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Compliance & Regulatory

Swiss Esports Takes a Leap: New Youth Protection Law Unveiled!

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Swiss Esports Federation (SESF) plays a pivotal role in shaping the future of esports in Switzerland

The Journey to Legislation

After rigorous discussions in the Swiss national parliament, the new youth protection law for film and video games (an English version is not yet available) has been finalized. SESF’s involvement ensured that the voice of the Swiss esports community echoed throughout the process. The result? A law that favors esports events in Switzerland, notably by avoiding stringent tournament participation regulations. However, the journey is not over. As the law rolls out, there are ambiguities that need addressing.

Co-Regulation: A Novel Approach

The Swiss government has taken an innovative path. While the federal council and parliament have set the overarching rules, the onus is on the industry to fill in the details. This calls for a collective effort from industry stakeholders, like SESF, to ensure the law’s efficient execution in the esports realm. Upcoming discussions will revolve around structure, financing, voting rights, and more, with SESF at the forefront.

Boosting Digital Media Literacy

The law paves the way for initiatives promoting digital media literacy, backed by federal funds. While this is a positive stride, questions linger: How much support? What are the criteria? Are there any restrictions on these funds?

Age Classification: A Step Towards Transparency

Gone are the days of optional age classifications. The new law mandates the industry to adopt a system akin to PEGI. SESF views this as a move towards clear rules and legal clarity.

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Esports Participation: The Heart of the Matter

The law’s crux for the Swiss esports industry revolves around the regulation of participants during events. A silver lining for esports enthusiasts is the provision allowing younger players to participate in tournaments, provided they have parental consent. This is a boon for the Swiss esports landscape, fostering young talent. However, there’s a caveat for underage spectators at offline events, with restrictions that are arguably stricter than desired.

The Road Ahead

With the political nod, the next phase involves drafting the law in detail. The industry was consulted in early 2023, with a public consultation draft anticipated by October 2023. The law’s full-fledged implementation is slated for 2024, followed by a two-year window for co-regulation negotiations.

Via SESF, press release, and the content of the Federal Law on Youth Protection in Films and Video Games.

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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Compliance & Regulatory

The Scandalous Legal Tug-of-War in Kenyan Esports: What’s Behind the Gaming Impact Grand Series Cancellation

The recent cancellation of the “Gaming Impact Grand Series” by the Electronic Sports Kenya Federation (ESKF) has sparked significant debate in the esports community. The Federation’s decision, citing SmartVR’s lack of registration and concerns over player safety and competition integrity, raises questions about regulatory intervention in esports events.

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Kenyan Esports

The “Gaming Impact Grand Series” promised to be a landmark event in Kenyan Esports scene, featuring monthly FC24 showdowns and significant prize pools. However, ESKF‘s intervention underscores the regulatory challenges facing esports in Kenya. Critics argue that the Federation’s approach could deter the growth of esports, advocating for a more supportive framework that encourages event organizers while ensuring participant safety and fair competition.

The Heart of the Controversy

At the heart of this controversy lies the Federation’s decision to cancel a highly anticipated series of monthly tournaments. These events, which promised to galvanize the local esports community with a grand finale prize of Ksh 300,000, were poised to set a precedent for the scale and excitement of esports competitions in Kenya. The Federation’s rationale centers on SmartVR’s failure to register as an official esports tournament organizer, coupled with apprehensions surrounding player welfare and the authenticity of competitive play.

Critique of the Kenyan Esports Federation’s Stance

The Federation’s stringent measures have not been met without critique. Many argue that such interventions, though arguably well-intentioned, may inadvertently stifle the growth and dynamism of Kenya’s esports ecosystem. Critics suggest that fostering an environment conducive to growth necessitates support and guidance for emerging organizers, rather than outright dismissal or obstruction. This incident has thus sparked a broader conversation on the balance between regulation and encouragement in the development of esports.

A Call for Collaborative Regulation

The crux of the issue may not lie solely in the act of regulation but in the manner of its execution. A collaborative approach, where regulatory bodies work hand in hand with event organizers, could serve as a middle ground. Establishing clear, accessible guidelines for registration and operation, alongside active support for compliance, could mitigate the risks without quashing initiative. Such a framework could ensure the integrity and safety of events while nurturing the competitive and entrepreneurial spirit that drives esports.

The Impact on Kenyan Esports Future

The implications of this legal skirmish extend far beyond the immediate parties involved. They touch upon the very trajectory of esports within Kenya, posing questions about the role of governance in a rapidly evolving field. The balance between safeguarding participants and promoting innovation becomes ever more critical as esports continues to capture the imagination of a global audience.

