The World of E-sports Contracts
Photo by Alex Haney
E-sports is a relatively new venture—the world of professional gaming is still in development. For that reason, there are no standard contracts or standard terms, and it can be very easy for the unwary to unknowingly contract away their valuable right. Here are a few things for players to consider when entering into this industry:
Streamer vs. E-sports Athlete:
Think carefully about how your personal brand and gaming skill fits in with the gaming industry. Affiliation with an e-sports team is an excellent path for some professional gamers, but those with a sizeable following already may find that the compensation from streaming full time rather than joining an e-sports team is more favorable to them.
Be Careful About Your Communications and Consult an Attorney
With professional e-sports contracts, as with any contract, you should have an attorney look over anything that can bind you legally. Remember that you do not necessarily need to sign a written formal document to create a contract—you may inadvertently enter into a binding commitment orally, through a letter of intent, or even an email.
Do Not Feel Pressure to Move Quickly
E-sports positions are rare and extremely competitive. Thus, e-sports teams may pressure a prospective player to sign an agreement as quickly as possible. Do not let teams pressure you into signing an agreement you have not reviewed with an attorney. Legitimate e-sports teams understand this: if they advise you against seeking an attorney to review the proposed contract, that should immediately raise concerns about the e-sports team.
Considerations in E-sports Contracts
Compensation: The first thing to nail down is compensation, which can take many forms in an e-sports contract, such as salary, winnings, technology allowances, and bonuses. These points should be carefully negotiated and memorialized. E-sports contracts generally compensate their players on a hybrid salary/performance-based model. For example, the player receives a base salary per month and a 70/30 revenue split where the team will take 30% of the player’s competition winnings. The current industry trend for large e-sports teams is for tournament/competition winnings to be solely awarded to the players, with teams preferring to maximize revenue through merchandizing and sponsorships. Contracts typically include performance-based bonuses based on league qualification and player ranking.
Obligations: E-sports contracts differ substantially regarding what is expected from the player. Some contracts mandate more than 150 streaming hours per month in addition to competitive training and tournament play. Additionally, players are typically required to spend time marketing, whether by attending promotional events or appearing for interviews. Be sure to know what you are signing up for and analyze whether the compensation scheme is fair compared to the requirements.
Revenue Streams: Don’t leave alternative revenue streams to chance. E-sports players have other revenue paths other than compensation directly from the e-sports team. For example, it is prudent to determine at the onset what type of content you can independently create and make money from. Can you make highlight packages of your play and upload them to YouTube? If so, must you share your ad revenue with the team? Additionally, e-sports players should address merchandising as well. It is not uncommon for e-sports players to receive a share of revenue from player-branded merchandise.
Intellectual Property Ownership: As in traditional sports, there will come a time when your competitive playing career is over. Think beyond the short-term and remember that you are more than your playing ability—you are a brand. Be sure that you have a clear understanding of your own intellectual property, including image and likeness rights, to ensure that you can continue creating content and earn after your professional e-sports career is over. If possible, you should seek to retain any of your personal intellectual property, such as trademarks and copyright. Even better is to secure your intellectual property and brand before you sign with an e-sports team.
Dispute Resolution: What happens if there is a problem? Who do you discuss issues with? Can you be traded to another team without your consent? As with any contract, you should hope for the best, but plan for the worst. You need to consider what happens if you suddenly become sideways with the e-sports team. For example, will you be able to sign with another team? What are the termination provisions? Consider whether a buyout clause is appropriate.
The world of professional gaming is an exciting place to be. If you are contemplating a career in professional video games as a streamer or e-sports player, we would love to hear from you.
For more information on this article and this topic, contact Christopher L. Harbin.