JTIP Blog

The monopolization of intellectual property (IP) in the video game industry has increasingly attracted attention as many antitrust-like issues have arisen. These issues are, however, not the prototypical issues that antitrust law is classically concerned with. Rather, supported by the United States’ IP system, video game publishers (VGPs) have appropriated video game IP to construct legal monopolies that exert control over individuals involved in the esports (and greater video game) industry. Particularly, this control disproportionately affects the employees of VGPs who provide live commentary, analysis, and play-by-play coverage of esports competitions (hereinafter “esports casters”) by impeding their ability to freely utilize and monetize their skills and knowledge. This restriction further hampers their capacity to adapt to evolving market conditions and secure stable employment in the field. Moreover, it creates barriers to entry for aspiring casters, thereby diminishing the industry’s diversity of voices and perspectives. 

The Pieces That Make Up the Esports Industry 

First, it is important to understand the structure and landscape of esports. The esports industry can be, generally, equated to any other “traditional” sport. Like in any “traditional” sport, there are players, coaches, team/player support staffs, casters & analysts, and production crews. Excluded from this list are game developers. Game developers are an integral part of the esports industry but have no comparative equivalent in “traditional” sports. From a functional perspective, the esports industry also operates incredibly similarly to “traditional” sports. There are regional leagues, seasons, playoffs, championships, team franchising & partnerships, rules (and referees), salary parameters, player trading & player contracts, practice squads, scrimmages, and sports betting.  

So why are esports casters disproportionately affected if esports and “traditional” sports are structured effectively in the same manner? To answer this, it is important to understand the role legal IP monopolies play in the esports industry. 

The Monopoly Power of IP in the Context of Video Games 

Unlike “traditional” sports, esports exists in a unique landscape where the IP of the entire sport is legally controlled by a single entity, the VGP. As an exploratory example, let’s analogize American football to esports. No entity entirely owns the game of football, but individual entities entirely own video games (like Riot Games for League of Legends and Valorant, Valve for Counter-Strike, and Activision Blizzard for Call of Duty). Moreover, the National Football League (NFL) lacks both the legal and physical capacity to stop or otherwise place conditions on every group that would like to play football, but Riot Games, Valve, and Activision Blizzard are legally within their rights to prevent players or entire leagues from playing their video games. This inherent quality of the esports industry functions as a legal monopoly and makes the industry unlike any other broadcasted competition. 

The Legal IP Monopoly is NOT a Competitive Monopoly 

When people think of monopolies, they typically think of competitive monopolies. Simply put, competitive monopolies are created when a single seller or producer assumes a dominant position in a particular industry. However, the monopolies VGPs have created are limited legal monopolies and thus are not the monopolies that antitrust law is concerned with. 

The precise distinction between the two monopolies (and their associated governing legal frameworks) is as follows. Antitrust law promotes market structures that encourage initial innovation with a competitive market, while IP law encourages initial innovation with the asterisk of limited exclusivity. More specifically, antitrust law enables subsequent innovation by protecting competitive opportunities beyond the scope of an exclusive IP right. When competitive opportunities are not present (i.e. a competitive monopoly has been created), antitrust law steps in to reestablish competition. Contrarily, IP law enables subsequent innovation by requiring disclosures of the initial innovation. The nature of these disclosures limit the scope of the control possessed by any particular holder of an IP right. What this means is that IP law provides narrower, but legal monopoly power over a particular innovation. 

While the above discussion is patent-focused, it is equally applicable to businesses that rely more heavily on copyright and trademark. Nevertheless, VGPs rely on all forms of IP to construct a comprehensive IP wall around their respective video game titles. 

Are VGPs’ Legal Monopolies Harmful? 

Because the legal monopoly is not one that antitrust law is concerned with, there is no law or governing body investigating or overseeing the monopoly-like practices and problems created by VGPs. As a result, these issues have been deemed as intrinsic characteristics of the esports industry, limiting the ways in which individuals can seek remedies. While there have been isolated wins related to equal pay and discrimination, there is yet to be any comprehensive attention given to the power imbalance of this industry. What this leads to is issues of job mobility and skill transferability for esports casters. 

Why Only Esports Casters? 

Game developers and production crews aren’t as affected by the job mobility and skill transferability issues simply because the skills required for their respective roles are easily transferable to other industries. A game developer who works on character design, can move to the film industry and work on CGI. Similarly, a camera operator for North American Valorant competitions can go be a camera operator for Family Feud. For players, their employment is controlled by the partnered / franchised teams and not the VGPs. As it is in “traditional” sports, players are free to move within and between the leagues as their contracts permit. 

Esports casters are different though. In professional football, casters, while well versed in the game of football, have substantial opportunities for job mobility if a particular situation is unfavorable. The reason being relates back to the NFL’s inability to monopolize the sport of football, meaning other football leagues can exist outside of the NFL. What this means is not only are football casters capable of transferring their skills within the NFL (such as Al Michaels’ move from NBC to Amazon), but football casters can also move to other leagues (like NCAA Football, Indoor Football, and the XFL). Comparatively, this is simply not an option for esports casters. Because VGPs are able to create a legal IP monopoly around a particular game (making them the single source and sole employer for esports casters of that respective game), they can completely control the leagues and broadcasts associated with their games. The economics of this makes it so VGPs can underpay their esports casters because (1) there is no other league that covers the same game they cast and (2) while possible, transitioning from casting one video game to another is not easy (think a football commentator becoming a basketball commentator). As a result, VGPs can create an exploitative employment structure in which esports casters are not treated in accords with the value they provide. This leads to barriers to entry for new casters, a lack of diversity in the industry, and challenges for existing casters to adapt to changing market conditions. 

Possible Solutions 

Esports casters’ ability to monetize their skills and knowledge is often limited by the exclusive use of IP rights by VGPs. To resolve this, a careful balance must be struck between IP rights and the livelihoods of individuals in the esports industry, including casters. One possible solution could be to consider a union-like structure that advocates for casters. This solution would give esports casters the opportunity to consolidate pay information, standardize contractual obligations, and voice their concerns about the structure of the esports industry. While the implementation of such an organization would be challenging considering the novel, underdeveloped, or constantly fluctuating nature of the industry, there are already many advocates in esports that are pushing for better compensation, inclusivity, and benefits for casters and analysts. 

Even though progress is slow, the industry is improving. Hopefully with these efforts, the esports industry can become fairer and more inclusive than other “traditional” sports. Nonetheless, the only certainty moving forward is that the legal IP monopolies surrounding video games are not going anywhere.