February 7, 2023

Volume XIII, Number 38


February 07, 2023

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February 06, 2023

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Esports Insights and Trends - Staying current with emerging developments in the booming esports industry ...

Leveraging its long history and extensive experience in all aspects of the sports arena, the Foley Sports Industry Team is actively immersed in the booming esports industry. Our Esports Insights and Trends will be a recurring post which is designed to deliver to esports industry insiders and watchers up-to-date information on the latest trends and developments in the fast-moving world of esports. To that end, today’s post covers a variety of topics, including the intersection of esports with privacy, traditional sports models, science, gambling, college programs, and investment activity.

The relationship between traditional sports and esports is constantly strengthening.

With ever-increasing connections between the two industries and the growing acceptance of esports into the mainstream, the bond between esports and traditional sports will continue to grow stronger. Esports titles that are developed on the basis of traditional sports help to bring newer fans to the traditional sports fan base and vice versa. Further, as traditional sports athletes continue to embrace esports, the latter will continue to gain legitimacy in the eyes of the public. Below are some stories from the past month that reflect the strengthening bond between the esports and traditional sports industries . . .

Esports made their presence felt in these Olympics. While esports have yet to be recognized by the International Olympic Committee, these Olympics marked the first time that esports-related events were held in connection with and with the support of the Olympics. To read more about some of the esports events that took place in the days before the opening ceremonies, click here.

Germany could soon begin recognizing esports as sports. News such as this could have major implications for German esports organizations as they would be able to do things such as apply for nonprofit entity status, among other benefits. To read more about this potential change in recognition in Germany, click here.

The Japan Esports Union (JESU) has formed in an effort to promote esports in Japan. JESU is the result of the merger of Japan’s three largest esports associationsJESU will attempt to help the Japanese esports industry overcome certain administrative and legal hurdles that have been stifling the industry somewhat in Japan. For more on JESU’s formation and efforts, click here.

Minnesota Twins’ pitcher Trevor May recognizes the need for traditional training in esports. This has become especially true as the stakes and the publicity when the top esports players compete have increased dramatically over the last few years. To read this MLB player’s take on esports as a whole and the need for more traditional training akin to traditional sports, click here.

Echo Fox President Jared Jeffries on esports players: “They’re definitely athletes.” This statement carries extra weight as Jeffries is a former first-round pick and played 11 seasons in the NBA. To read more about why the former NBA player and current head of Echo Fox said this, click here.

Pro wide receiver JuJu Smith-Schuster teams up with esports group, FaZe Clan, to increase each other’s brand. The Pittsburgh Steelers player will post videos and live streams as part of FaZe Clan’s media postings, and merchandise will be sold with both Smith-Schuster’s and FaZe’s name on it. For more information on this traditional sports-esports crossover collaboration, click here.

Esports player signed to compete in FIFA tournaments and create original content. Publisher Goal has signed Graham 'GrayzaGoal' McIntyre to represent it in FIFA tournaments while also tasking him with content creation on Goal’s site and social media. As esports grows in popularity, players who are both the best in their respective esport and appealing personalities for fans to watch will become major targets for acquisition. To learn more about this interesting signing, click here.

Snider Cup pits the best in NHL 18 against each other while also benefiting charity. The cash prizes in this tournament are modest compared to those in other tournaments; even the champion of this tournament will not be as big a winner as the student-athletes of the Ed Snider Youth Hockey Foundation. To read more about this event and the foundation it supports, click here.

NASCAR teams and tracks looking to expand into esports. While NASCAR teams are working together to create a pro iRacing league akin to the NBA 2K League, NASCAR’s tracks have also been working on putting together esports tournaments during event weekends. For more information about how NASCAR is making forays into esports, click here.

Madden demonstrates that traditional sports titles can be major esports players. The popular video game title has long existed but recently EA Sports has made moves to put it in the same competitive environment as other major esports titles. So far this recasting of the game in an esports light has led to great success. For more on Madden as an esports title and its recent esports success, click here.

Konami, a Japanese video game company, partnered with Nippon Professional Baseball to host the Pawapuro Championships. The Pawapuro Championships is an esports tournament featuring the official game of Nippon Professional Baseball, Pawapuro. To read more about this event, click here.

Other Related Stories:

Esports may have a culture problem.

With the relatively recent mainstream success of the esports industry comes the public microscope on the industry’s companies, events, personalities, and players. As an industry that has operated in a niche for more than a decade, esports has largely turned a cheek to politically incorrect sentiments in favor of trash talking and trolling. With a larger mainstream audience, esports, both as an industry and as individual players, will no longer be able to get away with some of the behavior they once did. Below are some stories from the past month that reflect changing attitudes in the industry . . .

