Hi everyone. Welcome to Naavik Digest's first Monday issue ever! In case you missed last week's emails, please remember that the new publishing cadence is Sunday, Monday, Tuesday, and Thursday. Each issue will explore a core topic, share a new podcast episode or deep dive, and feature its own secondary core focus:
- Sunday: Weekly News Roundup — quick-hitting analysis on the week's most important video game industry news
- Monday: Content Worth Consuming — the best third-party content we consumed in the past week
- Tuesday: Game of the Week — breaking down a new mobile, PC, or console game launch
- Thursday: Top Movers & Deals — a rundown of the week's most important M&A, fundraising, and stock market moves
We're excited to get rolling on the new cadence, and we’ll have more to share in the next few days. Now on to today’s issue. If you missed our last one, be sure to check out our analysis of the ongoing struggles of GameStop and what went wrong with the company’s turnaround strategy. In this issue, we’re discussing likeness licensing and how the star power of celebrities and athletes has become a vital economic force in game development.
Games For Good
Games are a force for fun, but what if they could be a force for good, too? We sit down with Laura Carter, the founder of Longleaf Valley developer TreesPlease Games, and Jenny Xu, founder of Run Legends developer Talofa Games, to discuss launching and fundraising for studios with corporate social responsibility missions. Are green games sustainable, and which business models work when you have a “third” actor sharing the bottom line? STEPN created a craze for running games, but how does the fitness gaming industry move forward with a “lighter web3 touch” or move away from it entirely? What learnings have both founders had in their early soft launches and alphas, and how did they tackle early user acquisition on mobile? We also discuss a variety of social initiatives that AAA and mainstream gaming could do to make the world a better place.
To learn more, make sure to download Run Legends and Longleaf Valley from either the App Store or Google Play. You can also find Jenny Xu and Laura Carter on LinkedIn. If you like the episode, please help others find us by leaving a 5-star rating or review! You can find us on YouTube, Spotify, Apple Podcasts, Google Podcasts, our website, or anywhere else you listen to podcasts. Also, remember to shoot us any questions here.
Superstar Avatar: The Perils & Profits of Name, Image, and Likeness
Written by David Taylor, Naavik Contributor
Earlier this month, sports media history was made when arguably the greatest football player of all time, Lionel Messi, shared that he would be joining the Major League Soccer (MLS) club Inter Miami FC. A day later, it was revealed that Apple was a key contributor to the deal, with the company reportedly offering Messi a revenue share from new subscribers to Apple’s MLS Season Pass.
The deal is unprecedented and has far-reaching implications for the entire sports media value chain. However, in the world of gaming, the deal’s primary implications will be to the benefit of one company in particular: Electronic Arts. With Messi’s move to Miami FC, FIFA players will be returning to the game in the hopes of getting Messi’s MLS FUT card or having the rare experience of playing with a 91-rated player on an MLS team in the game's Online Seasons mode. This benefit is due to the fact that EA Sports owns the license to Lionel Messi’s personality rights — also known as Name, Image, and Likeness (“NIL”) in the U.S. — as part of its contracts with essentially any league Messi might play for.
It’s an interesting time to discuss NIL matters, given recent calls from the College Football Players Association (CFBPA) to boycott EA Sports’ offer of just $500 to all athletes at NCAA Division 1 Football teams for use of their NIL in the upcoming game EA Sports College Football.
Sports simulators are not the only games that have an interest in owning the personality rights to superstars. CD Projekt Red announced the likeness of Idris Elba in its upcoming Phantom Liberty expansion for Cyberpunk 2077, with Keanu Reeves reprising his role as Johnny Silverhand. Interestingly, Elba’s character was written specifically with him in mind, as he was signed to the project before the role had been developed. Meanwhile, Nic Cage was added to the roster of characters trying to escape the army of the undead in the co-op zombie game Dead by Daylight. The rise of battle royale titles and hero shooters has also put a higher premium on avatars and in-game skins, creating lucrative new markets for licensing musicians, actors, and athletes as the basis of video game characters.
With all this NIL excitement, we thought we’d dive into the intricacies of licensing player NIL and whether exclusive personality rights are vital to the success of sports simulator games and to the monetization potential of gaming more broadly.
The Art of the Personality Rights Deal
The legal basis for licensing the likeness of celebrities and sports stars is a complex study consisting of loose language, historical court precedents, and the varying laws set by each country that engages in the world of sports and entertainment.
