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Home , G2 Esports, League of Legends, Riot Games

League of Branding Three recent partnerships by showcase the potential of organization sponsorship deals.

December 2019 by James Chang, Neil Thakur and Sean Gilbert

James Chang | Counsel Last month in Paris, and FunPlus Pillsbury | office Phoenix competed in front of thousands of +1.213.448.7127 [email protected] fans for the title of world champion, with millions more tuning in to live streams from around the globe. Neil Thakur Managing Director, Cofounder These teams did not compete on a soccer pitch, a basketball court, or a baseball Teknos Associates diamond. Instead, they met on stage at Paris’ AccorHotels Arena, a venue +1.650.330.8802 more commonly associated with concerts than competitive sporting events. [email protected] This event was no “ordinary” world championship; the teams in question participated in one of esports’ preeminent events, the World Championship. Despite the title’s humble beginnings, Riot Games’ multiplayer online battle arena (MOBA) offering has grown to levels of popularity Sean Gilbert historically associated with marquee conventional sports, and the World Associate VP Championship is League’s crowning achievement. Teknos Associates +1.650.330.8814 The event has grown significantly from its first occurrence in a conference [email protected] room in 2011. Over the years, it has taken place at arenas and stadiums such as the in Los Angeles, in New York, and the National Stadium in . While esports is still in its infancy—League of Legends has only existed for 10 years—the demographics of an esports audience are incredibly compelling for both endemic and non-endemic partnerships. Global Esports Market Highlights

Thanks in part to the proliferation of YouTube, and other streaming services, esports commands a truly global audience. Furthermore, esports is 79% particularly appealing to a younger—and profitable—demographic, with a 2018 of viewers are under 35 years old. report from Goldman Sachs estimating that 79% of esports viewers are under the age of 35. In addition, according to Newzoo’s 2018 Global Esports Market 52% report, it is estimated that as much as 52% of the global esports audience stems of its audience is in Asia. from Asia, a geographic region experiencing robust economic growth and a drastic increase in the incomes of average citizens. As such, it’s no surprise 45% that brands from across the globe are looking to establish partnerships with of gaming revenue comes from mobile. flagship gaming titles in an effort to expand their presence to new audiences. In

Optional label for Practice when there is no Bio info included. Pillsbury Winthrop Shaw Pittman LLP pillsburylaw.com Esports Esports the months leading up to the League coveted trophies. The partnership Analysis: of Legends World Championship, will also see design Not the Run-of-the-Mill Riot Games announced a number in-game cosmetic items for League License Agreement of partnerships with globally of Legends that can be purchased via The creation of products that renowned brands—both endemic and . This agreement contain inspiration drawn from non-endemic in nature. is the first time that Riot Games is others—both in a game and in the allowing a third-party, commercial real world—create interesting issues organization to design in-game skins for the companies in terms of their The Unlikely Sponsor: and cosmetic items for League of intellectual property (IP). While the Louis Vuitton Legends champions. exact details behind the deal are not Beginning in September, Riot Games public, for any company looking to announced a surprising partnership Given that League of Legends form a collaboration such as this, one with luxury goods provider Louis generates the majority of its revenue of the most important aspects will be Vuitton, which will design a bespoke via in-game microtransactions, this creating individual licenses, or a cross travel trunk for the Summoner’s Cup represents a significant extension of license between the two companies, (awarded to the winner of the League good faith on the part of Riot Games, so that they do not infringe on each of Legends World Championship). with a very real potential impact on other’s IP. Though Louis Vuitton had previously the company’s bottom line. Existing champions’ skins in League of Legends produced similar cases for FIFA’s For example, for Riot to sell Louis range from a few dollars to as much World Cup trophy and the America’s Vuitton-branded skins to its users, it as almost twenty dollars, and while Cup, its foray into the world of will have to obtain permission to do details on the exact nature of Louis esports undoubtedly surprised fans so. As with any Vuitton’s offerings have been slim of both League of Legends and Louis that sells virtual items, Riot is not only thus far, it’s not hard to imagine that Vuitton, yet, given the demographics in the position of being the seller of the designs will be priced toward the of esports viewership, it’s not difficult the items, but also its custodian since top end of the range. to understand the rationale behind the items only “exist” to the extent the partnership. Furthermore, the design influence they are stored on Riot’s servers. Louis Vuitton is in a similar situation From Riot’s perspective, it is will not be flowing only one way. in that it would have had to obtain a procuring a long-term partnership Louis Vuitton is reported to be partic- license from Riot to create real-world with a well-known luxury goods ipating in a clothing release inspired clothing based on characters in brand associated with marquee by two characters from League of League of Legends. Fortunately for conventional sports. Such an Legends, enabling them to establish a Louis Vuitton and unlike Riot, once alignment helps further legitimatize compelling crossover narrative across Louis Vuitton sells its products to a esports as a competitive endeavor two historically disparate markets. customer, they no longer need to be even as it helps reframe what one a custodian. thinks of as the “gaming lifestyle.” “A long-term partnership The fact that Riot will remain the From Louis Vuitton’s perspective, a with a well-known custodian of the items for as long as partnership with Riot Games serves luxury goods brand the game exists creates an interesting as an opportunity to differentiate need for Riot that is not seen in your itself from other luxury goods brands associated with run-of-the-mill license agreement. to an increasingly affluent, global marquee conventional At some point, if the collaboration audience that may otherwise never between Riot and Louis Vuitton ends have so much as contemplated sports helps further but League of Legends continues, Riot purchasing Louis Vuitton products. legitimatize esports as a will presumably continue to require Louis Vuitton and Riot Games’ competitive endeavor.” permission to host the virtual items partnership extends far beyond a and display the designs in its game. bespoke case for one of esports most As such, Riot would have presumably

