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    Article

    Entertainment and sports industry trends

    March 6, 2023

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    By Christina Chang

    What obstacles and opportunities will the entertainment and sports business industry face in the year ahead?

    In a conversation with the Los Angeles Times Business Advisory panel, Christina Chang shares insights on the entertainment and sports industry.

    As a trusted advisor to entertainment and/or sports businesses, what do you consider to be the most challenging obstacles facing the industry in 2023?

    Social issues in sports have influenced various aspects of consumer engagement, With the emergence of new media platforms, consumers now have more options to access sports broadcasts. They can choose sport or franchise-specific viewing plans that can be added a la carte or bundled into TV or other subscription plans. However, viewership can be pricey and subject to additional territorial blackouts and exclusivities (such as a local television network getting exclusive broadcast rights to certain NBA games). Also seeing increased promotion across OOO mediums like billboards, digital banner ads, and paid endorsements to promote in-person attendance to events, including the use of influencers and podcasts to promote third-party ticketing apps, as well as giveaways, sweepstakes, and contests by corporate sponsors or affiliates.

    What are some of the pros and cons of the social media age in terms of how social media affects sports and entertainment?

    The pros include the fact that social media allows virtually unrestricted and cheap ways to instantaneously connect consumers with their favorite athletes, brands, and talent along with creative options to monetize and promote the same. For example, creators can supplement income with subscriptions for exclusive content or experiences like live streams and meet and greets. In terms of cons, expansive coverage can be invasive, diminishes the talent’s expectation of privacy, and requires the talent to be “on” all the time. Talent has to be particularly mindful of the content they disseminate (including private content that’s inadvertently leaked or hacked) – a derogatory statement or racial slur on a live stream can have an instant but longstanding impact on one’s image, brand, and partnerships.

    What do sports and entertainment brands want to see in terms of sponsorship renewal or new business pitches?

    Brands want to lock up promising and reliable talent that have organic synergies to the brand, product, and services they’re promoting on favorable terms, including broad exclusivity and usage of all proceeds from services in unlimited mediums, payment terms tied to successful performance, regulatory compliance (such as the use of proper FTC disclosures), pre-set option terms that brand can unilaterally exercise, continued/sustained use of proceeds after termination, and ability to terminate for convenience for acts of moral turpitude (arrest, scandal, and other bad acts that are potentially damaging to the brand).

    What new avenues do you anticipate for creative talent over the next few years?

    Further monetization via traditional and ancillary avenues and mediums such as endorsement and merchandise deals across different verticals and monetization in the metaverse, including the sale of NFTs that grants exclusive access to merchandise and experiential activities. Other talent, including athletes with a limited or unpredictable career tenure due to unforeseen injuries, inevitable old age, etc. will engage in additional ventures, investments, and partnerships to preserve and supplement income, including joint ventures leveraging name, image, likeness endorsement, and services in exchange for equity.

    Are we seeing ESG-related trends in sports and entertainment businesses?

    Absolutely. Consumers are increasingly aware of and demand companies’ commitment to and implementation of ESG standards, which are increasingly becoming the gold standard. For example, sports and entertainment businesses now increasingly collaborate with partners who are environmentally conscious (such as companies that plant trees for three-point shots), don’t use labor in furtherance of fast fashion items, and/or have a strong commitment to DEI initiatives, inclusive of diverse, female-led executives and public-facing officials.

    How are pro sports teams facing international expansion and interest?

    American sports, especially NBA basketball, have astronomical appeal internationally, largely because of the celebrity factor associated with our stars and limited access/ability to see these stars play overseas. Teams will continue to capitalize on international fandom by making the teams and athletes more accessible. For example, in 2022, the NBA brought two attendance-packed, pre-season Warriors games to Japan’s basketball fans. Pro athletes also individually benefit by starting or ending their careers with international teams. Further, esports continues to expand its international footprint with its teams of professional players competing in tournaments worldwide. Tournaments are often live-streamed via digital platforms and sponsored by corporate partners, which also tap teams and individuals to promote services and products a la their influencer and athlete counterparts.

    What is the difference between copyright and intellectual property, and how are they protected?

    Copyright is a type of intellectual property (IP), along with trademarks, the right of publicity, and patents. IP may overlap (for example, a photo of an athlete in team uniform triggers copyright to the photo, publicity rights of the athlete, and trademarks of the team), but each has a distinct purpose with required elements to establish a claim, damages, and defenses. These are most relevant to brands, creators, and athletes. Copyrights protect against the unauthorized reproduction, display, adaptation, and performance of original works of authorship fixed in a tangible form of expression (such as with a printed television script). The state-based publicity right protects against the unauthorized commercial exploitation of one’s name, image, and likeness. Trademarks are symbols, logos, designs, or expressions that identify a particular source. Each has different formalities, including as to copyright, and requirements to be registered before bringing an infringement lawsuit, which can also preserve certain remedies.

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    The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.

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