relative to the size of the team and whatnot and to the size of the problem against them, considering that it’s, they are the Esports Integrity Commission and not the League of Legends one or not the CS one or what have you, right, I think ESIC do an incredible job, player, generally undesirable, undesirable and very difficult and very challenging role and do, do amazing work as well. Whose responsibility it is exactly, right like, everyone’s agreed that like we need to address this problem and do more to combat it but who’s going to step up and do it and everyone’s busy, right, and everyone’s under resourced and whatnot so I think it does need to be a combination of but I think the publishers definitely need to be involved 100%, I think the publishers, the TOs, the teams, all of the stakeholders and I do think we as an industry need to get behind ESIC a little bit more because I don’t know of anyone else trying, trying to do this, right.
Harry Clark
Mishcon de Reya
Ellaine, quite final thought as we reach the hour?
Ellaine Alexis Gelman
Head of Legal, Blast
Yeah, I mean I think you know as audience increases, as prize money increases and things become more lucrative and you know the margins between winning and losing become smaller, I think there’s more you know opportunity and more interest to you know gain some sort of advantage and manipulate the rules etc and there is a need for some regulation, you know, and a lot of that does fall sometimes for example on the tournament operators sometimes so, I think in general you know when you go to a lot of these sports forums, not just esports you know there is this real focus on you know there needing to be more regulation and you know to kind of maintain competitive integrity and you know access to opportunity, all these things so I think yes definitely it’s something that is requited and I think all the different players are, will need to be involved as Sam alluded to.
Harry Clark
Mishcon de Reya
Amazing, thank you all, that brings us to the hour. We had a, we had another question which I think Tom’s answered in the chat about what can the legal industry do more to, to kind of bring awareness to these legal issues in the sector? Hopefully, more events like these. I think it’s been great to kind of have an open discussion about a lot of different issues and yeah, I also thank you all so much for your time and thank you all for attending. If you’ve got any feedback that you’d like to give us in order to help us run these events in the future, please let us know or otherwise, just keep an eye out for our future Sports Law or Academy sessions, including event coming up on the interplay of AI and the sport sector, but thank you all again and please join me in thanking our wonderful panellists for their time. Thank you.