Towards a Constructive Resolution

The path forward requires dialogue, understanding, and compromise. The Federation, while steadfast in its commitment to regulation, must also embrace its role as a facilitator of growth. For their part, organizers like SmartVR must navigate the regulatory landscape with diligence and transparency, ensuring their events meet the requisite standards for safety and fairness.

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Conclusion: A New Chapter Awaits

The Gaming Impact Grand Series debacle serves as a pivotal moment for Kenyan esports, one that could define the contours of its future development. By embracing a spirit of cooperation and mutual respect, stakeholders across the spectrum can forge a robust framework for esports. This not only guarantees the safety and fairness of competitions but also ensures that Kenya’s esports scene continues to thrive, innovate, and inspire.

This article is inspired by James Fudge’s (The Esports Advocate) research on X/Twitter

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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Compliance & Regulatory

China’s Proposed Regulations on Online Games: A Comprehensive Overview

Explore China’s proposed regulations on online games, unveiled by the National Press and Publication Administration (NPPA)

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In a development there has been an announcement, by the National Press and Publication Administration of China (NPPA) on December 22 2023. They have introduced a draft guideline titled “Measures for the Administration of Online Games.” This comprehensive document consists of 8 chapters. Includes 64 articles. It aims to consolidate existing regulations while providing clarifications and amendments. Around 10 of these articles bring about changes in regulations marking a shift since restrictions were imposed on Chinese youth gamers back in September 2021.

One specific focus in the draft is Article 18 which aims to control spending and speculation in games. It states that games should not use reward systems that encourage users to overspend, such as offering in game rewards for logins or frequent purchases. Additionally the draft prohibits publishers from endorsing auctions for in game items. Publishers are also required to display pop up warnings to users who exceed a spending limit and set caps on in game expenditures although specific limits are not detailed in the draft.

The potential impact of these regulations regarding spending limits could be considerable as it primarily affects Average Revenue Per User (ARPU) games. Notably popular titles like Honor of Kings (Tencent) and Eggy Party (NetEase) may experience effects due, to their number of Daily Active Users (DAU) and low ARPU.
However game publishers face a challenge, in retaining and attracting users due to the lack of rewards for logins and ongoing purchases.

The response from both the industry and government to these regulations is crucial. Historical data shows that when there are changes in the gaming sector video game approvals tend to be put on hold. However after the draft release we saw a record breaking approval of 40 imported games and 105 domestic games in 2023. This indicates an inclination towards continuing to approve games, which demonstrates the governments commitment to fostering a gaming industry.

According to Niko Partners research the governments goal is to promote high quality development while addressing user concerns and rectifying business practices. The draft has prompted a response with the NPPA being open to industry feedback and recognizing the need, for revisions. It is worth noting that removing Feng Shixin, who oversaw the NPPAs Publishing Bureau has introduced an element of uncertainty into the landscape.

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As we progress through the 30 day review period industry stakeholders are eagerly anticipating a revised version of the draft that incorporates feedback.


Throughout the year it has become clear that China is moving towards implementing policies, for the video game industry. It is expected that the final draft will address concerns related to Article 18 providing an understanding of how loot boxes, daily incentives and spending limits will be handled. Although the complete impact is yet to be determined games that heavily rely on these monetization methods may encounter obstacles in the changing landscape.

image by: www.slon.pics

Author

  • Gilberto Ceballos

    Gilberto is a Mexican law student at Universidad Panamericana in Mexico City, one of the top law schools in the country, with an unwavering passion for various legal subjects like international law and arbitration. He is part of the full immersion program, designed to provide students with a deep understanding of international law. This experience aims to delve into the complexities of global legal systems, international relations, and dispute resolution mechanisms. In addition to this, Gilberto participated in the youth parliament organized by the Mexican Senate, representing the voice of the Mexican youth, as well as having various international academic experiences in Canada, United Kingdom and France. He is a passionate gamer and looking forward to contribute to ELN.

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Compliance & Regulatory

DouYu CEO Arrest: Implications and Company’s Response in the eSports Landscape

In a recent development that has sent ripples through the eSports industry, DouYu International Holdings Limited (Nasdaq: DOYU), a frontrunner in game-centric live streaming in China, faces a significant challenge. The Company’s CEO and Chairman of the Board, Mr. Shaojie Chen, was arrested by the Chengdu police around 16 November 2023. This news has raised concerns about the potential impact on DouYu’s operations and its position in the eSports value chain.

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The DouYu CEO Arrest and Its Immediate Aftermath

DouYu, in its official statement, disclosed that it was informed of Mr. Chen’s arrest on 20 November 2023. However, the reasons behind the arrest and the nature of the investigation remain undisclosed, as the Company has not received any official notice regarding the same. This lack of clarity has led to speculation and uncertainty, both within and outside the organization.

