Remember that Pokemon Go lawsuit I posted about a few months ago? It turns out that , as the Milwaukee County Board of Supervisors has agreed to settle the case for the sum of $83,000, with the entire amount reportedly going to the plaintiff’s legal fees. The park board will also agree not to enforce the ordinance at issue, which creates an awkward permitting process for any augmented reality games to be played in Milwaukee public parks.
This settlement comes after a July court ruling where the court found that it was likely that the plaintiff would succeed in establishing that the park board ordinance banning augmented reality games from public parks violated their right to free expression under the first amendment, and granting an injunction preventing the park board from enforcing the injunction.
This is as close to a 100% win as you get in law, with the board agreeing to give the plaintiffs everything their were asking for, and pay their legal fees. Score one for the forces of justice and freedom.
I recently did a podcast with local game developer Christian Sears, and a really interesting question came up and I thought I’d write a post about it, as it’s probably one of the most interesting issues to follow as the e-sports industry develops. The question comes down to this: as e-sports, and in particular e-sports leagues, become more established, how are revenues they earn going to be split?
One good starting point for an answer to this question is probably traditional sports. In most traditional pro sports leagues like the NBA and NHL, revenue is generally split roughly 50/50 between owners and players. Each league has arrived at that split after years of hard-nosed labour negotiations, including lockouts, strikes and countless melodramatic press conferences, so maybe there’s something about that number, and we can expect that in e-sports revenue will also end up being shared along those same lines.
Of course, with e-sports you have a third power group that doesn’t really exist in traditional sports: the companies that make the games. While no one “owns” basketball or hockey, someone does own games like Overwatch, League of Legends and DotA. Anyone who wants to operate an e-sports event needs the game maker’s consent, which means the game maker is going to get a piece of the pie. For this reason, I think the key issue regarding how revenue will be allocated in e-sports leagues is not the split between players and owners, like in traditional sports, but the split between the game companies and everyone else.
That seems to be the direction things are heading for a lot existing sports leagues. For instance, the League of Legends North America League Championship Series (NALCS) recently unveiled an overhauled revenue sharing model that states revenue will essentially be split three ways with Riot Games, the company behind LoL, getting 32.5% of league revenues, teams getting 32.5% and players getting 35%. In Blizzard’s upcoming Overwatch league, the split is apparently going to be 50/50 between Blizzard and the teams (with no details regarding how much of the teams’ share will go to the players).
While 32.5% and 50% are already significant numbers, if I had to guess, I would say that as things continue to shake out, the revenue going to the game companies is only going to increase. This is because, as discussed above, they’re literally the only game in town, and have all the bargaining power.
Say for example Blizzard goes to the owners and players in the Overwatch league a few years from now and asks for 70% of revenue instead of the current 50%. Even if all the owners and players were united against Blizzard’s demands, they can’t exactly tell Blizzard to f*** off and start their own league, because, as discussed Blizzard literally owns the game their league is based on and can prevent them from doing that. Instead, the owners and players would have essentially two choices: (1) take the 30%, or (2) stop operating and make nothing.
Blizzard, on the other hand, could always find more teams and players to replace the ones sitting out. They probably prefer not to go through the effort, but if the league is making money hand over fist and that extra 20% of revenue works out to a lot of cash, the effort may be worth it to them. Plus, if the league is doing well financially, there will probably be no shortage of new teams and players looking to sign up, even if they’re only getting 30% of revenues instead of 50%.
The bottom line is that Blizzard can always find more teams and players. The teams and players can’t find another Overwatch league.
Right now, the owners and players in e-sports leagues are basically in the same situation baseball players were before unrestricted free agency came along. They’re basically at the mercy of the game companies, who can pay them the minimum they’ll accept to continue operating and no more, then keep all the remaining profit for themselves.
I may be overstating things here of course. There’s obviously PR aspects to this I haven’t really considered. As EA has learned recently, the gaming community can get petty worked up by things they perceive as unfair. This would also take a certain cold bloodedness from the game companies that we haven’t really seen yet, nor would I expect to see anytime soon given that a lot of these e-sports leagues are just getting off the ground, no one knows how successful they’ll be, and everyone is in the “let’s all get together and make this thing work” phase.
However, and as e-sports gets more established and the amount of money at stake increases, that phase might start to give way to a more business-minded approach by the game companies (it’s worth noting, for instance, that Blizzard has essentially spent the year essentially shutting out independent Overwatch tournaments, harming the Overwatch scene in the process, in order to prepare for the roll out of the Overwatch league), and lead to the kind of negotiations you see in traditional sports. If that does happen, I can tell you right now who’s probably going to win, and it’s not going to be the teams or players.
