Legal Perspectives June 01, 2017
This article originally appeared on Law360, available here.
Streaming video game content is big business. User-created gameplay videos, live gameplay streaming, and esports tournament video coverage have become an increasingly prevalent part of the burgeoning gaming ecosphere. Juniper Research recently reported that streaming and esports game content will generate $3.5 billion by 2021, nearly double the 2016 total of $1.8 billion. Multinational brands, consumers, advertisers, investors and esports athletes are flocking to streaming game content, vying for revenue from advertising, digital tickets, subscriptions and game purchases. Amazon.com Inc.’s esports streaming site, Twitch, alone is expected to generate $20 billion in revenue and $1 billion in profits by 2020.
Streaming websites broadcast footage, live or prerecorded, of video games, often with in-game, live commentary from players and viewers. Increasingly, these streams feature advertisements displayed before and after videos, and as video overlays. Game developers’ legal policies, the Digital Millennium Copyright Act, the fair use doctrine and technological advancements are interacting to redefine how intellectual property rights govern this new generation of entertainment. With billions of dollars at stake, game publishers, streaming distribution channels (e.g., YouTube), and esports athletes are jockeying for the best position in this evolving legal landscape.
The use of game images and video are subject to copyrights held by the game’s developer or publisher. A game’s copyright holder can use copyright law to limit how their video game is used in online videos and streaming gameplay, because those uses likely constitute “copies” or “public performances” as those terms are defined in the Copyright Act. A developer could refuse to allow anyone to post videos or images from their games, and could issue DMCA takedown notices or initiate lawsuits to police unauthorized use of game content. In that scenario, only videos that meet the fair use exception to claims of copyright infringement would be allowed.
In practice, most developers have opted to embrace, or at least grudgingly accept, user-generated content and game streaming as a fundamental and lucrative component of the video game and esports industries. These activities can provide free publicity for the game, expand its user base and create vibrant communities of gamers sharing their experiences with games.
Many developers have policies that allow them to exert control over user videos and streams. Blizzard Entertainment, creator of "World of Warcraft" and the hugely popular "Overwatch," expressly permits customers “to create video productions using Blizzard’s Content” if the video is accessible to viewers free of charge. Blizzard’s policy limits use of company content to “noncommercial use,” but includes an exception allowing video creators to earn partnership fees from YouTube, Justin.tv, Blip.tv, Own3d.tv or Ustream.tv.
Bethesda Softworks has a similar policy governing video of its games. It encourages monetization of player videos through YouTube or other video platform partnership arrangements. However, Bethesda reserves the right to take down videos leaking content from illegally obtained versions of its games, videos that violate nondisclosure agreements and “wildly inappropriate content.” That may seem permissive, but Bethesda also reserves the right to take down “[a]ny videos that we deem need to be removed — because, let’s be honest, people come up with stuff that hasn’t even occurred to us yet.”
While amusing, that last catchall in Bethesda’s policy is a reminder that the policy operates as guidance, and is not a real limitation on the company’s ability to enforce its rights. Nothing in the policy prevents Bethesda from issuing a takedown notice to remove any video using company content for any reason.
But enforcement has its own risks. Atlus USA Inc., which released "Persona 5" worldwide on April 4, 2017, faced media and customer backlash after issuing a launch day warning to against streaming or creating videos showing game content beyond a certain in-game date. Atlus imposed the restriction to prevent the game’s storyline from being spoiled for players. On April 26, 2017, Atlus issued an apology for threatening gamers, and extended the in-game date cutoff for authorized use in videos, but did not fundamentally change its policy.
Atlus’ experience illustrates the delicate balance developers — particularly of games more reliant on their storylines than on multiplayer competition or open-world exploration — must strike between protecting their product via copyright strikes against streamers and video creators, on the one hand, and alienating their customers, on the other.
Technological advancements provide solutions, and new unintended problems. For example, Twitch partnered with Audible Magic, a service that automatically detects and mutes copyrighted audio content on prerecorded video. Nintendo uses YouTube’s automated Content ID system to flag copyrighted content appearing on streams. Nintendo’s affiliate program mandates that streamers share profits from videos using footage of their games with Nintendo or risk legal action to take down the video. Some argue that Content ID prevents individuals from making money for videos that qualify as fair use. For example, in March 2017, a reporter who covers Nintendo on his YouTube channel had a video blocked when Content ID flagged use of a two-word game sound effect. YouTube removed the flagged video.
As companies and consumers experiment with different potential solutions, the most judicious approach may be based on economics. Streams can encourage people to purchase games they were previously unsure about, and studies show most viewers have already purchased the game they are watching. Strict enforcement of intellectual property rights and mandatory monetization policies by developers can stifle media coverage of games and some of the user creativity driving the growth of this multibillion-dollar industry.
Developers may sell more games by allowing streaming with few restrictions than by prohibiting monetized streaming. Esports athletes, now earning millions of dollars per year, are a large part of the game streaming economy. Some have begun boycotting games that prohibit streaming, arguing that streaming is a fundamental evolution of how games are consumed. As the monetization of game videos and live streaming becomes more lucrative, expect more innovation in the tug of war over video revenue within the symbiotic relationship between game developers, video platforms and streamers.