Congratulations! You’ve honed your skills and built your following to a point where a company wants to pay YOU to use THEIR stuff! All that’s left for you to do is sign on the dotted line and you have yourself a shiny new endorsement deal! You’ve finally made it.
Not so fast.
While endorsement agreements are sweet, gamers should be aware of the various contractual pitfalls that may serve to unduly restrict their ability to perform and grow in the industry. This article is the first in a series that will examine various considerations a gamer should have when inking a fresh endorsement deal. The first topic we will cover is the Exclusivity Clause.
Exclusivity Clauses
Exclusivity Clauses may take innumerable forms but in essence, they seek to control how a gamer exploits their image, likeness, and personality by restricting the products a gamer may promote or use. As an example, under an endorsement agreement, a brand provides compensation to a gamer in exchange for the gamer’s use of the company’s keyboard during gameplay. The Exclusivity Clause prohibits the gamer from using any keyboard other than those contemplated under the agreement.
Exclusivity Clauses may relate only to the endorsed class of products. However, some Exclusivity Clauses may contemplate broader restrictions, such as preventing gamers from entering endorsement deals with any other brands.
The Consequences of Restricting Choice
Contractual restrictions may be seen as the cost of doing business. However, depending on the scope of the Exclusivity Clause, a gamer’s ability to further monetize their likeness and personality, and even their ability to perform, may be compromised.
Exclusivity Clauses that seek to restrict the gamer’s gear, or peripherals, may pose serious threats to the gamer’s performance. Such an Exclusivity Clause should be avoided at all costs, as it may compromise the very thing that is giving the gamer the opportunity to endorse a product in the first place.
Exclusivity Clauses that prevent a gamer from entering into endorsement contracts with a non-party, effectively limiting the gamer to endorse only one brand’s products, should also be avoided if possible. Given the exponential growth of the industry, and the uncertainty that comes with it, locking into one brand for an extended period of time may unnecessarily close the door on unforeseen opportunities. It is better to keep some options open in an industry with unknown, and untapped, potential.
Luckily, Exclusivity Clauses can be uniquely tailored in any endorsement agreement. Carve-outs can be introduced that provide for exceptions for certain products or for certain brands. If a particular mechanical keyboard is paramount to a gamer’s in-game success, then the Exclusivity Clause can provide an exception for that keyboard. Further, provided the gamer is valued by the prospective brand and possesses some sort of leverage in negotiations, a total Exclusivity Clause can likely be avoided.
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Exclusivity Clauses are a mandatory provision in most endorsement deals. While gamers may not be able to avoid them altogether, they should endeavour to draft them to fit their personal needs. Prior to cementing an agreement, the gamer must scrutinize what is and what isn’t important to them, and what products they can and can’t use under the agreement. If a preferred peripheral falls within the prohibition, the gamer must be able to carry on in a manner such that their performance is not compromised. Future opportunities should also be taken into consideration to ensure reasonable freedom and growth in their blossoming careers.
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