The Biggest Problem Facing E-Sports Right Now

What would you say the biggest problem facing e-sports right now is? The lack of mainstream TV deals? Dangerously high levels of energy drink consumption? The occasional collapsed lung?

This man has a problem.

While I think we can all agree the collapsed lung issue needs to be closely monitored, in my view there’s one fundamental problem facing e-sports that’s bigger than all of these: game companies have way too much power.

The reason for this is simple: they own copyright to the games, and if anyone, anywhere wants to run and broadcast an e-sports tournament, they need to get their permission. Because of this game companies basically have the ability to exercise absolute, 100% control, over the e-sports ecosystem. Some companies are currently taking advantage of this more than others, but in the long run they all have the ability to do this.

This is probably the most fundamental difference, business-wise, between e-sports and traditional sports. Imagine if someone needed the NBA’s permission to start a basketball league, or the PGA’s permission before running a private golf tournament. That’s basically the situation with e-sports right now.

In my opinion, is a very bad thing for the long-term health of e-sports, for two reasons:

  • Lack of Competition: I don’t think it’s too controversial to say that competition is crucial for the development of a healthy e-sports scene, especially at this early stage. If you want the best possible e-sports product to develop, you need to let different people with different approaches try things out. Some will work, some won’t, but ultimately the market will ensure the best products come out on top. If game companies can deny licenses to any potential competitors and basically set themselves up as the only game in town, then this process can’t happen, and we’re all the worse off for it.  The best example of this is probably the Overwatch scene for most of last year. Despite the game being hugely popular, its competitive scene was essentially dying on the vine and teams were shutting down left and right because Blizzard was  refusing to grant anyone licenses to hold Overwatch events (this was because, of course, it didn’t want these events competing with the Overwatch league it was going to start up itself).

 

  • Lack of Bargaining Power for Teams/Players: This is a corollary of the competition issue. As discussed in this post, because they control the games, the game companies have essentially all the bargaining power in negotiating how revenue gets split with players or their teams. Using the Overwatch league as an example, if the teams/players aren’t happy with how much money Blizzard is offering them, they can’t really tell Blizzard to f*** off go and set up their own competing league. Their only options are quite literally to take or leave what Blizzard’s offering. In the long run this means less salary money for players, less money for teams to market themselves (and by extension e-sports), less interest by investors looking to start or fund teams, and, ultimately, a less vibrant evolving e-sports scene.

This problem also applies to other parts of the e-sports ecosystem like streaming. Every single streamer right now is  infringing on a game company’s copyright. While most companies are currently being cool about the issue, as the money being made from streaming continues to increase, how long until more and more of them start going all Nintendo and shutting down streamers unless they agree to kick in a huge chunk of their profits to the company? Or how long until they decide only a select group of company-approved streamers can stream their games? And if this starts happening, what effect do you think that will have on the quality and variety of gaming streams available out there?

So what’s the solution? Simple – create an exception to copyright law that lets anyone, not just the game companies, operate and broadcast e-sports events (and streams) without needing permission of the holder of that game’s copyright (i.e. the game’s publisher).  Anyone who wants to set up an e-sports event or stream a game would have the unencumbered ability to do so, and the free market would be free to work its proverbial magic. Fans of Overwatch wouldn’t be forced to cross their fingers and hope they like what Blizzard does with the Overwatch league because they know they have no other options. Blizzard would have a bigger incentive to make sure it puts out the best product possible because it knows it can’t simply sue the competition out of existence.  The cream would rise to the top and we’d all get the best e-sports product possible.

Of course, I think there’s about zero chance of this kind of change happening for the foreseeable future.  For something like this to happen you’d need (1) a change to the copyright legislation creating some kind of exemption for operating or broadcasting e-sports events, (2) a court decision changing the interpretation of the existing copyright legislation on the terms above (maybe expanding the fair use doctrine to cover something like this – how likely such a challenge would be to succeed I have no idea, I’m just spitballing here).

As things stand, there isn’t really any big groundswell of support that could motivate the former, and I’d be surprised if anyone involved in e-sports has the resources and incentives necessary spend huge sums of money and years in court arguing about the latter. However, as more money starts being made in e-sports, don’t be surprised if this becomes a bigger point of friction between the game companies and the team owners/players, and some serious legal fights in this area taking place (maybe instead of going for the clickbaity title, I should have called this post “The Biggest Problem Esports Will Face In 5 Years.”). It will be interesting to see what happens when/if this does occur.

 

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