I have to say, though, while I’ve been as entertained as the next person by seeing the Reddit snowball of hate roll down and crush everything in its’ path this past week, I’m kind of of two minds about the way everything has unfolded.
I’m usually a bit turned off by all the moralizing that happens when companies are accused of being “greedy.” My question whenever the issue of “greed” comes up is this: how much money is someone allowed to try to make before they’re considered too “greedy”? Is there a specific line that needs to be crossed? If someone tries to make a 20% profit margin on a product they sell is that too greedy? How about 10%? Is that morally acceptable? Who gets to decide these things?
Greed is when there’s 10 kids and 10 pieces of cake at a birthday party, and some kid takes two. Greed isn’t the baker making that cake and selling it to the parents for a profit. He made the cake, and he’s free to charge as much as he wants for it. He doesn’t owe the parents cake, and if they don’t like what he’s charging they don’t have to buy it.
EA doesn’t owe anyone a game any more than the baker owes those parents cake. They sunk hundreds of millions of dollars into making a Star Wars Battlefront, and if they feel the best way they can make that money plus a profit back is charging players 5 cents every time their character ties his/her shoes, then they have every right to try that. That decision may be stupid and counterproductive, it may turn off players and end up sinking the game, but it’s not “morally wrong” and not really a basis for any kind of ethical outrage. In any event, that’s usually my glassy-eyed, right wing free-market fundamentalist view of these kinds of things.
At the same time, though, I’m sure if people playing Battlefront after launch and getting destroyed by a Darth Vader character that someone spent $1,000 to unlock wouldn’t really comforted by the idea that Adam Smith’s invisible hand is working in the background making all right with the world. They just want to have a good time with the game they spent $60 on, without having to shell out next month’s rent to be competitive. Are they “wrong” to be angry at whatever executive at EA decided to try to squeeze a few extra dollars out of the player base at the expense of everyone’s good time? In theory, based my little rant above, I guess you could argue that in a way they are.
So it looks like at least 7 people are willing to spend $20 million dollars on an Overwatch frachise, as Blizzard has announced the first seven teams of its Overwatch league, as well as some more details about how the league is going to work. A few random thoughts about all this:
The investors behind the teams are a truly eclectic group, with a couple of traditional sports names (Bob Kraft of the New England Patriots, Jeff Wilpon, COO of the New York Nets), a few existing e-sports Teams (NRG Esports, Misfits and Immortals), a rich businessman (Kevn Chou, co-founder of mobile game company Kabam) and a tech company (Net Ease, the company that operates Blizzard’s titles in China). I have no comment except to say that putting all these people in a room and having them interact with each other might be more entertaining than the actual Overwatch matches.
You have to think that Blizzard would have preferred to announce a full roster of teams at this point, not just 7. It looks like they were indeed having trouble getting people to put up the entrance fee. Still, like the old song lyric goes, 7 out of 10 ain’t bad.
In keeping with the above, the Net Ease addition is a bit puzzling. Investing in something as risky and untested as an E-Sports league isn’t something corporations are known for doing. Given Net Ease’s existing relationship with Blizzard, you have to wonder if maybe someone called in a favor of some kind to fill up a spot.
Two of the teams will be based in Asia (Shanghai and Seoul to be exact). So it looks like e-sports has beat traditional sports on the trans-continental sports league issue. At the same time, all the games (at least for the first season) will be played at the same arena in Los Angeles, so it looks like this will only make a difference in terms of the city each team will be flying from in order to get to Los Angeles. Still not a fan of Blizzard trying to force its’ league into a traditional sports model.
Blizzard also announced its’ player “scouting report,” which is basically the e-sports equivalent of a minor league baseball team holding open tryouts. The top 500 ranked players in Overwatch in the last six months (not in pro tournaments, just regular Overwatch players playing for fun at home in ranked mode), will be contacted by Blizzard asking them if they want to be eligible for the league. If they say yes, their names and info will be provided to the current team owners and they’ll be eligible to sign a deal for that sweet, sweet $50,000/year minimum salary. While this is certainly cool in an “anybody can make it” kind of way, you’d think we were past this at this point, and that the Overwatch talent pipeline would be mature enough that this kind of thing wouldn’t be necessary. Maybe Blizzard slowly suffocating the rest of the Overwatch scene since the beginning of the year wasn’t a good idea after all.
