Author Aside: I'm not sure how critical it is to include some "forest-eye view" articles at the start of my blog since these topics have been covered in dizzying detail on other sites, but the small amount of effort may very well help some poor lost soul who has just started wondering what odd corner of the internet they just stumbled upon, so here it goes.
It is important to understand the framework from which legal controversy arises in the esports scene before delving into the topics themselves. Each of these actors plays a critical role in the overall ecosystem of esports.
The Game Developer
What would basketball be like if nobody have ever bothered to invent the baskets? Without the game, there can't be an electronic sport built around it. Perhaps this seems stunningly obvious to most, but the intricacies surrounding the role of the developer are subtle and invisible--right until the point in which a fledgling esport runs into the brick wall of capital "I" Intellectual Property. Every video game, even those co-opted by esports community, belongs to the individual, or company, that created it. It is a product of their imagination, artistic, and technical prowess. The law recognizes the sheer amount of effort that goes into the creation of quality creative products, and protects the game from outsiders who seek to use the developer's creative genius for their own purposes.
The legal system protects this work from this creative thievery. I will discuss the role of intellectual property in esports at great length at a later date, but the big picture takeaway is that, in most instances, the game developer can put an end to any commercial, and many non-commercial, use of their product. This includes all esports competitions, and unauthorized fan projects that use the games likeness. As a result, before any game has a real chance to get off the ground as an esport it needs to have the explicit, or at least implicit, permission from the developer. A perfect example is when Nintendo told Evolution Fight Game Championships, a well known tournament series, not to stream, or even run a tournament, using Super Smash Bros. Melee. Public outcry convinced Nintendo to reverse course, but the point still remains; Nintendo was well within their legal rights to shutter the SSBM competition. The esports scene must remain in the good graces of the game developer, or the developer can end the competition at their leisure. This is quite possibly the largest difference between esports and traditional sports--nobody owns the game of basketball.
The players are the bread and butter of the esports scene. They are the entertainers, the "athletes" (I know some people will take offense to the term, but it's the truth), and without a strong and stable crop of players the competitive scene would die entirely. The players also tend to be the least business savvy of the major forces in the esports scene. They tend to be young, and so intensely focused on competing that other groups in esports, especially teams, tournament series, and sponsors, tend to exploit them for their enthusiasm. Basic theories of supply and demand rule the day--there appears to be a nearly unending supply of young people wanting to make it big as a player, but only so many slots to go around. Compare this to high school football: only a tiny fraction of those players will ever make a living playing a game that they love.
This does not excuse the fact that it seems as though there is a scandal involving a player being taken advantage of every week. Protecting these players both through the law, and through public awareness of the need to take a step back and look at their business deals objectively, will improve the esports in the long run. Where there is stability, there is higher level of play. At the end of the day the spectators watch these games to see the best competition possible.
Another interesting facet in the esports scene that differs from traditional sports is that it is in the game developers financial interest to attract as many of these players as possible to increase their own bottom line. Even those gamers who never make it to a professional tournament will spend money on the base games, and will advertise and recommend the games to others. Even where the game developers are not making money on esports events themselves, they will incidentally make profit through the exposure given to them, so long as the exposure is of a positive nature. For that reason, it is important for the players and game developer to develop healthy relationships with one another.
The Esports Teams/Organizations
The New England Patriots, the Atlanta Braves, the Mighty Ducks (kidding), these are the names of teams that instill such loyalty that parents pass down their affiliation to their children. It is this sort of loyalty that esports will need to install to create a lasting structure that can survive the inevitable ups and downs in the esports scene. The more invested the viewers become in their teams, the more likely they will watch the matches, buy the merchandise, and show their support over time. It is also an easy vehicle for the types of storylines that drive interest (think of the Cubs legendary World Series drought). However, there are some practical differences between traditional sports and esports teams that need some discussion.
Perhaps the most obvious difference is that most major esports organizations do not limit themselves to a single game. It is analogous to the idea of the Red Sox having a baseball, basketball, and football team. While it is true that some owners of sports teams have stakes in multiple teams, they are still separate structures for all practical purposes. This is not the case in esports. Organizations like Team Liquid have teams in League of Legends, Counter-strike, Overwatch, and individual players in Super Smash Brothers. This creates interesting branding opportunities that traditional sports lack: a viewer who loves Team Liquid's Overwatch team may turn on a Counter-strike match if Team Liquid is playing, even though they would not otherwise watch Counter-strike. This allows sponsors to expand their reach into different niches of the esports community by contracting with organizations. At first blush, this is a major advantage.
However, this structure can also be a disadvantage. It can be devastating when a team organization succumbs to scandal or financial pressure, as the resulting chaos stretches across multiple esports titles, instead of a single game. In addition, the larger the organization, the more opaque it becomes. Conflicts of interest begin to arise when these super owners become involved in both the teams and tournament creation scene. Some outside groups are attempt to address this issue, but there's still a long way to go.
Sponsors are the conduit for esports into the mainstream. Take one look at a NASCAR vehicle and you'll immediately understand the power of sponsorships. They are the driving financial force behind most sectors in entertainment. When someone has a product to sell, and there's an audience of people with money that would be willing to buy it, sponsors will spend money to put their product in front of these viewers to turn a profit. The allure of big sponsorship money is one of the driving forces behind the exponential growth of esports investment. Even professional basketball team owners are investing in the scene.
One of the major reasons for the gold-rush style growth in investment is demographics. Sponsors are always looking for ways to put their message in front of people with money that would otherwise be hard to reach. Young people, ages 25 - 40, are some of the most sought after eyes for advertisers. They are also a large part of the growing group that cutting the cord from traditional media outlets, while moving their time and attention to the internet. Esports represents a new method to reach these young people, and sponsors are willing to take the financial risk to reach them.
Of course, this will undoubtedly lead to some growing pains as traditional companies and advertisers adapt to differences between traditional sports and esports. There are also worrying signs that traditional financial firms are unequipped to deal with the valuation of esports, especially given the rather insane potential valuation of the upcoming Overwatch League making revenue of 720 Million a year; a number larger than the entire market value of all esports titles combined at the present time. Much of this revenue is expected to come from advertisement, and only time will tell if the money converts as well as everyone involved is expecting.
Tournament organizers fall into a strange category in the esports scene. In some games, they are the glue that holds everything together. They run events, promote their events, and are instrumental in the growth of the esports scene for that respective title. In other games, they have next to no third party involvement with the game. League of Legends is a perfect example: all of the professional tournaments are run by the game developer, Riot, themselves. The third party organizers have been cut out of the loop, and due to the laws surrounding intellectual property, it is next to impossible for these organizers to gain a foothold without the express blessing of the developer.
Even so, for many titles these third party tournament organizers are instrumental in the growth of an esports title. They help to provide legitimacy to new games, and help to promote new titles by using their considerable social media presences. They are in turn compensated by their sponsors, many of which sponsor the tournament organizers themselves. Think of the Sprint Center in Missouri; it is multipurpose, but lends itself to a certain level of professionalism. So too do these tournament organizers gain sponsors by producing professional events, without reliance on the sales of copies of the esports game, or third party products.
I hope this initial overview of the major forces in the esports scene was useful or informative. If you enjoyed this piece, let me know in the comments or on twitter. If you thought it was boring, or could use some work, let me know that as well! I'll be diving into the issues in more depth in the near future, and I'm happy to address any questions that my readers are interested to learn more about.