When it comes to sports simulators, each professional sport tends to have a player association that will negotiate the personality rights of the players as a collective. For example, in the world of football, FIFPro, the International Federation of Professional Footballers, is an international organization of 66 player associations across the world. Players sign their name, image, and likeness to their clubs, which belong as members of local associations. Those associations are part of FIFPro, which then negotiates the commercial use of player likenesses. This is likely to reduce the complexity of commercial entities negotiating with every player separately and benefit from greater bargaining power for FIFPro on behalf of multiple leagues and thousands of players.
In contrast, to sign a one-off celebrity like rapper Travis Scott, a game developer would approach Scott’s agent or manager and share what the developer is interested in doing with his likeness in the game. They would negotiate in great specificity what the rights entail as far as Scott’s likeness. According to a legal professional I spoke with, that may include Travis Scott’s voice, signature, brand, image, songs, and how much the game developer expects to use each. The more of the various elements of Scott’s likeness are used, the higher the fee might be. The game developer can proceed once the contract is set out and payment terms are agreed upon.
When Epic Games signed Travis Scott up to appear in a groundbreaking Fortnite concert experience, one of the things the developer would have needed to consider was the payment terms. While there’s no way to know Scott’s terms, Epic paying the artist an up-front fee rather than a revenue share would maintain secrecy around just how much Fortnite has made off his licensed skin. As we’ll discuss later on, those sales numbers are often astronomical.
It’s even more complex than it sounds, and as you’ll see sometimes the game developers and the individual forget or even disagree with what was laid out in the contract. Embarking on a journey to use a superstar’s likeness is not for the faint of heart.
The Perils of Player Likeness
Historically, video games have been considered expressive works that are enshrined in the U.S. by the First Amendment’s free speech protections. The ‘Transformative Use Test” is the primary way this protection has been assessed, “whether the work in question adds significant creative elements so as to be transformed into something more than a mere celebrity likeness or imitation.” However, over the years, numerous lawsuits have challenged this notion, forcing game companies to be cautious with the ways in which real-life people influence the characters used in games.
The landmark case of No Doubt v. Activision Publishing, Inc., in which the band members sued Activision for the wrongful use of their avatars (showing their avatars singing songs made by other bands like the Rolling Stones), set the precedent that video games were commercial products, not just works of art.
Since then, several other lawsuits have followed a similar logic of failing the Transformative Use Test because they depicted “characters in the performance of the same activity for which they are known in real life…” Here’s a brief primer on some of the most notable:
- Former Panamanian dictator Manuel Noriega sued Activision for the use of his likeness as a villain in the CoD: Black Ops 2 campaign mode, though the case was dismissed in 2014.
- In 2014, General George S. Patton’s estate sued the developers of Legends of War: Patton for using his name and likeness without permission.
- In 2017, Riot Games was successfully sued by footballer Edgar Davids for using his likeness in creating the character Striker Lucian.
- In 2017, Maradona sued Konami for the use of his likeness in Pro Evolution Soccer (PES) and settled out of court, even becoming a spokesperson for the game.
- In 2018, Lindsay Lohan lost her lawsuit against Rockstar for the in-game character Lacy Jonas bearing a similar resemblance to the actress.
- In 2020, Selena Gomez filed a lawsuit against the makers of Clothes Forever - Styling Game for the use of her likeness.
Even when contracts are followed, game developers must tread carefully. Tying a game to people in the real world often comes with the peril of needing to adapt when their inclusion no longer reflects well on the company. Just last week, Activision pulled its Nickmercs Call of Duty operator skin over a tweet perceived as anti-LGBTQ. TimtheTatman, another streamer with a Call of Duty operator, then requested his skin be removed in support of his streamer counterpart.
Sometimes the removal is out of respect. For example, Electronic Arts tends to remove footballers after their passing. Part of this is surely out of human decency, and at other times it’s because personality rights get twisted in estate disputes following the passing of a superstar. Paying respect doesn’t always mean removing the stars’ likeness, though. EA made the decision to continue the legacy of actor Michael K. Williams’ likeness in Battlefield 2042 when he tragically passed away before the game’s release in 2021.
In other cases, trouble can arise when the stars themselves are not aware that their likeness is being licensed legally. In 2020, 300 players in FIFA 21 reportedly planned to sue EA Sports for the use of their NIL without consent.
