Virtual reality in sports – privacy risks and revenue opportunities for players

Published 05 September 2018 By: Nan Sato, Sam Beer

Virtual Reality and sports

Virtual reality (VR) has become one of the hottest buzzwords in recent years owing to its potential to revolutionize many industries. The sports industry is arguably where VR is being put to use in the most effective and aggressive manner. The advent of VR technology will likely fundamentally change how sports are played, advertised, and watched. Increasing numbers of professional sports teams are incorporating VR into their training programs; content distributers and technology start-ups are racing to deliver more games in the VR format; and advertisers are itching to capitalize on the commercial opportunities created by an all-immersive fan experience.1

At the same time, the adoption of VR technology in sports will create new legal questions or at least require an expansion of existing legal doctrines. VR brings unprecedented opportunities for players to enhance their brands as well as perils for their names and reputation to be destroyed overnight. This series of articles will explore a number of legal matters, including privacy (particularly data privacy) of players and fans and issues related to distorted sensescape (the simultaneous presence of several sensuous experiences) and pervasive display.

After first reviewing the current adoption of VR technology in sports, this first article focuses on player privacy and data protection issues. Specifically, it looks at:

  • The growing role of virtual reality in sports

  • Impact on players’ privacy rights

    • Intrusion into private physical spaces

    • Privacy in public spaces

    • Data created by VR technology

  • How can players protect their privacy rights and proprietary data?

    • Option 1 – generally prohibit use of personal data and privacy violations and tightly regulate licensing on a case-by-case basis

    • Option 2 – broader licensing of use of the data / privacy rights player associations with limited regulation

    • Option 3 – licensing directly by individual players

    • Option 4 – license collection of the data rather than use

Virtual reality in sports

To begin, let’s throw away all the preconceptions that we have about VR. Many of us think about VR as a pair of clunky goggles that, once strapped around your head, allow you to see things in three dimensions. This is an antiquated conception. In fact, the technology is making strides towards a multi-dimensional and multi-sensory future even as you are reading this article. The Virtual Reality episode in the documentary series Next World with Michio Kaku offers a glimpse into the exciting future of the VR technology.2 Soon, we will not only be able to see, but also touch, smell, and feel the virtual world as if it were real. Devices such as nanobots will be able to trigger our brains to make us feel the ocean breeze of the Bahamas, smell the aroma of a Middle Eastern spice market, taste the freshly caught tuna of a Tokyo fish market, and experience the exhilaration of skiing down the Swiss Alps; all while sitting in our pajamas at home.

In the world of sports, VR technology will change the experience for everyone; from players to spectators. As of May 2017, seven NFL teams, three NBA teams, one MLB team, fourteen U.S. collegiate programs, and the U.S. ski team had all adopted the STRIVR virtual reality training system to help enhance the performance of their athletes.3 With the help of VR, athletes are now able to train their reactions by using simulators to do unlimited repetitions without the normal wear and tear that happens to their bodies in regular training sessions.4 Reports are showing that full immersion training through VR has helped improve body coordination in professional athletes. Andre Drummond of the Detroit Pistons corrected his free throw form and upped his accuracy rate by more than ten percent with STRIVR.5 William Byron, winner of the 2017 NASCAR Xfinity Series Championship, aged just 20, actually learned his prodigious talent for stock-car racing using VR. Rather than having to undertake all of the logistical difficulties of getting to a racing track, he was able to train six hours a day from his own house.6

The technology is revolutionizing the way sports are being consumed as well. Although the present VR viewing experience for sports fans is still largely confined to 3D headsets, the technology is improving at lightning speed to incorporate smell, touch and other sensory aspects. Viewers are already able to choose the perspective from which they wish to view a sporting event. An ice hockey fan can now choose not only to watch a game from behind the goal, front-row sideline, or high above, but also to step into the skates of goalie Henrik Lundqvist to block 100-mile per hour slap shots.7

In 2016, NextVR signed a 5-year partnership agreement with Fox Sports to live stream games in VR format through the service.8 NextVR is also the official League Pass partner of the NBA.9 On October 12, 2017, they jointly announced a schedule of 27 live games in virtual reality for the 2017-18 NBA season10 and the VR viewing experience seems to have been greeted with mostly positive reviews, excited for future developments in the technology.11

While the existing technology is making its way towards mass-market adoption, VR firms and research institutions are busy developing additional features which will enable fans to feel the vibration of a baseball bat, sniff the smells on a basketball court, and avoid motion sickness which is the most common complaint about the current technology.12 Furthermore, sports leagues, clubs, and event organizers will answer the fans’ calls for more intimacy by allowing virtual reality access to areas that are previously off-limits, such as the players’ locker rooms, team buses, and the bench area during a game. The Premier League, for example, has already introduced 360-degree cameras in the Manchester City Etihad Stadium to give viewers access the players in dressing rooms and the players’ tunnel.13

Soon, fans will not only be able to view, hear, and feel a sporting event as if they were physically present at the event, but also choose to view the games and locker room interactions from the players’ perspectives. Spanish technology company FirstVision has developed jerseys and ice pads which integrates a full-HD camera, a microphone, and an RF broadcast system that allow fans to run inside of the field or skate inside of the rink with their favorite teams during professional competitions in real time.14 Dutch start-up Beyond Sports is providing VR broadcasting that allows fans to view games “wherever they are, from every angle, as any player.15 Major American sports leagues are rushing to embrace the technology to enhance their fan base.