Lastly, just because I don’t want to end on something negative, it’s still really, really cool that this is even happening. If you had told me even a few years ago that something like this would exist, I wouldn’t have believed you. Even if the traditional city-based model doesn’t work out, it will still be really interesting to see how this shakes out. And if it’s successful, I have no doubt that this league will probably be seen as a major turning point in the development of e-sports when people look back on things 20 years from now. Congrats to Blizzard for putting their effort behind this.
From the “this is why people hate lawyers” file, it appears that Major League Baseball has filed a notice with the US Patent and Trademark Office stating it intends to dispute Blizzard’s registration of the logo for its upcoming Overwatch league, on the grounds that it may be confusing with its own logo. Here’s the two logos side by side for comparison:
Confused? Me either. The main similarity between the two appears to be the image of a white silhouette bordered by a two tone background. Hmm, why does that sound familiar? Oh right.
So watch out NBA. After the MLB’s inevitable crushing victory against Blizzard, you’re next.
My favorite thing about this story though? Technically this isn’t really news. The MLB actually filed the notice at the heart of this story almost three months ago, in late April. No one reported on it at the time, and since then there’s actually been no new developments on this (the MLB has until July 26 to file their legal argument in the dispute).
As far as I can tell, the only reason this has become a story now is that New York entertainment law firm Morrison Lee posted an item about it on their firm blog and everyone else just ran with it, with the story even ending up in non-gaming publications such as Deadspin, and CBS Sports. This probably says a lot of things about how the media works that I’m not smart enough to encapsulate in writing here. In any event, it looks like one little law firm blog can change the world after all. In keeping with that, if anyone out there has any sweet, sweet industry gossip they’d like to leak, please know that I am available.
Now that game sales are moving more and more into the digital realm, a question I sometimes hear is whether this changes anything in regard to game ownership, and whether users really “own” the games they buy through services like Steam.
The short answer to that question is no, users don’t really “own” their Steam games. However, they never owned games they bought on CDs either. When someone buys a game, all they get is a license to use the game, usually for personal, non-commercial purposes. The game company still owns all the intellectual property related to the game, all the buyer gets is essentially a right to play it. This has been true since the beginning of the industry, and the shift from selling physical copies of games to electronic copies has done nothing to change this from a legal perspective.
From a practical standpoint, however, things have changed considerably. Electronic delivery of games has made it far, far easier for companies to actually enforce the terms of their game licenses. For example, while in the days of CDs game companies had essentially zero chance of enforcing prohibitions on making copies of games or sharing them with others, nowadays that’s not the case. Services like Steam can keep far closer track of what you do with your copy of a game, and make it far harder for users to “circumvent” any such restrictions.
Moreover, if someone breaches the terms of a game license, it’s a lot easier for for companies to terminate that license (i.e. cut off that person’s access to the game). For instance, Valve regularly bans Steam users caught cheating by their software.
While Counterstrike cheaters aren’t too high on anyone’s pity list, other Steam users have also been banned for other, more vague transgressions against Valve’s terms of service, losing access to copies of all games in their library. For instance, this story highlights the story of a who was banned by Valve for vague violations of its terms of service, without any clear explanation for what he did wrong. The user lost access to a game library containing approximately $1,500 worth of games, with no refund, which appears to be Valve’s policy in the case of these bans. The ban was eventually lifted after the story made the rounds on some game publications, however the user was never provided with an explanation for what his alleged transgression was.
Admittedly stories like the one above are few and far between at the moment, however as electronic sales become more established, and other companies become more involved in online game sales *cough* Origin *cough* they’re bound to become more common.
Right now the only legal recourse someone who feels they were unfairly banned by Valve or another company from their service would be taking that company to court or arbitration, which makes no financial sense, even for $1,500 worth of games. At the same time, this is still real money that people have spent on their games (not to mention what can be hundreds or thousands of hours of progress, which must have some value), and allowing companies to essentially act as judge, jury and executioner in cutting off their access to their game library, without giving the these persons some practical recourse to dispute their ban (beyond the pipe dream of a lawsuit) seems entirely unfair. What the practical solution to this problem is I don’t know, but it’s something to think about as the era of physical game copies winds down.
Today, the fantastically-named Swedish e-sports organisation Ninjas in Pyjamas became the latest in a long line of organizations to drop their Overwatch team. The reasons cited by NiP in their official statement are similar to those cited by the many other e-sports outfits who have dropped their Overwatch teams in recent months: uncertainty about the future of the Overwatch scene, and a lack of information about Blizzard’s upcoming Overwatch league. The statement reads in part:
We entered the Overwatch scene last year just as the game launched, with one of the strongest lineups at the time of entry. The prospect of an emerging esport title was exciting as Ninjas in Pyjamas and other esports organizations picked up teams. As time passed we have seen a growing amount of teams release their Overwatch lineups as they assess the future of the game as an esports title.