EA Sports is far from innocent in this regard. According to Polygon, during the College Football lawsuit, the plaintiff presented “communications between the union and EA Sports in which scrambling players' names in the roster could get them around paying for the use of likeness.” EA Sports used to publish an NCAA College Football game series. But since it was not allowed to pay players due to NCAA compensation restrictions for college athletes, the company simply used the players’ numbers, positions, and physical attributes to create its college football simulator. This ultimately led to lawsuits that paid out over $60 million in settlements and the closure of the franchise as a whole in 2014.
With so much peril, one might wonder if the endeavor is even worth it. The answer is, of course, yes.
The Profits of Superstar Likeness
There’s a reason why companies jump through so many hoops to own the personality rights of superstars: There’s real money in it.
Epic Games pays superstars like Travis Scott, Ninja, and Drake millions of dollars for the use of their NIL, but by the looks of these rankings, Epic makes tens of millions in return. We also know the NFL activation raked in an estimated $50 million. Scott is right behind the NFL in terms of top-performing IP collaboration by revenue. When assessing value, we also have to account for the value gained from the spikes in engagement that come from players wanting to play with their newly licensed skins.
On the sports simulator side, EA Sports leverages tens of thousands of athletes’ NILs across hundreds of agreements with professional teams and associations for their Ultimate Team game modes. Ultimate Team, on its own, reportedly contributes $2 billion to EA’s top-line revenue each year. While we don’t know the contribution per player, you can bet that the likenesses of Ronaldo, Messi, Mbappe, and Haaland contribute their fair share to that overall number.
As for Madden, EA Sports owns the exclusive license to athletes’ likenesses through the NFL and NFLPA. According to one report, when EA signed its first five-year exclusive licensing deal, “It was like a nuclear bomb going off in the industry, and it just killed all other products.” While the most recent five-year exclusive licensing deal is reportedly worth $300 million a year, each time it is renewed, the contract guarantees Madden’s supremacy in the American football simulation market, which the same report said is worth about $700-800 million per year.
A notable distinction between Madden and FIFA is that the licensing for FIFA is far less centralized, giving FIFA a much deeper moat than that of Madden. Madden’s exclusive license on all player likenesses will expire in 2026, opening the opportunity for another game developer giant to swoop in and take exclusive rights to player likenesses across the entire league.
Regarding FIFA, the agreements with hundreds of different teams and associations will expire at different times, making it effectively impossible for an entity to swoop in and take a significant portion of the exclusive rights to player likenesses in a given year. The game’s title will become EA Sports FC after a historic falling out with the FIFA organization. Still, EA will retain all personality rights to athletes through separate contracts with player associations and will likely retain its effective monopoly in football simulation as a result.
Despite how lucrative superstar likeness can be, games have an amusing history of doing their best to replicate real-life celebrities without having to pay the heavy cost of their name or image. I still remember when Jon Dowd from MVP Baseball 2005 took the place of Barry Bonds (the then-MVP) after Bonds told the MLBPA that he would not be signing the group licensing agreement. In an unexpected turn of events, the EA Sports team decided to take the likeness of one of their associate producers at the time, Jon Dowd, and give him the superpowers of Barry Bonds instead.
This list of the 12 best video game athletes of all time is a fond reminder of the ways in which famous athletes with distinct play styles or abilities can lead to hours of fun and repeat future purchases for sports franchise games. Jon Dowd’s inclusion in this list raises an interesting question: Is it the athlete, or is it the expression of the athlete’s abilities in the game, that makes people fall in love with the experience?
Pro Evolution Soccer (PES) is probably the biggest challenger to the notion that player likeness is critical to commercial success in sports games. Through the latter half of the 90s and early 2000s, PES contended with FIFA despite having significantly fewer personality licensing rights. However, it’s worth noting that the success of PES is also due in part to some of the most egregious examples of using player likeness without permission. The player R. Larcos was an anagram of Brazilian star player Robert Carlos’ last name and even featured the same number, position, and nationality as the real-life athlete.
In the end, it’s impossible to separate the game from the superstar. Furthermore, it’s in all parties’ best interest to keep the details of personality rights contracts under wraps. Celebrities will always want to negotiate ever-higher contracts, and game developers want to avoid setting the floor for what they’re willing to pay for these rights. The result is that personality rights are worth paying for in aggregate, but it's less clear when it comes to paying for a specific individual.
Making Sense of Superstar Avatars
When assessing the different ways in which fiction has been “inspired” by real life, it’s hard to discern any consistency around what constitutes the illicit use of player likeness. All we can say is that the more high profile the game, and the more high profile the individual, the more cautious the game should be when its characters are influenced by real-world people.
