It’s been a tough few weeks for video game hackers. Yesterday in Los Angeles, a hacker responsible for a number of DDoS attacks against World of Warcraft’s servers was sentenced to one year in jail, as well as being ordered to pay $30,000 in restitution to Blizzard for the cost of responding to the attacks. This news comes on the heels of reports last week that South Korea has sentenced two of thirteen hackers recently arrested for making cheats for Overwatch, with one receiving a $10,000 fine, and the other receiving probation. Similarly, China has recently arrested 15 individuals charged with making PUBG cheats, levying a whopping $4.5 million USD in fines against them.
One notable thing about all these cases is that the perpetrators were charged criminally. While game companies have been suing hackers in civil court for years (see for instance Epic’s recent crusade against a 14-year-old Fortnite cheat maker), this is the actual government coming after people, often expending considerable resources to do so. For example, the WoW hacker above was caught after an international investigation spearheaded by the FBI, which took 8 years to conclude (the attacks actually occurred in 2010, the hacker was indicted in 2011, then the US government spent spent the intervening time, and what I assume are considerable resources, fighting to extradite him from his native Romania).
These kind of stories show how far the perception of video games has changed in mainstream society. I think it’s pretty safe to say that if a game company had gone to a law enforcement agency 20 years ago and asked for their help catching someone making CounterStrike hacks, they would have been politely told to mind their own business. After all, video games were still seen as kids stuff back then. The government wasn’t going to divert resources they could be spending on catching drug dealers to trying stop people from being able to see through walls on de_dust.
Nowadays that’s not the case. Video games are big business, and when Blizzard calls, the FBI apparently listens. Some countries, like Korea, have even passed legislation explicitly making it illegal to make video game hacks, with violations of the law punishable by up to 5 years in jail. And crucially, all this is seen is perfectly fine by society at large, with no one really raising any eyebrows when any of this stuff happens, even outside gaming circles.
While I think it’s still an open question whether this kind of behavior really deserves the kind of serious criminal sanctions we’re talking about here – after all, you could argue all these people are really doing is mildly interfering with others’ enjoyment of an entertainment product – it’s still good to see video games being taken seriously this way.
The streaming policy has an “Off-Limits List” of things the players can’t be seen to support or endorse. Aside from standard things like drugs, weapons or gambling, players are forbidden from supporting “Political Candidates or Initiatives.” Fairly standard, but if you don’t see xQc at any Donald Trump rallies, this is probably why.
2. There’s Technically No Limit to What Teams and Players Can Be Fined
The rules simply say that if a team or player violates the league rules Blizzard may “levy fines against the Team and/or Player.” They don’t say anything about the amount of any such fines, or place any other restrictions on what kind of violations warrant what level of fines. This kind of unlimited power on Blizzard’s part could potentially become a biiiiiit of an issue in the future, so look for the teams/players to try negotiate some clearer restrictions on this at some point (if they can).
In case you’re curious, the league so far has issued fines ranging from $1,000 to $4,000 to players under this provision for various fun activities I’m not going to go into detail on here.
3. Players Can’t Wear Excessive Jewlery
While playing in matches, players are limited to wearing “a reasonable amount (as determined by the League Office) of jewelry, rings, bracelets and necklaces.” I have nothing to add except that I really, really want to see someone force Blizzard to invoke this policy at some point.
4. …Or Smart Watches
The rules also prohibit players from wearing “smart watches … smart devices, fitness devices, or any other deviceswith computing capabilities of any kind, other than a digital watch.”I guess this rule is in place to prevent cheating, although I fail to see how wearing a FitBit or something like that is going to give someone an unfair advantage.
5. Failing To Report a Code of Conduct Violation is a Code of Conduct Violation
The league has an extensive code of conduct governing things like harassment, match fixing, drug use, etc. The code of conduct also states that “Upon becoming aware of any [prohibited conduct] players, team managers are required to immediately report the details to the league office. Failure to comply with this requirement is an independent violation of these league rules.” So if a player becomes aware of someone else violating the code of conduct, they have to report them or they themselves will face potential discipline by Blizzard.
While there’s probably good, reasonable reasons for having this rule in place, I can’t help but get a bit of a 1984 vibe reading it.
6. Blizzard Is Explicitly Permitted to Film the Players 24/7
The rules anticipate Blizzard creating reality-show style content surrounding the league, and state that the players give Blizzard the right to monitor their daily life “using persistent, 24/7 cameras that may be placed in the team house, training facility, competition venue and other locations frequented by team members (provided that no such filming or recording will occur in any team members’ bathrooms).” My favourite part about this is the explicit exception for players’ bathrooms, in part because it implies that literally nowhere else is off-limits.
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.
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.
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.
Riot Games has recently announced some major changes to the way it’s North America League of Legends Championship Series functions, in an attempt to move the NALCS into a more structured format that more closely mirrors the way major traditional sports leagues like the NFL or NBA currently operate.
Starting 2018, teams will no longer have to qualify for the NALCS through competing in a series of lower-level tournaments, nor will they face the immediate prospect of relegation if they don’t do well. Instead, ten teams will be more-or-less guaranteed spots in the league indefinitely. All the teams will share in the league’s revenues, with performance incentives for teams that place better. There’s even talk of a player’s union, as well as a minimum player salary of $75,000.
The most noteworthy aspect of this, however, is the price that Riot is reportedly asking for a franchise. Reports are that a franchise in the new-and-improved NALCS will cost a cool $10 million, around 5-10 times what LoL teams are currently reported to be going for. At this sky-high price, it’s more than likely that the majority of the teams currently in the NALCS will not be able to come up with that kind of money. Blizzard, which announced its own plans for a similar Overwatch league a few months ago, and is reportedly asking a similarly high figure $20 million per franchise, has run into some problems recently as multiple existing e-sports organisations balked at putting together teams for the league due in large part due to the high cost of entry.
Maybe the slack will be picked up by new outside investors or traditional sports franchises, who are willing to put up that kind of money in order to get in on the ground floor of the e-Sports business. Indeed, that seems to be the direction Blizzard has been heading with its Overwatch league, as the company reportedly focuses on attracting these investors at the expense of teams in the existing Overwatch e-sports ecosystem. However, unless Riot can show these investors a credible plan for how they are going to make their money back, it remains to be seen whether enough of them will come through to support a full roster of teams for the NACLS.
It may be that Riot is putting the cart before the horse here. If all goes well I have no doubt that 10 years from now a NALCS team (or whatever the NALCS equivalent is then) will be worth $10 million or more. However at this point it’s hard to believe that the economics of the (e-)sport justify paying this much for a franchise. By asking for this kind of buy-in fee, Riot risks pricing out and alienating the teams and players that have built LoL as an e-Sport from the ground up in the first place. Whether this is going to have a positive effect on LoL as an e-sport in the long term is an open question.
Riot is set to announce the 10-team roster for its league in November, 2017. It will be interesting to see whether Riot manages to put together a 10-team roster at the reported $10 million buy-in fee by that deadline.