How the Pandemic Has Changed Fans' Experience for Good
The COVID-19 pandemic has separated friends, family and colleagues and halted most in-person shared experiences. On the flip side, over the past year gaming, sports and entertainment companies have found new ways to help keep us engaged, connected and entertained. Millions of fans are now more engaged online through new interactive and social gaming experiences, virtual concerts with VIP fan sections and rebroadcasts of sporting events and concerts that feature more interactive and on-demand components.
In the future, a mix of in-person, virtual and hybrid events will create opportunities for companies to keep experimenting with new technologies and creating novel revenue streams as we emerge into a post-pandemic world.
Challenges Led to Innovation
At Fenwick, we have seen a number of business and technology trends emerge or accelerate over the past year among our company clients, which include Twitch, Jam City, 100 Thieves, Riot Games, Peloton, Instagram and Facebook. Chief among the industry shifts are:
- Increased Fan Engagement and Fan Interaction
Companies are offering new opportunities for fans to engage and interact virtually. The chat feature, now an integral part of the esports experience, provides a way for fans to converse in real time. For instance, through Twitch, the world's leading live streaming platform, fans can participate in esports competitions and attend virtual gaming conferences, offering an outlet for gamers to communicate with one another virtually. Shared viewership and other social components are bringing fans closer to the action and making viewing more social.
- More Opportunities for Monetization and Microtransactions
Subscription or membership models, a quick sidebar chat with a professional athlete, inviting fans into a private virtual room to interact with a celebrity and enhanced in-app purchases all offer new revenue generation opportunities. VIP experiences such as exclusive concerts, "meet and greets" and other intimate gatherings can be monetized digitally as well as in person.
- Continued Growth of Mobile
Mobile gaming in particular experienced record-breaking numbers and growth last year. As gamers seek more ways to interact with each other and make games more social Jam City — one of the biggest U.S. mobile game companies — is investing in creating more narrative role-playing games and strategy games, hiring a range of Hollywood talent.
Mobile will also continue to grow as more live events go paperless and cashless, requiring attendees to download an app for e-ticketing and other cashless, touchless and contactless transactions. The continued expansion of 5G and AI will enable even more opportunities for streaming and personalization via mobile.
Mobile devices will also house vaccine passports to the extent they are adopted. These are digital codes verifying an updated COVID-19 vaccination that may soon be required to access concert venues and other public places. The passport will likely be stored via QR code or in a digital wallet.
- Increased Use and Consumer Adoption of VR/AR
Virtual and augmented reality technologies (VR/AR) have continued to gain traction during the pandemic and helped replace some in-person fan experiences. During the 2020 Shanghai League of Legends Championships, Riot Games realized that bringing fans closer to the action was no longer feasible due to COVID-19. With the help of XR (a blend of VR, AR and mixed reality technologies) the company was able to offer a broadcast that gave the fans a more intimate virtual experience. VR/AR technology is in its nascency but will keep maturing over the next several years.
- Expanded Personalization of Influencers
100 Thieves saw content creator and online star Valkyrae become the fastest-growing female streamer of the year in 2020 after she started playing the online multiplayer social deduction game "Among Us." Her popularity continues to skyrocket: according to streaming information database Stream Hatchet, she was the most the world's most-watched female streamer in Q1 2021. This is just one example of the many ways celebrities found new ways to engage with fans during the pandemic, broadcasting from their kitchens and living rooms through Instagram and Facebook.
Peloton's popularity exploded last year, in part, with the help of professional athletes, actors and musicians. Every day users rode with them to compete and/or enjoy the ride.