Susan Tully, H2K CEO and co-owner, says that gender bias in esports exists and needs to be dealt with before it festers and damages the industry. According to Tully, while most of her esports’ experiences have been positive, she has noticed some offensive behavior and old-school stereotypes about women in the industry. But while this is currently the case, Tully believes that the esports industry can be progressive and set an example for other industries when it comes to equal opportunities for women. For more on what Susan Tully has to say about her involvement in an esports organization and the industry in general, click here.

‘Scarlett’ wins major victory for women in Olympics-affiliated StarCraft 2 tournament. Sasha “Scarlett” Hostyn, who holds the Guinness World Record for highest career earnings for a female esport player, ravaged her competition on her way to winning first place. Victories such as this will hopefully spur more women to compete in esports and should, at the very least, help reinforce the sentiment that there should be more professional women players in esports. To read more about Scarlett’s big win, click here.

Kim “Geguri” Se-yeon is about to become the first female player in the Overwatch League. The lack of female players in the league has been a topic of discussion since its inception, especially since the game’s creators, Activision-Blizzard, have always preached diversity and inclusion. Geguri’s Overwatch career will be closely watched, not only for her play against the competition, but also for how well she gets along with her team. If the former is any indicator of the latter though, her Overwatch team, the Shanghai Dragons, may have picked up a mid-season steal. For more information on the Overwatch League’s first female player, click here.

League of Legends team, Golden Guardians, fires head coach for inappropriate remarks. The coach, Choi “Locodoco” Yoon-seop, apparently made an off-camera, offensive remark to a female member of Riot Games’ esports staff prior to participating in an interview with Riot Games. The Golden State Warriors, the parent company of the Golden Guardians, have a strict zero-tolerance policy, which Locodoco was fired for violating, though it is unclear exactly what was said. For more on this story, click here.

Overwatch League player fined $2,000 and suspended for use of homophobic slur. The player, Felix “xQc” Lengyel, directed the insult at an openly gay player on Lengyel’s personal stream, after Lengyel’s team lost a match to the insulted player’s team. While Lengyel has issued an apology, the league was quick to fine him and issue a four-game suspension. Lengyel’s team, the Dallas Fuel, decided to extend the suspension for the remainder of the first stage of the season, which ended Feb. 10. For more on this incident and how the league and Lengyel’s team handled the situation, click here.

Twitch announces stricter rules for harassment, regardless of whether the conduct occurs on Twitch’s service. Twitch will also be enforcing stricter rules in regard to sexual content. The changes to Twitch’s community guidelines will hopefully foster a safer and more inclusive environment on the popular streaming site. For more on Twitch’s changes to its guidelines, and the reasons behind them, click here.

There’s much money to be made in the exploding esports industry.

Successful esports companies, investors, and players alike all stand to profit heavily from the rapid growth of the esports industry. Below are some stories from the past month that detail certain esports entities’ financial conquests from 2017. . .

Esports revenues for 2017 were $756 million. SuperData Research believes revenues this year will exceed $1 billion. The market research firm came up with these and other interesting figures from the past year and all of the data speaks loudly about the booming state of esports. For more information on SuperData’s research report, click here.

Playerunknown’s Battlegrounds sits atop premium PC game digital market with $714 million in revenue. While this amount easily leads the list of purchase-to-play titles, it doesn’t even come close to the games at the top of the free-to-play market, such as League of Legends, which brought in $2.1 billion in revenue in 2017. For more information on this topic, which is based largely on the SuperData report mentioned in the previous item, click here.

Almost $31 million in prize money was distributed last quarter through esports. More than half of that amount was distributed in connection with the Counter Strike, League of Legends, and Dota 2 esports titles. These figures were included in The Esports Observer’s quarterly industry report. For more information on this report and related data, click here.

Costs of marketing in the esports industry are growing at a remarkable rate. This article from Forbes suggests that the cost of customer acquisition is growing at a rate of 113 percent annually. For more information on this figure and the costs of marketing in the esports industry in general,click here.

Activision Blizzard scores big on in-game purchases in 2017, bringing in more than $4 billion.This is impressive when considering that Activision’s net revenues for 2017 were $7 billion. These figures underscore an obvious trend within the esports industry: In-game purchases are king and the key to generating large amounts of revenue. With numbers like these, it’s no wonder legislators around the country keep eyeing loot box reform. For more information on this subject, click here.

Speaking of loot boxes.

Continuing the trend of monitoring how governmental authorities have been ramping up the attack on loot boxes, here are some of this month’s biggest stories regarding the highly profitable and very controversial in-game mechanism.