Pillsbury Winthrop Shaw Pittman LLP League of Branding had to have negotiated a requirement tournament’s most valuable player narratives surrounding competitive that it be able to continue to display (MVP) award. Furthermore, OPPO League of Legends, while OPPO the designs even after the cross will present behind-the-scenes stands to benefit from the exposure collaboration ends. footage via its “OPPO Cam” and will brought by one of the world’s largest produce standalone segments on and most recognizable competitive On the other hand, as we have seen in teams participating in the compe- video games. many cases, sometimes partnerships titions. While Riot Games certainly do not end amicably, and the involved stands to benefit from the additional, Analysis: parties need to permanently separate lifestyle-oriented productions, there The Data in the Details from one another. While fans of each is substantial upside for OPPO, as well. OPPO’s deal to produce videos for brand undoubtedly wish the best Riot’s games using its OPPO cam for both Riot and Louis Vuitton, the According to Counter Point requires its own set of unique consid- designer may have elected to insert Research, OPPO’s share of the global erations. League of Legends has a a special termination clause into its smartphone market stood at approx- strong following across the globe, but license where termination under imately 9% at the end of Q2 2019, one market in which it is especially certain circumstances would require roughly unchanged since Q2 2018. popular is in Europe, where the 2019 Riot to stop showing its designs even By aligning its brand with a global World Championship was hosted. A to users who had purchased the esports title, OPPO stands to benefit large European fan base means that skins. This is an especially important from increased brand recognition, European residents will likely be consideration for an organization which it undoubtedly hopes will lead present either in audiences or in the that derives so much of its value from to increased smartphone shipments. teams, and for any entity wishing to brand equity, as Louis Vuitton does. This is particularly true in the West, publish content containing images where it is less well known compared of European residents, that means to brands like Apple, Samsung they would have had to consider Upwardly Mobile: OPPO and Huawei. Not content to rest on its laurels, the European Union’s General Data one week after the Louis Vuitton Additionally, according to Newzoo, Protection Regulation (GDPR). announcement, Riot Games approximately 45% of global gaming The GDPR is one of the strongest data unveiled a second, multiyear, revenue (approximately $68.5 protection laws in the world, and its global partnership—this time with billion) is associated with mobile scope is very broad. Part of the law smartphone manufacturer OPPO. devices, with additional growth in means that organizations must be Riot Games’ decision to partner the total gaming market expected cognizant of how they process the with OPPO makes sense when one to be driven by the mobile sector data of European residents, including considers the significant League moving forward. While Riot Games their images. For a venue like the of Legends fanbase in China (both had no official mobile titles at the World Championships, it would be OPPO and , Riot’s parent time of its partnership announce- virtually impossible for OPPO or organization, are Chinese corpora- ment with OPPO, it would go on Riot to gain explicit consent from tions), as well as the general esports to announce three separate mobile every European resident to show demographic viewing trends in the games at its 10 Year Anniversary Riot their image on the OPPO cam, but region. Per the terms of the deal, Pls presentation in mid-October. All fortunately, there are a number of OPPO will serve as a tentpole sponsor three mobile titles are expected to other lawful bases for which OPPO for three of League of Legends’ launch in China first, driven in large and Riot can process their images. primary international competitions: part by Tencent’s existing footprint It is important for any producer of the World Championship, the in mobile gaming in the country, digital media to carefully consider Mid-Season Invitational and the but perhaps as a result of OPPO’s the justifications it will have in place All-Star Event. For both the World involvement, as well. OPPO’s and to produce media that will almost Championship and Mid-Season Riot Games’ partnership represents certainly contain images of residents Invitational, OPPO will be the a great opportunity for Riot Games of the European Union. presenting sponsor of the respective to further develop rich and engaging

