Science and Technology Law Review Volume 22 Number 2 Article 4 2019 Gotta Catch ‘Em All! The Rise of eSports and the Evolution of its Regulations Elizabeth Chung Southern Methodist University, Dedman School of Law, [email protected] Follow this and additional works at: https://scholar.smu.edu/scitech Part of the Computer Law Commons, Intellectual Property Law Commons, Internet Law Commons, and the Science and Technology Law Commons Recommended Citation Elizabeth Chung, Gotta Catch ‘Em All! The Rise of eSports and the Evolution of its Regulations, 22 SMU SCI. & TECH. L. REV. 231 (2019) https://scholar.smu.edu/scitech/vol22/iss2/4 This Comment is brought to you for free and open access by the Law Journals at SMU Scholar. It has been accepted for inclusion in Science and Technology Law Review by an authorized administrator of SMU Scholar. For more information, please visit http://digitalrepository.smu.edu. Gotta Catch ‘Em All! The Rise of eSports and the Evolution of its Regulations Elizabeth Chung* I. INTRODUCTION It will inevitably shock many to find out that the video gaming industry stands to be one of the most successful industries for upcoming generations. In fact, it is predicted that the global gaming market will hit nearly $180 billion in revenues by 2021 (in 2012, the revenue market stood at a measly $70.7 billion).1 This increase in market size “reflect[s] the constant growth of platforms, such as smartphones.”2 In 2018, mobile games brought in $61.3 billion in revenue, accounting for over 50% of the total gaming market, and are expected to grow to $106.4 billion, or to about 59% of the total revenue, by 2021.3 According to one study, “there are about 2.3 billion gamers across the globe,”4 and 91% of the global market is digital.5 This means that “$125.3 billion worth of games flows through digitally connected channels as opposed to physical retail.”6 The transition from brick and mortar retail stores to online digital plat- forms can be seen across most industries. With this change, it is inevitable that questions will arise surrounding how legislation will have to evolve and adapt in order to properly accommodate the transition. Further, much like how it is difficult to regulate a virtual currency like Bitcoin, it will be diffi- cult to regulate the virtual world in the early stages of its life. Unfortunately, with all of the good that the virtual universe could bring, it could also open Pandora’s Box,7 potentially including otherwise illegal activity. For instance, this virtual world could potentially serve as a vehicle for transactions that * Elizabeth Chung is a 2020 candidate for Juris Doctor from SMU Dedman School of Law. She received a Bachelor of Arts in English and Biological Sciences with a minor in Chemistry and Mathematics from Southern Methodist University in 2012. 1. Dean Takahashi, Newzoo: Games Market Expected to Hit $180.1 Billion in Revenues in 2021, VENTUREBEAT (Apr. 30, 2018), https://venturebeat.com/ 2018/04/30/newzoo-global-games-expected-to-hit-180-1-billion-in-revenues- 2021/. 2. Id. 3. Id.; Bradly Shankar, Mobile Games Brought in $61.3 Billion in Revenue in 2018: Report, MOBILESYRUP (Jan. 17, 2019), https://mobilesyrup.com/2019/ 01/17/mobile-games-revenue-2018-report/. 4. Takahashi, supra note 1. 5. Id. 6. Id. 7. Greek Myths & Greek Mythology, https://www.greekmyths-greekmytholo gy.com/pandoras-box-myth/ (last visited Feb. 2, 2020). 232 SMU Science and Technology Law Review [Vol. XXII cannot be tracked.8 If a videogame platform and transaction is to serve as an intermediary, will courts have to give immunity to companies like Microsoft as they do for internet service providers?9 If the government cannot fully track the dark web, what efforts will it have to make in the video gaming industry?10 This comment will explore the floodgates of future litigation that the virtual video gaming world will unavoidably open.11 The virtual industry is growing exponentially and has integrated itself into nearly every aspect of the next generation’s life.12 For example, toddlers are more advanced with technology because of the convenience that iPads and smartphones provide to parents trying to calm and occupy their children, and children are learning how to do homework using technology in classrooms at a much younger age.13 Though this early instruction can be pivotal in a child’s development, it also foreshadows the future of technology and how much the next genera- tion will depend on it. The convenience could make everything in life more efficient, with no exception to potential illegal activity. This comment will explore these different legal issues and explain how courts have ruled in sim- ilar (but not identical) issues in the past. These issues will include: (1) the laws that will govern