Washington State Senate bill would target loot boxes for investigation. If passed, the bill, which was introduced in the State Senate in mid-January, would authorize the state Gambling Commission to investigate loot boxes and address whether games and apps containing these mechanisms should be considered gambling. The bill is likely to see several revisions before being voted on. For more information on this bill, click here.

Other Related Stories:

Investors keep lining up to get a piece of the esports pie.

There are some who say the ship has sailed on getting into esports for the possibility of substantial financial gain. Clearly this sentiment belongs to the minority, as investments in the industry don’t appear to be slowing down. Below are articles detailing some of the biggest investments in the past month.

Esports infrastructure services company, ReKTGlobal, acquires popular Las Vegas-based esports organization, Rogue. This news is significant as the company wants Rogue to pursue Overwatch and League of Legends franchises in the future. With such a significant undertaking in Rogue’s future, ReKTGlobal may look to make some major moves and seek out new partners in the near future. For more information on this acquisition, click here.

Epics.gg, a trading card platform centered around esports, raised $2 million in seed funding. The digital platform will allow esports fans the ability to buy, sell, track, and trade their digital cards. The cards will include rich media and statistics, much like traditional trading cards. For more information on this company and its successful seed round of investments, click here.

Millennial Esports, an esports management and technology firm, raises $12.1 million and acquires majority stake in Eden Games. Eden Games specializes in racing games, so this move makes sense for Millennial Esports, which is already involved in the digital racing scene. For more information on this, click here.

French esports organization, Team Vitality, raises $3.1 million and plans to use the money to enter esports leagues and create a League of Legends academy. With that much capital, it won’t be surprising to see Team Vitality’s name on the next list of potential candidates for an Overwatch or League of Legends franchise. For more on what Team Vitality plans to do with its newly raised money, click here.

Tencent increases its portfolio with investment in Chinese mobile game developer, Shanda Games.Tencent already has some titles in the mobile game space, such as its flagship mobile game Arena of Valor, but this acquisition should serve to further diversify Tencent’s already diverse gaming portfolio. For more on Tencent’s latest investment, click here.

Canadian venture capital firm, Blackhawk Resource Corporation, acquires UMG Media for $26.4 million. UMG Media is best known for organizing esports tournaments and for its online tournament and matchmaking platform, UMG Gaming. For more information on this major acquisition, click here.

Esports One, a data and analytics company, raises $3 million in seed round. The company aims to inform and entertain esports fans with live statistics during esports streams. For more about this esports analytics company and its successful seed round, click here.

ESL invests in Nazara Technologies, an Indian mobile game developer, in an operation-expanding move. After acquiring a minority stake in Nazara, ESL immediately signed a license agreement with one of Nazara’s subsidiaries, NODWIN Gaming, to organize and operate ESL competitions in India for the next five years. For more on this ESL expansion into India, click here.

Other Related Stories:

Professional esports continue to up the ante.

It used to be that the best players in esports were rewarded with nothing but bragging rights for their triumphs. But now, in addition to the pride that comes with being the best, top esports players are being rewarded with contracts and sponsorships akin to those of traditional sports athletes. Professional esports organizations continue to pop up to compete in organized leagues that are broadcast around the world. The industry isn’t just growing, it’s evolving into bigger and better things. Below are some of the top stories from the past month that highlight the evolution of the competitive aspects of the esports industry. . .

As professional gamers become branded content creators, more public relations training is needed. This article details the rise of the competitive gamer and how companies are shifting from sponsoring teams to sponsoring individual personalities who are both respected within their esport and engaging personalities for purposes of streaming media content. With this shift, and with recent public relations fiascos involving some of the streaming world’s most renowned personalities, brands would be wise to offer their newly sponsored gamers some sort of media and public relations training. For more on this informative article and the state of the sponsored professional competitive gamer, click here.

Rivalcade’s Esports Battle League, a geolocated esports league featuring multiple titles, starts to take form with first three franchise holders. While the industry has taken on a few geolocated leagues in the last few months, such as the Overwatch League and the NBA 2K League, nothing like this has ever been attempted. There is still a lot of work to be done in putting together Rivalcade’s future league, but the fact that three esports organizations have all put up the $1 million franchise fee is a huge step. For more on this upcoming league, click here.

Overwatch League targets Asia and Europe for new franchises. With the success of the league so far, Blizzard is planning to expand to Asia and Europe next season, with any new franchisee expected to pay more than the $20 million ponied up by each franchisee this year. Further, Blizzard expects the league to reach profitability next year. For more information on Blizzard’s expectations for the future of the Overwatch League, click here.

