The Rise of eSports: Labor Implications Involved in the Future of Riot Games and League of Legends.

By: Robert Pagan

The emergence of eSports throughout the world has brought numerous legal implications to light.  Almost overnight, individual eSports gamers have been elevated to the status of athletes, and the video games they play have become spectacles engaging enough to draw large audiences.[1]  How large of an audience are we talking about?  Well, according to ESPN, League of Legends viewership ratings in 2014 exceeded the viewership ratings of perennial U.S. sporting events such as the National Basketball Association (“NBA”) Finals and Game seven of the Major League Baseball World Series.[2]

In 2009, Riot Games launched the gaming platform known as League of Legends (“LoL”).[3]  LoL is a multiplayer online battle arena (“MOBA”) game, a relatively new gaming genre that has exploded in popularity over the past few years.[4]  In this genre, each player controls only one unit – the “hero.”[5]  Teams consist of five players competing against each other in a race to destroy the opposing team’s fortified structure at the opposite end of the map.[6]  This is very similar to other professional sports, especially basketball, where a group of five teammates (each with their own specific roles to fill) attempt to outscore the other team to claim victory.  The only two differences between the two sports are: 1) eSports has players interact virtually, with avatars taking the actions they command rather than themselves actually making the actions, unlike traditional sports where competitors are interacting physically with other competitors; and 2) eSports, unlike traditional sports, are developed and owned by individuals or single entities, not a collective set of organizations.

LoL is already the most popular PC game in the world and well on its way to becoming the most popular video game ever played.[7]  Last we heard, the game had twenty-seven million daily players, with sixty-seven million unique monthly users, making it far and away the biggest game in the world.[8]  Near the end of 2014, Microsoft[9] and Sony[10] each announced that they will launch eSports leagues.  If the recent popularity of eSports can cross into console-gaming—video-gaming that takes place on a console such as an Xbox or Playstation—that will open still another market for viewership.[11]

LoL has reached a mainstream level unimagined by developers of the game.  As its developer, Riot Games has seen an unanticipated increase in revenue across all platforms, including in-game purchases, merchandise, viewership revenue, and sponsorship.  Even Coca-Cola has entered the mix.[12]  Commenting on Coca-Cola’s recent partnership with LoL in an online article on The Daily Dot, Matt Wolf, Coca-Cola’s global head of gaming, said, “eSports is at a point now where the company feels like it’s time to move into the industry.  There are several signs that show that this is real it’s sustainable, and the growth is astronomical.”

But what does all this revenue mean for the players?  Professional LoL income comes mainly from streaming, sponsor endorsements, and  Riot.[13]  Whether a player is classified as an employee or independent contractor for their respective teams is a significant distinction, considering each classification has its own legal consequences.[14]

If a player is considered an employee, his or her status means that the teams that employ them must follow a wide array of statutory requirements, including but not limited to: (1) paying payroll taxes; (2) complying with minimum wage and overtime requirements; (3) providing meal periods and rest breaks; and (4) maintaining adequate workers’ compensation insurance.[15]

Alternatively, if a player is considered an independent contractor, none of these statutory requirements would need to be followed, and teams can forgo any of the responsibilities of an employer-employee relationship.

Presently, players sign contracts with their teams that determine salaries, player and team responsibilities, and a wide array of other issues.[16]  Player contracts must define the responsibilities of the players.  When those expectations are specifically outlined in a contract, there is less room for teams to place undue burdens on players or for players to claim that such expectations are unreasonable.[17]

The majority of issues faced by players and teams within the eSports community can all be solved through the creation of a collective bargaining agreement.  If collective bargaining were to exist, star players would have the potential to negotiate for higher salaries and more flexible contracts, and teams are similarly more likely to engage in additional negotiations with players that have a large impact on the team performance.[18]

Modern major sports are controlled by collective bargaining agreements struck between the owners in the form of the leagues and the players in the form of the players’ associations.[19]  A Players’ Association or some kind of representative system to help protect player interests and share information could improve this process.[20]  Creating successful compensation structures is crucial to the survival of professional eSports, as we know it.

[1] Stephen D. Fisher, The Rise of eSports: League of Legends Article Series Foster Pepper (Feb. 2014), http://www.foster.com/documents/foster-pepper-white-paper

[2] Patrick Dorsey, ‘League of Legends’ ratings top NBA Finals, World Series clinchers, ESPN (Dec. 3, 2014), http://www.espn.com/espn/story/_/page/instantawesome-leagueoflegends-141201/league-legends-championships-watched-more-people-nba-finals-world-series-clinchers.

[3] Fisher, supra note 1 at 1.

[4] Id.

[5] Id.

[6] Id.

[7] Id.

[8] Paul Tassi, Monstrous Viewership Numbers Show ‘League of Legends’ is still eSports King, FORBES (Dec. 11, 2015), http://www.forbes.com/sites/insertcoin/2015/12/11/monstrous-viewership-numbers-show-league-of-legends-is-still-esports-king/#2eedaa954021.

[9] Eddie Makuch, Microsoft Announces Halo eSports League, GameSpot (Nov. 6, 2014), http://www.gamespot.com/articles/microsoft-announces-halo-esports-league/1100-6423409/.

[10] Vikki Blake, Sony Launches Esports League on Playstation 4, IGN (Oct. 15, 2014), http://www.ign.com/articles/2014/10/15/sony-launches-esports-league-on-playstation-4.

[11] Katherine E. Hollist, Time to Be Grown-Ups About Video Gaming: The Rising Esports Industry and the Need for Regulation, 57 Ariz. L. Rev. 823 (2015).

[12] Id.

[13] Stephen D. Fisher, Player Contracts: Defining Expectations to Avoid Conflict: League of Legends Article Series Foster Pepper (Aug. 2014), http://www.foster.com/documents/foster-pepper-white-paper/playercontracts_definingexpectionstoavoidconflict_.aspx.

[14] Bryce Blum & Stephen Fisher, E-Sports Law Article Series: Player Contracts; Defining Expectations to Avoid Conflict 1, (Aug. 2014), http://www.foster.com/documents/foster-pepper-white-paper/collectivebargainingwhitepaper-fosterpepper.

[15] Id.

[16] Fisher, supra note 13 at 1.

[17] David Philip Graham, Player Contracts and Unions in the LCS, DPG at Law (Dec. 2013), http://www.dpgatlaw.com/Articles/Player-Contracts-and-Unions-in-the-LCS.shtml).

[18] Blum, supra note 14 at 2.

[19] Graham, supra note 17 at 5.

[20] Graham, supra note 17 at 5.

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