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Esports license agreements on IP rights can see publishers, clubs, and sports leagues grabbling for their exploitation.
Esports are continuing to grow in popularity. This circumstance has highlighted their commercial potentials since clubs and sports leagues seek to monetize their IP rights with video game publishers and esports organizers.
At the same time, brands sponsorship and advertising are the largest revenue streams for both sports and esports teams which now have also attracted non-endemic brands. Consequently, professional sports teams and leagues would exploit their unique IP rights by licensing them to publishers and increasing the brand awareness and the experience to find new audiences through esports.
The exploitation of Italian football league IP rights
The licensing of the right to use the name of Italian football competitions is within the domain of football associations, such as the Italian FIGC, where the FIGC may grant publishers an exclusive license for the use of Serie A, Serie B, and the Coppa Italia. On the contrary, the right to license club-specific IP rights such as the team name, crest, and football kits is held by each club. It is negotiated through a separate license with video games publishers.
How US leagues license their IP rights
The most important distinction between most European sports leagues such as Serie A and US sports leagues such as the NFL is that the latter retains the ability to enter into their own gaming partnerships. This circumstance means that players and teams have limited autonomy to enter into separate deals. Accordingly, US sports leagues operate as a collective franchise of the teams, and the commercial benefit deriving from esports tournaments flows back to the teams through the national association.
What are the consequences of the exploitation of IP rights through esports license agreements?
A strong centralized licensing system where the videogame publishers are granted a full set of rights creates a better user experience. This circumstance would avoid scenarios with video games having a mixture of fully licensed teams and sports leagues and unofficial team sports league names. However, a centralized licensing system can create a significant barrier to entry for publishers who have no rights to use players and clubs’ IP and cannot produce a game that fans deem credible.
While, with the opposite scheme, sports teams may have as much autonomy as possible to license their IP so that they can enter into agreements with publishers, in a context where:
- sports leagues have less bargaining power than the clubs; and
- sports teams may develop and increase their revenues using the digital strategy of their marketing team.
Currently, the licensing environment is fragmented, with sports leagues in various jurisdictions offering different rights to video game publishers. Yet, even with these possible obstacles, the most important step to be accomplished is to negotiate appropriate licensing agreements considering:
- the extent of and limitations to sports teams’ IP rights;
- the ability and the responsibility for video games publishers to take enforcement action when IP rights are infringed; and
- the implications of taking, or failing to take, enforcement action.
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