Legal Trends
With the rise of new digital media, entertainment and gaming technologies, along with the growth and diversification of global audiences and the advent of entirely new business models, we are seeing novel legal challenges and opportunities. Many are related to:
* The production and livestreaming of interactive shows
* Messaging and video chat-related companies that operate chat services for younger users, in particular privacy concerns and questions around content moderation
* An array of regulatory issues have cropped up in the booming esports industry around franchise and licensing agreements, sponsorship and player contracts, and streaming and fan engagement. Issues include FTC disclosures of paid influencer relationships, whether esports agencies collect data offline, online and through new technologies including biometrics, and whether esports agencies are required to be talent agencies under applicable law
* For companies streaming video, CVAA (Century Communications and Video Accessibility Act) compliance and accessibility requirements and FCC registration
* Securities, financial regulatory and intellectual property issues involved with digital assets (including NFTs)
The Long-Term Effects of the Pandemic
We anticipate many of the innovations we saw during the pandemic to further accelerate in this new era. Even as live events return, we expect they will be at lower capacity and feature more hybrid experiences.
Many exciting innovations will continue this year as companies continue to adapt to a sports, gaming and entertainment world that will not return to what it was before the pandemic.
About the Authors
Andrew Klungness, Partner, Santa Monica
Andrew is a co-chair of Fenwick's consumer technologies team, as well as a principal member of its fintech/blockchain group. He works with clients in a number of verticals, including ecommerce, consumer tech, fintech, blockchain (NFT, DeFi, Layer 1, and others), marketplace, CPG, mobile, AI, social media, games, and edtech, among others. Andrew leads significant and complex strategic alliances, joint ventures and other collaboration and partnering arrangements, which are often driven by a combination of technological innovation, industry disruption, and rights to content, brands or celebrity personas. He also structures and negotiates a wide range of agreements and transactions, including licensing, technology sourcing, manufacturing and supply, channel partnerships and marketing agreements. Additionally, Andrew counsels clients in various intellectual property, technology and contract issues in financing, M&A and other corporate transactions.
Jennifer Stanley, Partner, San Francisco
Jennifer, who leads Fenwick's copyright group and games industry group, is a top advisor to cutting-edge companies in the video games and interactive entertainment industry. Serving as a
"primary care" counselor to companies, Jennifer advises clients on intellectual property,
technology and media transaction strategy; copyright registration, protection and dispute
resolution; and business model analysis and risk management. Her practice encompasses a wide range of industries, including: Advertising, Content (digital streaming, movies, distribution), eCommerce and retail, eSports, Fashion and jewelry, Gaming, Hardware/devices, Influencers (YouTubers, etc.), Sharing economy (food, travel, transport), Talent, and Virtual reality (VR) and augmented reality (AR).
Jennifer is a go-to authority for games and esports matters. She regularly authors thought leadership and is an in-demand speaker in the space.
Vejay Lalla, Partner, New York
Vejay helps clients navigate the convergence of technology, advertising, media, ecommerce and entertainment, and advises on the potential impact for his clients from a commercial, intellectual property, regulatory and privacy standpoint. He regularly advises venture-backed companies across numerous industries, including games, media-tech, marketing-tech, blockchain, fintech, proptech, augmented and virtual reality, artificial intelligence and machine learning, fashion, retail, beauty and consumer product companies over their entire lifecycle. In addition to his startup practice, Vejay has deep industry knowledge in advertising, media and entertainment focusing on content distribution and licensing arrangements, and talent/influencer deals both in traditional media and digital distribution.
About Fenwick
Fenwick is one of the world's top law firms focused on technology and life sciences, with leading Games and Digital Media and Entertainment practices. The firm has been involved with advertising, media, entertainment and games companies – advising on their challenges and helping capitalize on their opportunities – since the genesis of the digital revolution.
The firm opened its Santa Monica office in early 2019 to better serve more than 300 clients in the Los Angeles region, which include innovative startups, established companies and venture capital investors. If you'd like to connect with one of our attorneys, please click here to contact Zaharit Chen, Business Development Manager.
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Founded in 2013, the company has already proven its technology can work via pilot programs in Sweden, Germany and Italy—as well as its homeland of Israel, where it’s a publicly traded company on the Tel Aviv Stock Exchange. But on Tuesday, Electreon announced a partnership with Michigan public authorities, as well as private stakeholders like Ford Motor Company, to install a one-mile-long stretch of electrified road in Detroit—the first time such a system would be used in public roads in the U.S. The system is expected to be operational by next year.
