Current Legal Issues in Video Games and Esports
| Publication year | 2020 |
| Author | By Yen-Shyang Tseng |
By Yen-Shyang Tseng
Yen-Shyang Tseng is an appellate attorney at Horvitz & Levy LLP in Burbank.
YTseng@HorvitzLevy.com
The year 2019 marked incredible growth in video games and esports. Video games generated an estimated $152.1 billion in revenue, a nearly 10% increase from 2018, while esports are estimated to have generated $1.1 billion, about a 30% increase. Forbes recently estimated two top esports teams, Cloud9 and Team SoloMid, are now worth $400 million each, up from $310 and $250 million the year before.
A recent example showing the growth of esports is the Fortnite World Cup, held in July 2019 with a $30 million prize pool. This event took place at the Arthur Ashe Stadium, perhaps better known for being the primary venue for the U.S. Open tennis tournament. Tickets to the event sold out, and an estimated 2.3 million viewers watched the finals on Twitch and YouTube.
Other major esports such as League of Legends, Dota 2, Counter-Strike: Global Offensive, Overwatch, PlayerUnknown's Battlegrounds, and Magic: The Gathering also remain successful. This growth will no doubt continue in 2020. But the expansion of this new industry, as well as changes in the way video game companies monetize their games, have led to legal disputes. What follows is an overview of some of the interesting legal issues to watch in the coming year.
Much has already been written about loot boxes — in-game boxes containing random items that players can buy using real money — which generated close to $30 billion in sales in 2018. The main controversy concerns whether loot boxes should be regulated either because they constitute gambling or because they harm minors due to the randomized reward structure. While debates over these questions began years ago, 2019 was an important year for legal and regulatory developments.
In May 2019, Missouri Senator Josh Hawley introduced a bill to regulate loot boxes. (Sen. Bill No. 1629 (2019-2020 Reg. Sess.).) In August, the FTC held a public workshop to examine them. At least two lawsuits venued in California have alleged violations of consumer protection statutes over the advertisement and sale of loot boxes. (Smith v. Blizzard Entertainment, Inc. (Super. Ct. Sac. County, July 23, 2018, No. 34-2018-00237322) 2018 WL 4051570; R.A. v. Epic Games, Inc. (C.D. Cal. Feb. 28, 2019, No. 2:19-cv-1488) 2019 WL 1002976.)
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Perhaps as a result of this pressure, the video game industry has begun to self-regulate. Apple and Google already require disclosure of the odds of obtaining random items in loot boxes for apps on the Apple App Store and Google Play Store. By 2020, Nintendo, Sony, and...
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