To avoid copyright disaster, the future of streaming is licensing

We continue to sit on the edge of our seats watching the contests of League of Legends, Dota 2, and others on the big screen. But there’s a different contest to watch — online streaming platforms battling it out for the most viewers and best streamers while also steering clear of critical damage in the form of copyright infringement claims. Not only has the race for viewers started, but major players are maneuvering in the battle to provide streaming services as well.

The greater the competition in video game streaming, the easier it will be to fall into a matrix of copyright infringement when determining who owns what: the developer, the streamer, the user or the platforms. The key to overcoming this obstacle? Licensing. Licensing agreements offer a path forward for developers, platforms and streamers navigating the unsettled issues of copyright infringement in the gaming industry.

Online streaming is a driving force in the television and movie industry. Streaming services like Netflix typically avoid infringement by obtaining consent from the show owner and entering into exclusive licenses. This cautious approach remains steady even in light of several show owners ending their licensing agreements with such streaming services and taking them elsewhere. Like gaming, television and show owners also fight to keep up with the success of online streaming by developing platforms to exclusively stream their own shows — take HBO Go and Disney.

Similarly, in the gaming realm, in 2016, Microsoft acquired Beam, which allows users to interact with the game being streamed by another player. In early 2017, Twitch began selling video games and in-game content through its streaming service. YouTube recently signed a deal with FACEIT, the creator of the esports Championship Series (ESC), to make YouTube the exclusive home for ESC competitions. Twitch joined forces with Blizzard, the creator of Overwatch, to give Twitch the exclusive streaming rights to more than 20 Blizzard tournaments. Notable players like Electronic Arts and Nintendo have also taken steps towards exclusivity for their games. Most recently, ESL, the world’s largest esports company, agreed to bring exclusive esports content to Facebook.

This competition breeds ambiguity over ownership—in an industry driven by new games, new platforms, and celebrity streamers—making platforms the most at-risk “player” for potential infringement claims from the top (developers) and the bottom (streamers).

This competition among platforms may come at a cost. It is easy to fall into a matrix of copyright infringement when determining who owns what — the developer, the streamer, the user or the platforms. This ambiguity over ownership — in an industry driven by new games, new platforms, and celebrity streamers — makes platforms the most at-risk “player” for potential infringement claims from the top (developers) and the bottom (streamers).

At the top, developers are seeking control over how streamers can use their work on specific platforms. Meanwhile, streamers are seeking control over which platforms can stream their commentary and techniques during gameplay. The pursuit for control becomes even more competitive as developers create their own exclusive platforms and as more platforms pop up. Platforms, providing most of their content for free, need to maneuver the competition to find the success of Netflix and avoid the infringement pitfalls of Napster.

Remember Napster? It ignited the online streaming world when it enabled individuals to download and share music on computers. It was free, it was accessible, and it was without consent. When music companies caught on and started filing copyright infringement actions, it suffered a crippling blow. Napster’s litigation lasted seven years and ended in a $130 million settlement—litigation not suitable for an industry run by a thriving free-to-play community.

The rise of competition in streaming games will increase the options for developers to seek out the most protective “bang” for their buck. The deep pockets of platforms will empower them to obtain as many exclusive licenses to games as possible. By following more of a Netflix approach, a platform may position itself to defend against developers’ takedown notices under the Digital Millennium Copyright Act (DMCA) for any wrongfully used copyrighted content, and avoid Napster-like snafus. This issue came close to esports’ home when Nintendo shut down the livestream of Super Smash Bros. Melee. It serves as a reminder that, without a license, games are ultimately the developer’s intellectual property and owners, like Nintendo, can shut streaming down without notice.

Streamers who seek out platforms to pay for their gameplay may look to the defense of fair use in response to potential infringement claims brought by a developer. Fair use is a highly fact-specific defense requiring a four-factor analysis: (1) the purpose and character of the use, (2) the nature of the copyrighted content, (3) the amount copied, and (4) the effect on the market or value of the copyrighted work. The more transformative the work, the more likely the stream belongs to the streamer. Generally, when a large amount of a work is used for direct commercial benefit, which is often the case when streaming, a fair use argument is an uphill battle. When other non-commercial uses, such as teaching, are prevalent, the argument for fair use is stronger.

This hunt for and development of protection against infringement fiascos will undoubtedly encourage a world of competition. Consider the success of platforms like HBO Go and Netflix. Platforms should embrace the inevitable changes which may call for paying more for streaming services, building stronger relationships with developers, and monitoring licenses between other platforms and developers. Online streaming shows no signs of stopping or slowing. Avoiding infringement claims is essential, and it is dangerous to rely on community norms to avoid litigation claims. As the dollars at stake grow, the threat of community backlash against developers may not be enough to prevent them from pursuing litigation to shut down live-streams. Napster’s litigation changed the landscape of music streaming forever. Licenses are the best armor against potential infringement wars for the video game streaming industry, as it is poised to take flight.