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Tournament licenses are a necessary step in taming eSports' Wild West | Opinion

Backlash to Capcom's community licenses for small tournaments highlights some genuine missteps -- but the general principle is sound

It is a principle previously unstated, I believe, but nonetheless true, that over the course of reading a relatively small number of articles about the eSports sector the probability of encountering the term "growing pains" approaches a near-certainty.

Of all the various corners of the games business, perhaps only virtual reality is subjected to that with even close to the same frequency; but in its current incarnation, VR can make a reasonable claim to being a tween and thus legitimately able to make the growing pains excuse. eSports in various forms and guises has been doing the rounds since the late 1990s; it's fair to raise an eyebrow at the claim of growing pains, when the sector is no longer the industry's stroppy teenager but has rather become the industry's sulky twenty-something that refuses to move out of the basement and still expects its laundry done for it.

The latest tantrum to emerge from this sector concerns Capcom's announcement of a community licensing system for Street Fighter V tournaments -- a fixed contract which it expects the organisers of any small tournament with a cash prize to sign up for. The company's release of the community license has spurred a pretty significant backlash from people involved in the Street Fighter tournament scene (and the usual Greek chorus of social media drama hounds keen to pile onto the villain of the week, whoever it may be), which has ranged from some genuinely legitimate criticisms of specifics of the license, all the way up to daft conspiracy theories that Capcom is trying to kill off the SF5 tournament scene to clear the decks for the launch of the recently announced SF6.

Esports is no longer the industry's stroppy teenager but has rather become the industry's sulky twenty-something that refuses to move out of the basement and still expects its laundry done for it

To clarify from the outset: it isn't especially unusual for game companies who create popular tournament games to want organisers to sign up for a license to run events. Similar licenses are offered by companies like Blizzard and Riot; they're designed for the most part to give small tournaments a clear legal framework to operate within, while protecting the company's IP and rights, while larger tournaments (i.e., companies running major game tournaments for profit) are expected to negotiate a commercial agreement.

This hasn't always been the case; tournaments and eSports were historically pretty much the Wild West in this regard, but as things like massively popular live-streamed tournaments with major corporate sponsorship deals have become commonplace, the blind eye that was once turned to this IP infringement has turned instead into a set of standard legal agreements which -- when they're at their best and working properly -- provide a solid basis for tournaments and game companies to work together for both parties' benefit.

That's the slightly rosy perspective. In the case of Capcom's effort to create such a licensing system for Street Fighter V events, there are absolutely some missteps -- resulting in some genuine concerns about how the agreements are structured from tournament organisers and participants alike. The key problem lies in the line Capcom is drawing between what it considers "community events" -- to which the new community license would apply -- and "eSports events", which are larger and generally for-profit events.

Capcom is setting a limit on the size of community events that's dramatically smaller than some other companies who offer such licenses for their games; in the contract as it stands, a single community event can have a maximum prize pool of $2000, while events that run on an ongoing basis can have a maximum annual prize pool of $10,000. Exceed those limits and your event is considered an eSports event, meaning you have to negotiate a commercial license with Capcom.

This is almost certainly too low, and smacks of figures being pulled out of some lawyer's backside without an actual clear understanding of the kinds of tournament and event that exist out there and will be covered by this agreement; many tournaments function by charging an entry fee to participants which goes into a prize pool, and it's pretty easy for a small local event charging $15 or $20 for entry (for example a Street Fighter tournament organised at a university, or on the sidelines of an event like PAX or EGX) to go above that $2000 mark and end up breaching the existing license.

Complaints about Capcom's new esports licensing rules range from prize pool limits to whether licences should even exist

Similar licenses from other companies set the single-event limit much higher ($10,000 in some cases) and the annual limit higher still ($50,000 isn't unheard of); Capcom's proposals seem to misunderstand the scale that small non-profit events can reach in terms of prize pool, and ought to be reconsidered to set this bar higher.

Such legitimate concerns, however, have received far less airtime than a general sense of outrage at the existence of such a licensing system in the first place. Consequently, I suspect that if Capcom turns around tomorrow and announces (as it should) that it's changing the prize pool numbers to match those used by other companies, the most vocal critics of this move will remain entirely unsatisfied because their argument is based in the notion that Capcom does not, or should not, have the right to demand tournament organisers sign up to such a license at all.