League of Legends Pro League experiences huge initial success with geolocated teams. While this success may be taken with a grain of salt, as experimentation with the new format came in the largest league with the largest fan base and with teams that can afford new arenas, it should serve as a demonstration to other leagues that following a traditional sports format can be highly successful. For more on the success of geolocation in the League of Legends Pro League, click here.

Shifting laws in Japan pave the way for esports players to start making serious money. Anti-gambling laws in Japan have inadvertently stifled the professional esports scene for a while now. However, the country is using an esports event to test run a new regime in which players will be able to earn larger pools of money than previously allowed, as well as licenses that will allow them to compete in paid videogame competitions in the future. For more on this dramatic shift in the Japanese regulatory scheme concerning esports, click here.

Houston-based venture capital firm has plans for massive esports arena. After the success of a Houston Outlaws Overwatch League launch party, Work America Capital Management, a Houston-based VC firm, has decided to jump headfirst into the Houston esports scene. The firm plans to build a $70 million, 120,000 square-foot tech-startup complex that will include a built-in esports arena, presumably for use by the Houston Outlaws next year. Then the Overwatch League moves to home and away games for its geolocated league. For more information on this investment into esports infrastructure in Houston, click here.

Former Dutch soccer star Ruud Gullit is starting up a FIFA esports academy to be called Team Gullit. The academy will take virtual unknowns in the FIFA esports world and provide coaching and support in developing each player’s brand. Gullit realized there was an “enormous world” behind the video game when he visited the FIFA World Championships last year. For more information on Gullit and the world’s first independent training organization primarily focused on FIFA, click here.

Tencent Games is planning a World Cup for its mobile esports title, Arena of Valor, with a prize pool of at least $500,000. While Arena of Valor only launched in the U.S. in December 2017, the Chinese version of the game is the world’s most played. For more information on this new tournament, click here.

Media, technology, and esports.

While each of these three industries is valuable in its own right, it is at the intersection of the three that some of the biggest deals today are going down. Below are some of the biggest stories from the past month at the intersection of media, technology, and esports.

Game over for net neutrality: esports in a deregulated internet. The repeal of net neutrality has far-reaching implications for the esports industry. For an interesting take on the future of esports in this new internet age (from the authors of this newsletter), click here.

Overwatch League opening a huge success, reaches 10 million viewers its first week. Between streams on Twitch and MLG, the Overwatch League reached an impressive number of viewers in its first week. At its peak, the new league had 437,000 viewers. But even though viewership took a big hit going into week two (see related stories at the end of this section), it looks as though the Overwatch League may live up to all the hype. For more on the league’s viewership during its first week, click here.

Twitch had a hugely successful 2017; The numbers back it up. With a 22 percent increase in watch time last year, Twitch’s growth is still trending upwards, and the popularization of esports should only serve to grow Twitch’s numbers and length of views further. For more on Twitch’s year in review, click here.

Twitch gives its content creators new tools, allowing prerecorded video for the first time. In addition to allowing content creators more options for sharing pre-made videos, as opposed to live streams, Twitch has also signed a deal to bring several YouTube stars on board to create content for the popular streaming site. For more on Twitch’s latest changes to its platform and content, click here.

Facebook lands big streaming rights deal, will be the exclusive destination for multiple leagues from esports federation ESL. This is a giant leap into esports for Facebook and a risky gambit for ESL, as the esports community has been indoctrinated into streams from Twitch. For more on Facebook’s big foray into esports, click here.

Facebook experiences issues in its first ESL Dota 2 stream. A tournament that was hugely successful in person had more than a few snags trying to stream to its thousands of viewers. When Facebook’s streams started out with inferior quality, many fans took issue; some even began to restream the event on Twitch. This led to ESL sending DMCA take-down notices and even banning some of the streamers. All of this was obviously a public relations fiasco that has hurt both the ESL and Facebook in the eyes of ESL fans. For more on this streaming hiccup that could have an industrywide impact, click here.

Facebook launches ‘Gaming Creator Pilot Program,’ a new streaming service. Despite its ESL stream mishap. Facebook is hoping to rebound from its mistake and take advantage of its mainstream appeal to soon become a major player in the esports streaming market. For more on how Facebook is trying to get gamers to start streaming through its new service, click here.

ELEAGUE Boston Major reaches peak concurrent viewership of 1.1 million during the final match of the Counter-Strike: Global Offensive tournament. This is an all-time record for an individual Twitch channel. While the Overwatch and League of Legends leagues get a lot of attention, Counter-Strike tournaments have long been successful and continue to perform well, both in terms of in-person attendance and streams. For more on this successful event, click here.