and regulate eSports and its players; (2) copyright in- fringement issues between game developers and those who record their gameplay for profit on platforms like YouTube and Twitch; and (3) gam- bling, wire fraud, and other illegal transactions that cannot be traced in this cyber world and how courts will deal with these. II. VIDEO GAMERS ARE SOME OF THE MOST WATCHED PLAYERS IN THE COUNTRY It was recently announced that video gaming platforms had a whopping six hundred sixty-six million viewers in 2017, which is more viewers than Hulu, HBO, ESPN, and Netflix combined.14 Video gaming platforms are dominated by viewing platforms such as YouTube and Twitch, with You- Tube bringing in 517 million viewers (gaming video content only), and Twitch clocking in at 185 million viewers despite its fairly new introduction 8. See Takahashi, supra note 1. 9. See id. 10. See id. 11. See id. 12. Effective Classroom Practice: Infants and Toddlers, NAEYC, https:// www.naeyc.org/resources/topics/technology-and-media/infants-and-toddlers (last visited Feb. 2, 2020). 13. Id. 14. Ana Valens, Report Reveals Twitch Has More Viewers than HBO and Netflix, GAMEPUR (Oct. 18, 2017), https://www.gamepur.com/news/33863-twitch-audi ence-hbo-netflix.html. 2019] The Rise of eSports and the Evolution of its Regulations 233 to the public (Twitch was introduced in 2011, approximately six years after the launch of YouTube).15 YouTube “is a video sharing service that allows users to watch videos posted by other users and upload videos of their own.”16 Started in 2005, YouTube was acquired by major tech conglomerate, Google, in 2006.17 “YouTubers,” or the people who upload content on the platform itself, make money from their videos by enabling videos to be monetized per view, ad sharing, and later turning fame into merchandise sales, appearances, and sponsorship deals.18 Users can opt to join “subscription versions” of You- Tube where they can access streaming shows or avoid the ads, though this is only an option and the platform remains free to use as-is.19 Twitch, like YouTube, can be used either to watch content or as a sub- scription-based service where users “interact, explore [and] contribute” to the platform by “watching, chatting, subscribing and cheering with Bits, and more [to help their] favorite streamers get rewards [and] recognition.”20 On April 19, 2017, Twitch announced it was going to create a new subscription tier, which includes “ad-free viewing, subscriber badges and twenty-six emoticons chat during subscriber-only mode,” starting at $9.99.21 It was set to be launched on “partnered channels who choose to opt into the beta to start, with availability set to increase in the coming weeks.”22 Otherwise, subscriptions start at $4.99/month for the most basic package and cap out at $24.99.23 The idea behind the different tiers is to “allow fans to support their favorite streamers on higher levels . [and also offer] increased opportuni- ties for fans to give money to streamers solely to support them instead [of having to receive] things in return.”24 The platform was recently acquired by 15. Id.; Eugene Kim, Amazon Buys Twitch for $970 Million in Cash, BUS. INSIDER (Aug. 25, 2104), https://www.businessinsider.com/amazon-buys-twitch-2014- 8; TechTerms, YouTube, https://techterms.com/definition/youtube (last visited Feb. 2, 2020). 16. See TechTerms, supra note 15. 17. Id. 18. How to Earn Money on YouTube, YOUTUBE, https://support.google.com/you tube/answer/72857?hl=en&ref_topic=9153826 (last visited Feb. 2, 2020). 19. See, e.g., YouTube Premium, YOUTUBE, https://www.youtube.com/premium/ (last visited Feb. 2, 2020). 20. TWITCH, https://www.twitch.tv/p/about/ (last visited Feb. 2, 2020). 21. Chaim Gartenberg, Twitch’s New Subscription Model Will Let Fans Pay Streamers Significantly More Money, THE VERGE (Apr. 19, 2017), https:// www.theverge.com/2017/4/19/15359244/twitch-new-subscription-model-tiers- more-money-streamers. 22. Id. 23. Id. 24. Id. 234 SMU Science and Technology Law Review [Vol. XXII Amazon.25 Twitch users can now link their Amazon Prime accounts to re- ceive free perks such as a specific skin.26 Skins may be earned within a video game.27 They change the look of portions of the game, such as changing the look of the gun you play with.28 “Skins are purely cosmetic so they don’t change the gameplay or they don’t make you a better player,”29 but some skins are rarer than others.30 So players with a rarer skin get certain recognition, quite similar to branding on clothes.31 For those who are unfamiliar with the world of video gaming, as a brief explanation, gaming video content (GVC) is where a player will record him- self or herself playing a specific game.32 The content can range from stream- ing a “speed-run” of a difficult level