The issue isn't whether Capcom can do this - the company is clearly within its legal rights to do so - but whether it should, a moral rather than a legal question

Here's where we hit the slightly condescending "ah, growing pains" aspect; these are the kind of complaints that you get whenever a company steps in to impose a formal framework on something that's been a bit Wild West in the past and operating in a legal grey area (or in some cases has been entirely illegal and relying on everyone turning a blind eye).

To some extent, this is an understandable response. While some companies have engaged very proactively with the community that has sprung up to organise tournaments and leagues around their games, others have largely allowed volunteers and third-parties to cultivate such a scene while they sat back -- either through indolence (why spend time and effort on something a community will do for free?) or ignorance of the potential consequences, both commercial and reputational, of not being involved in events and communities that are so tightly associated with your product and your brand. Thus the sense that some people may have that Capcom is diving feet-first into a scene that's been built up by the efforts of other people, whose efforts have generally been uncompensated, is not unreasonable.

The issue isn't whether Capcom can do this -- the company is clearly within its legal rights to do so -- but rather whether it should, a moral rather than a legal question. However, for all that Capcom's initial attempt at a license may be flawed -- which it is -- the general idea of creating a standard license for small tournaments is a really, really good idea, both from the perspective of the company itself and the perspective of the tournament organisers.

The idea of the community license is to carve out a clearly defined space for small, non-profit tournaments and give their organisers a clear legal framework to operate within -- one which protects Capcom's IP and reputation, of course, but also protects organisers by giving them explicit permission to use that IP in their events, within certain sensible limits. It's still a major change to the status quo, and you can certainly sympathise with tournament organisers' discomfort with some aspects of the license, such as being forced to allow Capcom to use any footage from their event (which they may have paid professionals to produce), or being forbidden from charging anything to spectators who attend the event (which removes some avenues for events to reach breakeven).

However, the general principle -- that game companies whose games are used in major tournaments should be able to exercise some degree of control over those events and how their games are used therein -- seems pretty hard to argue with, even if we may quibble over the details.

Some series fans are even convinced the new licences are part of a conspiracy to kill off the SF5 tournament scene ahead of the recently announced SF6

For the larger, eSports-style tournaments, it's even harder to make an argument that the game company shouldn't be involved, given that the entire "sport" being played rests entirely on that company's copyrighted material, and that the tournaments and events often rely upon doing things with the game which are not permitted by standard consumer licenses -- public exhibition, broadcast, use of trademarked logos, and so on. It's also important to understand Capcom's point of view, and that of the other game companies who offer free community licenses to small tournaments. It's not a case of profiteering; these licenses are free and issued to events that are meant to be non-profit (and the nature of community licenses tends to guarantee that, which is actually not a bad thing from the perspective of giving tournament participants some guarantees about how events will be run).

It would be just as easy for Capcom and other companies to say something like "you need an eSports license if your event exceeds these limits" without specifying exact license terms for smaller events -- but these firms are increasingly aware that keeping tournaments and leagues at arm's length doesn't prevent those things from being tightly and indelibly associated with their games and brands, and thus presenting a significant reputational risk over and above the more minor issues like copyright infringement that often crop up in these contexts.

Not to put too fine a point on it, eSports and gaming tournaments in general have shown, in recent years, that when things go wrong they can go very, very wrong indeed; from harassment, racism and sexism being broadcast over game footage, through to unscrupulous organisers disappearing with funds or using pirate copies of games, all the way up to real nightmare scenarios involving sexual assault or the grooming of minors, there have been many cases where companies' games and brands are deeply associated with awful situations -- and lacking any kind of contract or engagement, the company has had no power to resolve the situation or even to effectively distance itself from it.

Community licensing for tournaments gives companies like Capcom the ability to enforce certain minimum standards for organisers and events -- which ultimately should be to the benefit of participants as well -- and the leverage to withdraw that license if things go really wrong, which is the bare minimum a company should be able to ask in terms of covering its ass when people are using its products in this way. In return, organisers get the security of a clear legal framework to operate within rather than a dodgy unspoken assumption that everyone will turn a blind eye to copyright infringement and license-breaking.

There are minutiae to be fixed, but it's not a bad deal for everyone involved -- and while some may mourn another step in the passing of competitive gaming's Wild West era, anyone who seriously wants to see this area grow and develop should be happy to see the sheriffs riding into town.

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Rob Fahey avatar
Rob Fahey: Rob Fahey is a former editor of who spent several years living in Japan and probably still has a mint condition Dreamcast Samba de Amigo set.
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