Nielsen report says that 71 percent of South Korean esports fans watch games on TV, as opposed to the 56 percent who view live events online. This finding, and others included in the Nielsen report, are very telling. Assuming that South Korea is a microcosm of the esports market, these findings suggest that if games were made more available on linear TV, more fans would consume esports that way. For more on this report, which examined audience trends in South Korea, China, and Japan, click here.

ELEAGUE will stream all of its events exclusively through Twitch. While Twitch was already streaming all of ELEAGUE’s events, in conjunction with YouTube and TV station TBS, this is a big win for Twitch, which will now be the sole destination for the league that is quickly gaining popularity for its events spanning multiple esports titles. For more on ELEAGUE’s deal, click here.

FanDuel co-founders looking to start an esports firm, Flick, which they’re promoting as “a new way for gamers to share and watch gaming content with their friends.” While the platform and the company are still in their early stages of development, the owners hope to soon raise “a couple of million” British pounds during a Series A round of venture funding. For more on this upcoming platform, click here.

Two former Apple executives have formed what they say is a simpler, safer streaming platform.The platform, called Caffeine, looks to simplify user interface and get rid of external software or configurations while also promoting a safer and more friendly community. To read more about this new platform, click here.

Google rumored to be developing its own game-streaming platform. Code-named “Yeti,” Google’s supposedly secret project appears to be a subscription-based streaming service that’s playable on Google Chromecast devices. If this is indeed what Google plans on doing, the article suggests that maybe Google is also planning a new version of Chromecast with Bluetooth connectivity and a game controller. For more information on this, click here.

Razer finally unveils the phone it designed with mobile gaming and streaming in mind. This beautiful phone features a Qualcomm Snapdragon 835 processor and 8 GB of RAM, as well as a hefty price tag of $700. The price may be worth it for diehard mobile esports players who are looking to get an edge over the competition. For more info on this state-of-the-gaming-art phone,click here.

© 2023 Foley & Lardner LLPNational Law Review, Volume VIII, Number 59

About this Author

Mary K. Braza, Foley Lardner, Sports Industry Team Lawyer, Franchise Acquisition Attorney

Mary K. Braza is a partner and litigation lawyer with Foley & Lardner LLP and a former member of the firm’s management committee. As co-chair of the Sports Industry Team, she advises stakeholders in significant sports franchise acquisitions and valuations; stadium/arena financings, redevelopments and ancillary developments; and issues surrounding league and team operations such as broadcast television and radio deals, regional sports networks, new media, social media, mobile rights, sponsorship agreements, naming rights, concession and merchandising agreements, and...

Jonathan Israel, foley lardner, professional collegiate sports, Olympic attorney, entertainment lawyer, private equity funds law,

Jonathan L. Israel is a partner and litigation attorney with Foley & Lardner LLP. He advises clients on a wide variety of traditional labor and general employment matters, both in the United States and internationally. He practices in diverse industries, including professional, collegiate and Olympic sports, entertainment, media, financial services, hedge and private equity funds, transportation and retail.

Previously, Mr. Israel was assistant general counsel at the National Basketball Association, where he served as in-house counsel to the...

Raymond Luk Jr., Associate

Raymond Luk Jr. is an associate and business lawyer with Foley & Lardner LLP. He is a member of the firm’s Transactional & Securities Practice, and is admitted to practice law in New York and Wisconsin. He is not currently admitted in Michigan.

In 2012 and 2013, Mr. Luk was a summer associate with Foley and assisted in several practice areas, including Transactional & Securities, Finance & Financial Institutions, and the Sports industry Team.


Mr. Luk earned...

Kadmiel Perez, attorney, Foley

Kadmiel Perez is an associate with Foley & Lardner LLP. He is a member of the firm’s Intellectual Property Litigation Practice.

Prior to joining Foley, Mr. Perez worked as a legal clerk and paralegal aide at a Tallahassee-based law firm. As a law student. Mr. Perez gained experience as a legal department intern at Harris Corporation, where he researched and drafted answers to urgent and complex legal matters, mostly in the areas of intellectual property and government contracting.

Kevin Schulz, attorney, Foley

Kevin R. Schulz is a partner and business lawyer with Foley & Lardner LLP. His practice focuses in the areas of mergers and acquisitions (M&A) and commercial transactions. Mr. Schulz is a member of the firm’s Transactional & Securities, Commercial Transactions & Business Counseling and International Practices, as well as the Food & Beverage, Manufacturing and Health Care Industry Teams. He is co-chair of the Sports Industry Team.