Digital Streaming: Snuffing The Life Out Of Live Sports On TV

Broadcasters spend billions of dollars to purchase the rights to air sporting events that brings in huge audiences and sell advertising for massive amounts of money. And these reasons are historically the primary reason why subscribers chose one cable or satellite company over another.

The biggest money-spinner includes the NFL and the English Football League. According to Deloitte, the top five European football leagues generate close to RM70 billion in revenue in 2016-2017.

The main threat facing broadcasters is illegal or unauthorised streaming of these events. With rudimentary IT skills and devices, one could easily circumvent restrictions or geographical controls to stream and watch live sporting events.

Some broadcasters, like SKY attempt to combat illicit viewing by offering its own streaming services to customers to watch the EFL matches. Yahoo Sports has grown into a major NFL streaming player, in an attempt to boost the league's reach, particularly among the younger demographics, while broadcasters need these leagues to stopgap subscribers cutting the cord.

In Malaysia, what does the rise of streaming mean to broadcasters like Astro or Radio Televisyen Malaysia (RTM), the two major purchasers of rights to broadcast sporting events?

We speak to Richard Wee, Partner at MahWengKwai & Associates, to understand more.

1. How does live streaming impact broadcasters’ investments into these live sporting events?

The main issue of live streaming is that it potentially damages the broadcasters’ investment whereby the benefits of exclusive rights owed to them fail to tally with the expected output. This is largely when the material is distributed without a license to use which is akin to piracy.

In terms of revenue generated by the broadcasters, these exclusive media rights owed to them are one of the biggest contributors when compared with other aspects such as merchandising or sponsorship.

2. How are Malaysian broadcasters protected under the law? What extent of protection in the sports context is accorded to broadcasters?

Malaysian broadcasters are protected under the Copyright Act 1987, where the author of the broadcast must be a qualified person, the work need only be recorded and published in Malaysia to warrant copyright protection.

Under Section 15 of the Copyright Act 1987, the rights afforded includes ‘the recording, the reproduction, and the re-broadcasting of the whole or a substantial part of the broadcast…’ which is ‘...recognisably derived from the original’.

The issue of live streaming above are potentially illegal under Section 41 of the Copyright Act 1987. The extent of protection in the sports context still until today remains unclear as there has not been any reported cases surrounding this issue in Malaysia. Therefore, we have to look towards the UK courts and their decision.

♦ In the English case of The Football Association Premier League Ltd (“FAPL”) v British Telecommunications plc & Ors (“BT”), the streaming servers were given ‘live’ blocking orders, which only takes effect when live Premier League matches are being broadcasted. The blocking orders comes in force upon the streaming of live broadcasts servers rather than websites, and these servers are then “reset” each match week during the Premier League season to ensure that the servers which are no longer the source of infringing footage do not continue to be blocked.

♦ The host providers will be notified every week when one of its IP addresses are subject to blocking, giving them the opportunity to set aside the order. This has been so effective that the order has been further extended to the 2018/2019 Premier League season.

♦ Although as of today, there has not been any cases along the lines of the FAPL issue above reported in Malaysia, the legislature and judiciary of Malaysia would do well to take example from the UK Courts in their flexibility when balancing the broadcaster’s lawful rights, live streamers’ limited rights, as well as the public’s right to information and entertainment.

3. Would sharing of clips to sporting events between users be considered as commercial exploitation? Are there laws that protect rights holders?

The case of England and Wales Cricket Board Ltd & Anor v Tixdaq Ltd & Anor is an interesting case to consider. Here in this case, the Defendant compiled many 8-second long clips of sporting event highlights which were recorded from the users’ handphones from live television broadcasts and published them on their website. The Judge in that case held that while “citizen journalism” could possibly fall within the scope of a fair dealing defence for the purpose of reporting current events, the Defendant’s main purpose was to facilitate the sharing of clips between users, which was ultimately a commercial exploitation of the intrinsic value of the clips.

If the case were to be applied in the Malaysian context using local law, a fair dealing defence is mirrored in Section 13 of the Copyrights Act 1987. Section 263 of the Communications and Multimedia Act 1988 could also potentially be used to address “citizen journalism”.