Regardless of the perils and ambiguity, I expect that the use of superstar likeness will be more prevalent in gaming in the future as players seek to engage with their favorite celebrities and sports stars in more immersive ways. Aspiring metaverse builders such as Fortnite and Roblox will likely lean more heavily into recreating these personalities in order to draw in new audiences, retain their existing following, and assert themselves as the most comprehensive transmedia platform. As for the current moment, I am curious to see how EA Sports will approach the player likeness of the college athletes who decide to boycott EA’s $500 offer to license their NIL.
Apple purchased the rights to stream every MLS match for the next 10 years for $2.5 billion dollars, and then it paid to bring Messi to the MLS in an unprecedented subscription revenue deal. The deal represents a new way to leverage personality rights that cut across multiple media formats. I expect this will unleash more creative dealmaking, enabling a celebrity or athlete to monetize their likeness across platforms in never-before-seen ways.
Content Worth Consuming
Greg Kasavin, creative director, Supergiant Games (Simon Parkin / My Perfect Console): “My guest today is creative director and writer of some of the most memorable and influential independent games of recent years, including Bastion, Pyre, Transistor, and, most recently, the smash hit Hades, which topped many of 2021’s best games of the year lists. In the 90s, he co-founded Arcadia, a website dedicated to films and video games, which led to an internship at GameSpot, one of the largest websites specializing in video game coverage in the world, of which he eventually became editor-in-chief. After leaving journalism for the world of game development, he worked on the Command and Conquer series, then, in 2010, joined Supergiant Games as creative director. He once said: ‘Our goal is for each game we make... to be good enough and idiosyncratic enough so that it hits someone at the right place at the right time and becomes their favorite.’ Welcome, Greg Kasavin.”
Xbox is trying to turn the corner after a decade of struggle (Gene Park / The Washington Post): “‘The expectations of fidelity and complexity have increased, as well as expectations of shipping and running well across multiple platforms,’ [Matt] Booty said, adding that the company’s games must be programmed for two Xbox consoles plus PC and sometimes PlayStation and Nintendo machines. ‘It just adds up. I do think there’s an expectation reset going on now.’ Even though Xbox studios are meant to feed the Game Pass strategy, Booty emphasized that there is no mandate to ‘design around’ a subscription service. This is key messaging, as many game studios are tempted to chase the wildly successful ‘Fortnite’ by introducing game elements meant to lure in monthly engagement. ‘I always tell our teams, do not go designing a game trying to reverse engineer Game Pass,’ Booty said. ‘Sea of Thieves has been consistently one of the top played games every month, and it was designed many years before Game Pass existed. Just go build a good game, and that will help our strategy.’”
The rise and rise of skill gaming: exclusive interview with new Game Taco CEO Nancy MacIntyre (Dave Bradley / PocketGamer.biz): “With partnerships including Atari and game brands including Bejeweled, Scrabble and Trivial Pursuit, Game Taco is the USA’s leading tournament platform for online skill games with real cash prizes. It’s the parent company of WorldWinner, acquired in 2021. And it also has a new CEO. Nancy MacIntyre, who was appointed just before Pocket Gamer Connects Seattle in May. MacIntyre gave a talk at the conference called ‘Evolving skill gaming for diverse audiences,’ covering gender, generations, and genre. And before she went on stage, we had a chance to quiz her exclusively about her market insights, her 25-year career in the games industry, and her philosophy for business.”
Builder Base 2.0 — Behind the Scenes with the Clash of Clans Team (Supercell): “Hey Clashers. Welcome to an extra-special episode of Clash On. We’re going to have several members of the Clash of Clans team sit down in a roundtable discussion to talk about the thoughts behind why we changed Builder Base, what are some of the new features that they each worked on, and kind of give you an insight into how we develop new content for Clash of Clans. Without further delay, meet the Clash of Clans development team members who have a story to tell about Builder Base 2.0.”
- Coda Payments: Managing Director, Publisher Partnerships (Los Angeles, U.S. / Hybrid)
- FunPlus: Senior Community Manager (Barcelona, Spain / Remote)
- LILA Games: Lead Gameplay Engineer (Remote)
- MY.GAMES: Game Designer (Remote)
- Nexus: Head of Sales (Remote)
- Supersocial: Game Designer (Remote))
You can view our entire job board — all of the open roles, as well as the ability to post new roles — below. We've made the job board free for a limited period, so as to help the industry during this period of layoffs. Every job post garners ~50K impressions over the 45-day time period.