Electreon, which opened its U.S. headquarters in Los Angeles last month, is initially targeting fleet vehicles like taxis, buses and drayage trucks for its technology, but plans to eventually expand into the consumer EV market as well. Electric road systems would be especially attractive to fleet vehicles for a number of reasons, the most obvious being that they stop frequently. Time spent idling, especially in predictable locations, means it’s easier to know where to install electrified roads and make them cost-effective.
Stefan Tongur, Electreon’s L.A.-based vice president of business development, says the company’s induction charging technology will probably charge slower than the traditional plug-in station model. But if the pavement under every bus station was electrified, he told dot.LA, a small amount of charge would be added to the vehicle at every stop—meaning the bus would need to take fewer, if any, breaks to recharge its battery.
Image courtesy of Electreon
It’s easy to imagine similar use cases at ports, rail yards or airport taxi lanes, all of which could spell significant savings for companies that lose time and money when their electric fleet vehicles are plugged in and recharging. Many of these areas also fall under the purview of the private sector, which would make uptake and implementation easier, according to Tongur. He said Electreon is already eyeing a move into such spaces.
Electreon aims to have its wireless charging technology installed on public roads around the U.S. within “a couple of years,” Tongur added. While Detroit will host the pilot program, Los Angeles and New York will be the next targets.
“L.A. is obvious, right? It’s the Mecca of EVs,” he said. “You have air quality issues here; you have the port of L.A. and Long Beach; you have so much traffic. Moving to electrification is, I would say, a must.”
The goal of installing wireless charging for moving vehicles is “very courageous,” said Mehrdad Kazerani, a professor of electrical and computer engineering at the University of Waterloo in Ontario, Canada. Kazerani noted that researchers at the university had developed a similar concept for the sprawling Trans-Canada Highway. “Of course, we did not pursue this idea, but it seems Electreon has made good progress along this line,” he said.
Kazerani added that wireless charging technology may also allow the EVs of the future to use considerably smaller batteries, which would make the cars lighter, more energy-efficient and less expensive. Smaller batteries would also mean less mining for battery materials and less waste when a battery reaches the end of its life.
“This is kind of an invitation to the U.S. market: to policymakers, state agencies, fleet owners and original equipment manufacturers,” Tongur said. “This is an opportunity to do things together—join us on this path and journey.”
Based in West Hollywood, Superjoi’s platform allows creators to run Kickstarter-like campaigns to raise capital for projects, while giving fans the chance to suggest ideas for new content. Creators can also reward fans who chip in by giving them event tickets, merchandise or a personal video call. Later this year, Superjoi plans to help fans reap financial rewards, too—such as a share of advertising revenues generated from projects that they backed.
A screenshot from Superjoi's platform.
Major online platforms like Facebook and YouTube have increasingly monetized the relationship between creators and fans, targeting users with ads and sharing some of the revenues with creators. But Superjoi’s founders contend that fans have been completely cut out of the equation despite driving creators’ successes. In September, the startup began building a platform that would give fans a share of the financial upside, co-founder and CEO Chris Knight told dot.LA.
“Superjoi, as we position it, is liquidity with love,” Knight said. “The reason why we call it that is, for somebody who's creative, there's no better funding source for their creativity than the people who love them—and that’s their fans.”
Knight learned a lot about what he calls “superfans” after helping to build Fantom, a fan-focused smartwatch launched with England’s Manchester City Football Club. The Premier League team consults its fans on decisions relating to its stadium and sponsorships, he noted. “I see huge opportunities in the future for creators to actually have a deeper engagement with their audience and actually mobilize their audience to a new level,” Knight said.
Fans will initially fund projects on Superjoi by buying “supercoins,” an in-platform currency that is worth $1 each. While supercoins are not technically crypto tokens at this stage, the startup envisions letting fans invest in creators, earn a financial return and receive ownership in their content based on tokenization. Superjoi collects a 10% cut of a creator’s fundraising goal.
The platform plans to launch in mid-May with about 25 U.S.-based creators with larger audiences, and will onboard more creators on a waitlisted basis, Knight said. A full public launch is expected later this summer.
Superjoi, which has 14 employees, plans to use the new funds on growing its team, acquiring creators and marketing the platform.