pillsburylaw.com Esports League of Branding

Since Riot produces its tournament “For the first time ever, ensuring that no condition in their games, it likely has releases that branding deal with Riot unnecessarily require attendees and participants an amateur League of restricts them from affiliating with to grant rights to show their images. other sports and, in particular, other OPPO and Riot would need to work Legends competitor will esports. While many partnership out how the relationship between the have an opportunity to deals seek to form exclusive relation- rights granted to Riot could extend ships with others, for a brand like to OPPO or whether OPPO would participate in the title’s that has so many different be responsible for clearing its own All-Star event; Red Bull initiatives—we are after all talking privacy and data permissions. about a beverage company that has will host a “Player One” two different Formula 1 racing teams— such an exclusive relationship would A Partnership that Will competition in which the likely not be possible. Give You Wings: Red Bull winner will earn a spot Two weeks after its Louis Vuitton A Triple Play announcement, and one week after its to compete on stage OPPO release, Riot Games announced Worth Studying that it had also procured Red Bull with professionals.” Riot Games’ announcements of global as a partner for its global League partnerships with Louis Vuitton, of Legends events. Long associated As part of the partnership, Red Bull OPPO and Red Bull all differ in scale, with late-night gaming binges, the will have dedicated, branded player scope and execution. While these energy drink producer is well known areas at all major global tournaments, agreements may provide ample League of Legends throughout the world and has an and will design - inspiration and even a potential established presence in adventure themed bottles for spectator purchase template for other companies, leagues sports and motorsports alike. and placement on broadcasts. For the and players seeking to form similar first time ever, an amateur League partnerships, they should also serve As one of the most recognizable of Legends competitor will have an as a reminder of how carefully names in sports, Red Bull’s prolifera- opportunity to participate in the constructed such deals will need to tion into esports involves many games title’s All-Star event; Red Bull will be to best serve the interests of all in addition to League of Legends. host a “Player One” competition in involved. • Red Bull also works individually which the winner will earn a spot to with and content creators compete on stage with professionals Legal Lessons that play many different games, as in the tournament’s signature 1v1 well as with esports teams. As a format event. Red Bull will also Riot Games + Louis Vuitton lifestyle brand, Red Bull benefits by host the official All-Star afterparty, Branding alliances require various licenses to appealing to a diverse demographic. furthering its commitment to the protect each party’s intellectual property. This coupled with the company’s event and cementing it as one of the existing relationships with a number most recognizable “non-endemic” Riot Games + OPPO of League of Legends professional brands in all of esports. Tapping the power of a global, increasingly teams (e.g., Cloud 9 and G2 Esports), Analysis: mobile audience necessitates careful make a long-term, global partnership attention to cybersecurity and privacy laws. between the two organizations seem Restrictions May Not Apply inevitable—especially given Red For Red Bull, a brand that is Riot Games + Red Bull Bull’s existing involvement with diversified into many different sports When partnering with an existing branding League of Legends’ Brazilian and and esports, an important consid- juggernaut, exclusivity may not be in the European leagues. eration of this partnership will be cards.

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