“It ain’t over till the Old Lady sings” - Konami, Juventus and the licensing of IP for use in sports video game content

As has been widely reported, Konami have recently announced a major deal in the football licensing battle by entering into an agreement with Italian football giants, Juventus FC, to secure the exclusive right to use Juventus’ IP within eFootball PES 2020. This includes a right to exclusively use the team name, crest and official kits. Additionally, the Konami development team has been given access to the players themselves where, by using technology such as full-body 3D scanning, Konami will recreate the players in their most lifelike manner.

This agreement between Konami and Juventus is part of the complicated matrix of licensing players, clubs and leagues’ IP for use in sports video game content. Whilst the agreement presents a number of interesting ramifications, one angle to explore is the difference between the licensing conditions in particular leagues and jurisdictions and the commercial impact that these differences will have on players, clubs and leagues when licensing their IP for use in esports.

A comparison of different licensing frameworks

Premier League

The Premier League places certain restrictions on the rights individual clubs can licence for video games and itself licenses the right to use certain IP for use in video game content, for example club kits, stadium designs and (subject to certain club rights) the names of players and managers collectively. This creates a collective licensing system, where IP rights are granted to the Premier League on behalf of players/clubs to then licence to third parties such as EA as the Premier League’s partner. There are, however, certain IP rights that players/clubs retain autonomy over, for example, the ability of individual players to licence their image rights to a game producer for a video game cover agreement. Clubs are also allowed to enter into their own gaming partnerships, for example Liverpool, who having ended its partnership with Konami, weeks later signed a content agreement with EA Sports who will now become the club’s official video game partner.

Serie A

In Italy, the licensing of the right to use the name of Italian football competitions is within the domain of the Italian Football Association (FIGC) where, for example, the FIGC granted EA an exclusive licence for the use of Serie A, Serie B and the Coppa Italia in FIFA 19. The right to licence club-specific IP such as team name, crest and kits is held by each individual club and is negotiated through a separate licence with the game producer, which has allowed Juventus to strike its exclusive agreement with Konami.

NFL

The most important distinction is that unlike the Premier League and Serie A, players and clubs within the NFL do not retain the ability to enter into their own gaming partnerships. This is because under the terms of EA’s exclusive licensing agreement with the NFL and the NFLPA (the NFL players association), EA, as the official partner, is granted a more complete set of rights to use players and teams’ IP. This means that players and teams have limited autonomy to enter into separate deals - as the NFL operates as a collective franchise of the teams, the commercial benefit flows back to the teams via the central deal.

What are the ramifications?

1. A strong centralised licensing system such as the NFL, where the game producer is granted a fuller set of rights, in theory, creates a better experience for the gamer, given that all content is fully licensed. This avoids the scenario that we see in other leagues such as the Premier League and Serie A where there is an irregular licensing system, with games having a mixture of fully licensed teams/leagues and unofficial team/league names; for example, Tottenham Hotspur feature as North East London in PES 2019. A licensing system like this undoubtedly frustrates fans and is one of the key elements to the aged-old debate sports gamers have between PES and FIFA. However, there is an argument that a centralised licensing system can create a significant barrier to entry for games companies other than the official partner, who have no rights to use players and clubs’ IP and so cannot produce a game that fans deem to be credible.

2. Esports are continuing to grow in popularity and this has seen the commercial potential of esports increase as clubs and leagues seek to tap into this new gaming market; for example, Paris Saint-Germain recently partnered with Finnish game developer Supercell which has seen PSG set up their own team for Supercell’s new game, Brawl Stars. The increasing value of this market may create tension between clubs and leagues, given that clubs want to be given as much autonomy as possible to licence their IP so that they can enter into agreements with games companies, whilst leagues also want to be involved in the action and so will seek to retain the right to licence as much IP as possible. Clubs may also increase focus on to the way that revenues are distributed from central agreements.

3. The licensing landscape is now extremely fragmented, with different leagues in different jurisdictions offering different rights to game publishers. To add to the complication, there are a number of parties involved, which include players, clubs and leagues as well as third parties such as console companies and sponsors. This complexity is no doubt a headache for games companies looking to produce games based on real-life sports.

What next?

The growth of esports has been exponential, with awareness of the industry rising dramatically, streaming platforms such as Twitch and YouTube continuing to see viewing figures accelerate and revenue estimated to reach $1.1 billion in 2019. With this in mind, clubs, players and leagues will seek to attach increasing commercial importance to the use of their IP in video gaming. This may lead to more disputes between these parties as tension over the use of IP rights increases. Watch this space…

For more information please contact Connor Hearn on +44 (0)20 7203 8911 or at connor.hearn@crsblaw.com.