Startup Must Know: The Rapid Growth and Legal Issues in the Indian eSport Industry

Startup Must Know: The Rapid Growth and Legal Issues in the Indian eSport Industry

With a total population of 1.34 billion, India is the second-largest country in the world. The objective conditions in the past show that the challenges of developing eSport in India include insufficient infrastructure, unaffordable hardware equipment, and unsupported culture and family. But after 2020, India is about to usher in the development of eSport.

In fact, insufficient infrastructure is no longer the biggest obstacle to the development of eSport in India. Taiwan’s ASUS brand “ROG” has also become the only official partner of India for the first designated equipment. An interesting phenomenon in India is that it may directly enter the “mobile eSport ecosystem” and skip the “computer eSport” related games.

(picture from 91mobile)

Online video games are inseparable from eSports in terms of growth factors. In eSports, the players tend to cherish their career as professional or amateur video game players which motivates them to actively participate in tournaments. Therefore, a high level of recognition in multi-player videogames is indeed essential for eSports industry. Looking into the growth of the online game players in India, the industry predicts a positive shift. Many industries have been affected due to COVID19. However, the lockdown became a thriving factor for the eSports industry. Housebound people are driving to accept a new model of engagement through eSports. And around 35% higher usage has been noticed in multi-player modes in online gaming. Many eSports platforms have reported double-digit growth in the user base during the lockdown. For example, Paytm First Games has reported an almost 200% increase. This new addition to the sports industry is well greeted since 2019. We can even say that this is a ‘paradigm shift’ in the Indian sports industry.

India is a lucrative market for FDI with 75% of its population under the age of 45 and the second-largest online market. Investors need to adhere to all the relevant regulations in India during collaborations. Considering the spectrum of the consequences, several laws indirectly regulate this complex industry.

Intellectual property is one of the most important concerns in the eSports world. It is crucial to receive proper authorization or license from the appropriate personnel. Make sure that your intellect is properly shielded with IP protection in an adequate form of IP such as trademark, copyright, patent, trade secret, etc. Otherwise, IP infringement can cost a fortune.

In India, the Public Gambling Act is the most influential law in the eSports industry. Since the Act is a State Subject, therefore, the regulations may vary from state to state. However, Indian Foreign Direct Investment (FDI) and Foreign Exchange Management Act (FEMA) prohibit any kind of investment or collaboration for foreigners in lottery, gambling, betting field, and even in technology. Therefore, it would be wise to understand the regulations surrounding your investment. The Information Technology Act further regulates the electronic transmission of gambling information too.

To maintain morality, decency, and to avoid provocative contents, this industry is regulated by many other laws such as The Code of Advertising Standards Council of India to control the content of the advertisement in the eSports industry, The Information Technology Rules which control the transmission of information, and the Indecent Representation of Women (Prohibition) Act, etc.

Apart from legality, negotiating power has become the foremost concern in this industry. A careful review of the contract becomes essential for any type of investment and collaboration. Terms in the player’s agreement also cause disputes and effects employment. Therefore, considering drafting contracts by professional corporate lawyers would be a smart choice.

With more recognition, countries might strive to enact specific laws to regulate the industry. With these evolving law changes, our society would demand proficient eSports lawyers soon.

Taiwan is also currently having great eSports recognition. Therefore, Taiwanese and Indian collaborators walking hand in hand would be a win-win scenario. It is also an opportunity for startups that focus on the eSports industry.

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