In recent years, sports simulation technologies have revolutionised how both sporting fans and athletes engage with and experience traditional sports. From realistic video games to advanced training simulators, these technologies are designed to provide immersive experiences that replicate real-world sporting activities and scenarios. However, as the industry grows, it brings with it a range of legal risks and commercial considerations for both the end users and the developers of these technologies. In this article, we explore current trends in sports simulation technologies and the potential risks involved in their use.
Sport simulation technologies cover various applications and mediums designed to replicate real-world sporting activities and scenarios. Some of the main sports simulation technologies include:
- Sports video games such as FIFA, NBA 2K, and Madden NFL provide highly detailed and realistic representations of real-world sports, allowing players to control and manage their favourite teams and athletes;
- Training simulators use a combination of virtual reality, augmented reality, and other technologies to create realistic training environments which can simulate sporting challenges at various difficult levels. Examples of training simulators include 3D play visualisations, virtual reality batting cages for baseball or augmented reality golf simulators; and
- Fitness and exercise applications have been using gamification and simulation to make workouts more engaging. Cycling application, Zwift, which simulates cycling routes and races allows end users to participate in races remotely using Zwift bicycles.
Legal Risks
- Licensing and sponsorship agreements:
- Companies who develop sport simulation technologies must ensure that they have proper licensing agreements in place which grants the company the right to use relevant branding in respect of clubs, teams, athletes, and other logos or branding. Unauthorised use of branding without proper licencing from the proprietary owner of the intellectual property in question may lead to intellectual property claims being instituted against the company as well as potential reputational damage. Furthermore, companies must ensure that they have appropriate sponsorship agreements which address the right to commercialise and use 'player likeness' or other branding in their sports simulation technologies.
- Data Privacy and Security:
- Processing of personal information: Sport-simulating technologies often collect extensive personal information, including biometric and/or healthcare information. Companies should ensure that they have all the necessary data subjects' consent to collect, store, and process personal information through their technologies. In the absence of express data subject consent, companies should ensure that one of the other grounds for the lawful processing of personal information is present, for example, the legitimate interests or the performance of obligations under a contract with the data subject. Companies must comply with data protection regulations such as the Protection of Personal Information Act 4 of 2013 and the General Data Protection Regulation (EU) 2016/679 to avoid hefty fines and reputational damage. To the extent that personal information is transferred across borders, companies should ensure that they have obtained the necessary consent to transfer such personal information.
- Technical and organisational safeguards: Companies must procure and deploy robust cybersecurity measures to safeguard end-user information. This will entail implementing both organisational and technical safeguards to guard against loss of, damage to or unauthorised destruction of personal information and against unlawful access to or processing of personal information.
- Physical safety and liability:
- Users of virtual reality and augmented reality-based training simulators could suffer physical injuries due to falls or collisions with other objects. It is essential that companies design these products with physical safety in mind and provide appropriate warnings and instructions regarding use. Companies should also consider including waiver provisions in their end user licence agreements disclaiming liability by providing: (i) that the technology is provided on an 'as-is' basis; and (ii) that and the end user agrees to use the product at their own risk. Furthermore, companies should ensure that they have limited their liability to an acceptance level.
- Monetisation and revenue models:
- Subscription models: Due to the vast quantity of data generated through the sport simulation technologies, companies can develop a business model where users can subscribe to 'premium' services which provides users with statistics and data insights based on their performance and provide insights on how to improve their performance.
- Microtransactions and in-game advertising: For sporting video games, microtransactions and advertising are common revenue streams for sporting entities. An example is FIFA's Ultimate Team packs where a user purchases a pack without knowledge of which player cards they will receive. However, companies that offer this sort of 'LootBox' functionality to a global audience should be cognisant of the fact that some jurisdictions have banned this sort of offering because it amounts to unlawful or underaged gambling.
- Monetising data: as professional athletes are the target base for augmented and virtual reality simulation technologies, companies should ensure that they have established a data monetisation plan which should address, inter alia, the company ownership over the usage data (for example, performance and use statistics) and the company's right to commercialise and sell the data as part of other data products or offerings.
Sport simulation technologies offer exciting possibilities for both entertainment and athletic training. However, as highlighted in this article, companies and end users must be aware of the legal and commercial risks associated with the use of these sporting technologies. By understanding and addressing the risks identified above, companies can better navigate the evolving landscape of sports simulation, by ensuring that their technologies comply with any licencing, intellectual property and data privacy requirements whilst ensuring that they have built a contractual framework which enables the company to monetise the data generated through simulation technologies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.