Under this Communications and Multimedia Act, licensees are bound by law to ensure that their network and service are not involved in the commission of any offence, including those which are governed under the Copyright Act 1987.

4. At the moment where are the countries that have established a good framework/stringent intellectual property rights protection in dealing with the rise of streaming and the threats it pose to rights holders and broadcasters?

United Kingdom is leading the way with flexible yet potent laws such as the Copyright, Design and Patents Act 1988 to protect intellectual property rights protection as shown by the two cases above.

In 2011, the United States Senate introduced a Bill (Bill S. 978) to amend the federal criminal code to provide imprisonment of up to 5 years, a fine, or both for criminal infringement where the offence consists of 10 or more public performances by electronic means, during any 180-day period, of one or more copyrighted works and where:

(1) the total retail value of the performances, or the total economic value of such performances to the infringer or to the copyright owner, would exceed $2,500; or (2) the total fair market value of licenses to offer performances of those works would exceed $5,000.

This includes, within copyright provisions protecting works from criminal infringement, the public performance of a work being prepared for commercial distribution.

I would say that these two countries are examples of the forerunners for countries which have established a good framework for intellectual property rights protection while facing the rise of illegal streaming of sports broadcasts.

Malaysia has the potential to become one of the forerunners of establishing a good framework for intellectual property rights protection as well, as we have several acts such as the Copyrights Act 1987 accompanied by the Communications and Multimedia Act 1988. There is just a lack of case law precedent here in Malaysia at this juncture.

5. Case study: During the Electronic Sports League (ESL) One Genting tournament 2018, ESL issued a Digital Millennium Copyright Act (DMCA) Takedown notice to live streaming firm Twitch, a subsidiary of Amazon.

Digital Millennium Copyright Act (“DMCA”) is a copyright legislation in the United States that protects the rights of copyright holders. It is important to note that when it comes to broadcasting, the largest esports broadcasting platform is still Twitch.tv based in USA. This means that any content on Twitch is still subject to DMCA.

One mechanism under the DMCA is the DMCA Takedown Notice, which enables the copyright holder to enforce the rights to his/her work by compelling the host or server to remove the infringing piece of work.

Of course, if the case is one in which the Takedown Notice issued was knowingly filed falsely, the alleged violator may sue the filer for damages. Simply put, a DMCA Takedown notice is akin to an injunction to compel the host or server to remove or block access to the work that is infringing someone’s copyright.

6. Do tournament organisers have the right to grant broadcasting rights to streamers as the intellectual property rights of the game belong to the publishers?

Esports tournament organisers do, in some sense, own a certain degree of broadcasting rights. Here, we must distinguish between proprietary rights to the game and broadcasting rights. Since the game belongs to the publishers (i.e. the company that published the game), it is indisputable that the proprietary rights to the game belong to the publishers, including the intellectual property rights of the game.

However, whenever there is an esports tournament, the tournament organisers would undoubtedly need to hire commentators, hosts and a production team to ensure that their content is engaging and of the highest quality. The rights to these add-ons then belong to the tournament organisers. Therefore, tournament organisers can enter into exclusive broadcasting agreements with broadcasting platforms (as was done between ESL and Facebook) as the rights to the intellectual property insofar as the additional content belongs exclusively to the tournament organisers themselves.

7. There is a point of view that limiting broadcasting rights may have adverse effects on the growth of esports. Your view?

In my view, esports is a spectator sport. The ecosystem thrives on the popularity of the players and tournaments. In order for esports to grow, we cannot deny that there is a great need for monetary investment - both in teams/organisations as well as tournaments.

At the end of the day, esports cannot exist without fans. While on the one hand, it makes sense to attract as many fans as possible through diversifying the medium of broadcasting, I think this has to be balanced with the need for sponsors funding the tournaments. Also, running a tournament is not a cheap affair. If views to the official broadcasting channel is drawn away to the other platforms broadcasting the same tournament, sponsors will not feel that there is any justifiable ROI and thus be hesitant in sponsoring a tournament.

This creates a domino effect - lesser sponsorship will result in lesser tournaments, lower quality production and a diminishing interest in esports itself. In other words, esports will suffer a slow death.