Today we announce that we will be joining the growing list of organizations placing Overwatch as one of the titles to observe but not to be involved in, given the uncertainties of the scene.
While unfortunate, it’s not difficult to understand why Ninjas in Pyjamas, made this decision. Aside from the much-hyped Blizzard league, which everyone seems to be awaiting with baited breath, but for which details have been essentially non-existent, there’s simply not enough other Overwatch events happening to support most pro teams.
Overwatch e-sports site over.gg summarizes the situation neatly. The period from August of 2016, when Overwatch was released, to January of this year, saw 9 major offline Overwatch tournaments (‘offline’ tournaments being the large, in-person tournaments that attract high numbers of viewers). Since then, outside of Korea’s popular APEX league, which continues to thrive, and Blizzard’s own Contenders series, billed as a developmental league for the upcoming ‘real’ Overwatch league, there have been essentially no major offline Overwatch tournaments anywhere in the world.
Given the game’s continued popularity, it’s unlikely that lack of fan interest can fully explain why Overwatch tournaments have dried up this way. Instead, reports have been surfacing about another likely culprit: many organizers have been having problems obtaining licenses from Blizzard to run tournaments. For instance, January of this year Blizzard denied an Overwatch tournament license to Pro Esports Association (PES), a nascent e-sports organisation formed by a number of North America’s largest e-sports teams that looked poised to become a major player in the industry, and had plans to start its own Overwatch league. No official reason was given. Since then, reports have surfaced that multiple other organizers have been having significant trouble getting licenses to run any kind of major tournament, for reasons that often don’t hold water, such as scheduling conflicts with less popular ‘online’ tournaments.
While Blizzard has not publicly acknowledged or provided any reasoning for this freeze (pun not intended) on tournament licenses, it’s not hard to see why the company would be acting the way it is. If Blizzard is going to be starting up their own Overwatch league, and that league is supposed to become the go-to place for Overwatch e-sports, why allow a potential competitor like PES permission to run their own league? Why give any third-party organizers permission to run their own tournaments, when these events could develop their own followings, and drain eyeballs and interest from Blizzard’s own flagship offering?
While this is all just speculation, and I’m still waiting for the leaked video of a Blizzard exec explaining that this is their master plan while twirling their mustache, it’s hard to deny that Blizzard has a massive incentive to discourage any competitor from gaining any kind of foothold in the Overwatch e-sports scene, and, through denying them tournament licenses, a simple and effective means to do it. The unfortunate thing is that by taking this approach, Blizzard appears to slowly suffocating the Overwatch e-sports scene as a whole in the process.
This state of a affairs highlights one significant difference between e-sports and traditional sports, one that e-sports are going to contend with and address if they’re going to be successful in the long-term: Nobody “owns” traditional sports. If someone wants to start up their own football league, they don’t need a license from the NFL to do so. With e-sports, of course, that’s not the case. Blizzard, and any other company that owns an e-sports IP, could shut down every competing e-sports offering tomorrow if they wanted to, by simply denying them a license to operate.
While most game companies are not doing this at the moment, and seem content to license their IP freely in order to let their game’s scene develop, as the money at stake increases we’re likely to see more and more companies following Blizzard’s lead on this and freezing out (I swear I’m not doing it on purpose) their competitors in order to protect their own e-sports offerings.
Ultimately, this seems like it’s extremely unhealthy for e-sports, especially at a time when the field is still evolving and people are still trying to figure out what the right long-term business model for e-sports is. This is when different leagues and tournament organizers should each be allowed to put out their own product and compete for viewers. Ultimately this kind competition is best way to allow well-functioning, viable e-sports businesses to develop. The NFL didn’t get where it is today by denying other leagues licenses to host football games. It got there by competing with them, and offering a better product. Blizzard doesn’t have to do any of that if it doesn’t want to. They can simply lock everyone else out of the Overwatch scene, leaving them as the only show in town. Unfortunately, if they mismanage that scene (as they seem to be doing) or offer an inferior product, fans of Overwatch as an e-sport will have nowhere else to turn to.
In the end, this is sad to see. Overwatch has been a massive success as a game since its release, and it should be thriving as an e-sport. Instead, it appears to be dying on the vine. Hopefully Blizzard decides to re-evaluate their approach to this issue, and their ongoing support for the Overwatch scene, in the future.