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.
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.
It looks like the video game industry isn’t immune from the kind of ransomware attacks that have been hitting…well, everywhere, recently, as CD Projekt Red, the Polish developer behind the Witcher series, reports being subject to a blackmail attempt by thieves who have stolen some early development materials for its’ upcoming game, Cyberpunk 77. The blackmailers have reportedly threatened to release the materials online if their demands aren’t met.
What’s been great to see is the way the company has responded to to the situation. Taking a page from the Jaromir Jagr handbook, they’ve basically told the blackmailers to go ahead and release everything. They’ve also put out a public statement summarizing the situation, and noting that the materials are old and don’t represent the current state of the game.
All in all, this was a fantastic way to handle this by the company. In the end, I wouldn’t be surprised if the positive PR, and the extra exposure for Cyberpunk 77 that the company gets as a result of this incident (ironically enough, this story will probably be the reason many people hear about the game for the first time) will outweigh any damage done if the materials are released.