Esports is establishing itself as a worldwide phenomenon and it is doing so at breakneck speed. Among the many challenges and issues are concerns about game ownership, compensation, and player health and safety. While these concerns would seem reasonably manageable in a ‘national’ or even ‘continental’ context, the global nature of esports presents massive and unprecedented hurdles in almost every facet of the sport. Nowhere is this more evident than in the way Intellectual Property (IP) influences every relationship between every party in the esports arena.
When it comes to the subject of labour relations in esports, the impact of IP is present as well. Typically, there are two parties involved in the “usual” labour-related negotiation regardless of industry type. For example, in traditional sports, we have the employer (the team or franchise owner) and the employee (the athlete).
In esports, however, the addition of IP (and the Game Developer who makes it) creates an entirely different situation, and therefore an entirely different relationship structure. The presence of the Game Developer is constant. Some are much more ‘present,’ while others allow a certain amount of autonomy for third parties to get involved in the competitive scene. Because these economies and relationships are so new, and because of the speed at which the sport is evolving, it is difficult to determine what amount of control is healthy and what is detrimental.
In a recent blog, I explored the underlying control that Game Developers have as a result of their ownership of a game’s IP. In this blog, I will focus on the competitive landscape specifically, how a Game Developer’s control plays out in reality, and what that means for labour relations within the esport industry.
The style of competition chosen for any given esport determines the number of parties involved. But before we get there, we have to ask, who are the key players?
The Game Developer is the creator of the game (Valve, Blizzard, Riot, etc) and therefore the ‘owner’ of their game’s IP. As a result, they have control over that IP on every potential platform or event in the esports industry. There are varying degrees of involvement that any given Developer employs in an effort to exert greater or lesser control. What’s interesting is there is a ‘sweet spot’ in terms of their involvement…too much tends to constrain and constrict organic competitive community, and too little can create a ‘free for all’ mentality. Many Developers have started creating rules and policies they implement for competition and that also applies to how third-party tournaments are run. At this stage of the esports industry, it is evident that the level and intentionality of Developer involvement is definitely increasing.
Tournament Organizers are the production companies that are in the business of planning and hosting esport tournaments. These tournaments can be online, live or both. They can be league competitions, one-off tournaments or a series of tournaments. A great example of this is ESL. Since 2000, ESL has been a significant player in the esport tournament landscape. Among many other things, they handle tournament planning, location procurement, securing equipment, and finding sponsors. They are a one-stop shop in terms of tournament execution, but they do not own the IP they are using for these tournaments.
Esport Organization/Team Owners
Esport organizations are in the business of brand development. The esport teams they create, streamers they sign, and content they create are all implemented with the intention of growing the brand. They are multi-faceted entertainment companies, and it will be fascinating and fun to watch as they continue to evolve. Team Liquid is a great example.
Team Liquid currently has 14 different rosters of talent competing in 14 different esport titles. The number of teams and titles they compete in change according to the ever-evolving esports landscape. What is important to understand is that Team Liquid is completely independent of any league or tournament they participate in. They inherently have to rely on the Developer in order to compete in any given esport but they but the organization is separate from them. Other examples of this sort of organization include Cloud 9, TSM, and Complexity.
The quality of relationship and interaction between these key players lays the groundwork for individual and collective success. Let’s look now at two different competitive models Developers deploy in the esport ecosystem, where the relationships between these key players come to life.
The Franchise Model
In this model, the Game Developer retains control over the structure, rules, policies, organization and profit related to the underlying esport. Although a new concept in the world of esports, this is the model used by ‘traditional’ sports leagues, like the NHL and NBA. Traditionally, the franchise model has provided the stability prospective investors typically want to see before they invest the large sums of money needed to create and operate a team. Historically, this model has created an environment that brings fans in, and the stability that leads to significant investment and growth.
Three different Developers established franchised leagues in 2018.
- League of Legends North American Championship Series (Riot Games)
- Overwatch League (Blizzard Entertainment)
- NBA2K League (Joint venture between the NBA and Take-Two Interactive)
While the leagues under this model operate with similar rules and regulations to other esports leagues and tournaments, this model differs by requiring teams to purchase a franchise slot in order to participate. Slots can be offered in a variety of ways and is dependent on the Developer’s preferences.
‘Revenue sharing’ is an element typically included by the Developer in this model. The basic idea is that as the money comes into the league from sponsorship deals, broadcast rights, and merchandise (among other revenue streams), the profits get distributed evenly among those involved in the league. In an esport franchised league, revenue will always be split among the Developer and franchise owners. Athletes may or may not be included.
Historically, esport titles came and went based on the popularity of that video game. As the game grew older it became stale, gamers would move on to the next ‘it’ title, and the game’s esport competition would fade away. This model may, or may not, change that. Only time will tell.
The ‘Non-Franchise’ Model
This is the ‘traditional’ esports model that, up until recently, has been used almost exclusively in the esport competitive landscape. The competitive structure will be nuanced to some degree depending on the Developer involved. In general, however, competitions are structured in the following way. The Developer creates a video game that is popular and has competitive potential. A tournament organizer, seeing the potential, obtains an IP license from the Developer to host a competitive event or tournament. The Developer is involved in establishing general rules and regulations for competitive play, while the tournament organizer is responsible for creating and organizing the physical logistics of the tournament, securing their own sponsorships and broadcast rights, and so on. Esport organizations then enter these tournaments seeking brand exposure and promotion, the athletes seeking to establish a name and reputation.
The involvement of a third party Tournament Organizer means the Developer relinquishes some control over the competitive ecosystem and some of the profit they could generate from their game as an esport. But, this structure also mitigates the Developer’s risk. The cost of tournament operations is spread across multiple organizations performing different functions. It also allows Developers to remain flexible in the style of competition they wish to implement for their various esports titles. Though not readily identifiable, this is the version of esports that most people have experienced if they’ve been to an esport tournament or event.
A great example of this style of competitive model seen in CS:GO (developed by Valve). Valve provides structure to CS:GO’s competition by creating a set of rules to be implemented across the CS:GO competition – examples include Valve’s changes to a coach’s involvement during matches, and restrictions on gambling for those involved in the CS:GO competitive scene. This is an ongoing process for Valve, continually updating and making rule changes as the competitive scene evolves.
Valve allows tournament organizers to put on their own ‘independent’ CS:GO events. They also provide the opportunity for Tournament Organizers to submit bids in order to host a Valve-sponsored tournament. After making their selections, Valve fades into the background leaving the Organizer to deal with the execution of the tournament.
So, what does it mean for the athlete?
It’s About Developer Control
In both the above models, the Developer is inherently involved because they own the IP of the esport being played. So, the competitive structure preferred by a Developer is another way to understand the level of control that Developer maintains over their esport and how athletes are affected as a result.
Athletes should always be aware of changes to the landscape of their sport and ought to take note at the introduction of the franchise model into esports. It signals a shift in the perception Developers have of esports, and the amount of control they desire to have over their esport titles – athletes included.
As events and tournaments attract more and more viewers, the impact of these differing competitive models will come into clearer focus. Where athletes fit’ into the hierarchy of the competitive structure will become a more pressing question. We’ll take a look at this and more in the next blog.
Thanks for reading my blog. The above content is not legal advice but observation about the vast esports field. If you have any questions or comments or would like to schedule me to speak at your event, head over to my website www.ecesports.gg