Sources close to the matter indicate that the investigation revolves around allegations of pornography and gambling content on DouYu’s platform, both of which are illegal in China. This arrest is part of a broader pattern of increased scrutiny and regulatory action against tech companies in the country.

Potential Impact on DouYu and the eSports Industry

Mr. Chen’s arrest and the ensuing legal proceedings, if any, could significantly affect DouYu’s reputation and operations. The company, known for its robust live streaming platform that caters extensively to the eSports and gaming community, might face challenges in maintaining its market position and user trust. The incident could also cast a shadow over the broader eSports industry in China, which has been burgeoning in recent years, with DouYu being one of its key players.

Company’s Response and Contingency Plans

Following Chen’s disappearance, DouYu has stated that its business operations remain normal. However, the company declined to comment on Chen’s whereabouts. This situation has raised concerns about the future of DouYu, especially considering the company’s significant user base of approximately 50 million monthly users and its diverse range of content, from eSports to live cooking shows.

Broader Implications for the Tech Industry in China

Chen’s arrest is the latest in a series of actions against high-profile tech executives in China, reflecting the government’s tightening grip on the tech sector. This trend has been marked by a two-year crackdown, affecting business confidence and investment, particularly in the tech industry. The situation mirrors the experiences of other Chinese tech figures like Alibaba’s Jack Ma and China Renaissance’s Bao Fan, who have faced similar challenges.

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DouYu’s Journey and Current Challenges

Since its founding in 2014, Chen had led DouYu to become a major player in the game-streaming and eSports arena. The company went public in 2019, raising USD 775 million from US investors at a valuation of nearly USD 4 billion. However, the ongoing crackdown and increased regulatory scrutiny have severely impacted DouYu’s business, with its market value plummeting to less than $300 million, a stark contrast to its cash and short-term investments worth nearly $900 million.

Tencent’s Involvement and the Failed Merger

Tencent, holding a 38% stake in DouYu, had plans to merge the company with rival streaming platform Huya. However, this merger was abandoned in 2021 due to failure in obtaining approval from China’s antitrust authorities, further complicating DouYu’s position in the market.

About DouYu International Holdings Limited

DouYu, headquartered in Wuhan, China, is a leader in game-centric live streaming. The platform, accessible via PC and mobile apps, offers an immersive and interactive experience in games and entertainment live streaming. It is particularly noted for its focus on eSports, providing a mix of video, graphic content, community events, and discussions. DouYu’s commitment to high-quality content and technology-based talent development has been instrumental in expanding its user base and enhancing user experiences.

Looking Ahead: The Road for DouYu and eSports

The arrest of Chen Shaojie and the subsequent uncertainty surrounding DouYu underscore the complex and often precarious nature of operating within China’s tech sector. This incident not only affects DouYu but also sends a cautionary signal to other companies and investors in the industry. As the situation evolves, it will be critical to monitor how DouYu navigates these challenges and what this means for the broader landscape of tech and eSports in China.

As the situation unfolds, the industry and stakeholders will closely watch how DouYu navigates this challenging phase. The company’s response and adaptability in the face of this unforeseen event will be crucial in determining its future trajectory in the dynamic and ever-evolving world of eSports and live streaming.

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Via: PRNewswire

Image source: BNN

Author

  • Leonid Shmatenko

    Leonid Shmatenko is part of Eversheds Sutherlands’ data protection and technology law team. He has vast experience in regulatory and general issues in the areas of eSports and Blockchain. He advises eSports associations and clubs on all legal issues, advises and supports crypto startups in all matters from planning, preparation to execution of private and public token offerings (so-called Initial Coin Offerings or ICOs). Furthermore, Leonid Shmatenko specializes in international arbitration and has participated in several arbitration proceedings (SAC, ICC, DIS, UNCITRAL, ICSID, ad hoc) as a party representative and secretary of the tribunal. Leonid Shmatenko studied at the Heinrich Heine University in Düsseldorf and is currently pursuing a PhD in international law. After his successful first state examination (2011), he completed his legal clerkship, inter alia, at the German Embassy in Lima and within international law firms in Düsseldorf and Paris. He passed the second state examination in 2015. He is an external lecturer at the National Law University of Ukraine “Yaroslav Mudryi”, where he teaches International Investment Law. He is admitted to the Bar in Switzerland and Germany. Before joining Eversheds Sutherland, Leonid Shmatenko worked as an attorney at leading law firms in Geneva, Munich and Paris.

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