As fans become more accustomed to watching the games in VR, they will demand increased access to their favorite players both in and outside of the games. More players will be asked to share their sensory perspectives through VR and let fans into their private lives to a greater extent. The development of the technology and the regulations surrounding it will be driven by the fans’ growing demand for more intimacy with their teams and players.

Impact on Players’ Privacy Rights

Intrusion into Private Physical Spaces

As discussed above, VR technology will allow fans to follow their teams to places that were formerly private. For instance, eye cameras which are intended to provide viewers with the players’ perspectives will also allow the viewers to observe what is being discussed during time-outs and planning sessions. Fans will also be able to witness scenes that are currently leaked to the public only on rare occasions, such as the profanities often exchanged on the players' bench or motivational-heckling between teammates off the field. Whilst some may find this amusing, such contents are not necessarily suitable for young viewers. Further, whilst player behavior will be expected to change as a result, there will undoubtedly be moments where the mask slips and a player's public image is damaged as a result (whether due to profanity or the revelation of details of their private life) with major personal and financial consequences.

The penetration into formerly private physical spaces also opens up new commercial opportunities. Just imagine how much more entertaining television shows that offer a behind-the-scenes look at famous teams, such as Hard Knocks and All or Nothing in the NFL, would be in the VR format. VR content producer BigLook360 has already been filming at the NBA practice court, where stars like James Harden and Kyle Korver show off their three-pointers.16 NBA and BigLook360 are now able to draw in casual fans by broadcasting such training sessions which were previously only accessible to a select group of people. Sports leagues and VR companies have started cashing in on such exclusive and immersive entertainment experiences.

In most cases, players are not being compensated for their appearances in the broadcasting of the training sessions and behind-the-scenes contents. Indeed, when players are paid, this is seen as tainting the "reality" that the shows are aiming to present – NFL Films received a dressing down from its co-producer, HBO Sports, for paying (only up to US$ 8,000 each) a number of players for the Hard Knocks show, where fans followed the players into their cars, homes, and even the hospital room of a player’s wife right after she gave birth.17 The VR technology will only boost the commercial scale of such exclusive content where players are under increasing pressure to provide access to viewers to their private lives. Unless the current profit structure is renegotiated, players will be giving up more of their privacy for free for the benefit of the leagues and technology companies.

Privacy in Public Spaces

The even trickier issue is the intrusion into the players’ private spheres in public. In 2016, Mountain Dew put a 360-degree camera in the car with NASCAR driver Dale Earnhardt Jr. Nike has used VR to show fans the exact perspective of Brazilian striker Neymar as he skips past defenders.18 As the technology continues to develop, fans will one day be able to feel the same physical sensation and maybe even sync their thoughts with the ones of their favorite players. Such technological developments are exciting for the fans, but they require the players to share a significant amount of personal information, including their eye movements, body movements, and personal perspectives.

Although such movements and perspectives happen in public places, they nonetheless concern a much more intimate and private level of players’ lives. There has been no case law on this precise point, but it is fair to argue that players have a reasonable expectation of privacy concerning their own observations and personal experiences (whether in private or in public); things that VR will allow spectators to directly intrude into.

Data created by VR Technology

The players' desire for privacy also extends to concerns over the amount of information that VR Technology will provide their employers and others.

The collection of biometric information by teams and third-party companies is already making big news in the sphere of wearable technology in sports. "Wearables" are devices that, when attached to players, can record various aspects of their performance / physiology in great detail – e.g., sleep patterns, heart-rate, or speed. Currently, wearables are employed mostly for health monitoring and performance enhancement purposes rather than as part of VR technology in professional sports. For example, in the NFL, Zebra Technology has been permitted to embed RFID (radio-frequency identification) tracking devices in every player's shoulder pads in every game in order to collect data for coaching and broadcasting purposes.19 As VR technology develops, its increased implementation will necessarily involve players producing significantly more expansive (and more valuable) data of this kind.

Players are, justifiably, concerned about what happens to this data. In the NBA for example, there have been fears that the teams could use the information about players' physiologies that they collect from wearables to reduce salaries in contract negotiations.20 If a team has data to prove that a player's heart rate is habitually lower than the team-average during training sessions, no matter their performance on game-day, that perceived lack of effort could be used to justify a pay-cut. There have even been concerns that the collection and sharing of this sort of biometric data could amount to the unlawful disclosure of confidential personal medical information.21 With VR Technology, the risks would be even more extreme – teams could monitor players' eye movements for concentration levels and sanction any loss of focus.

Vast amounts of highly valuable (and sensitive) data will be collected by teams and third-party providers with very little understanding as to how it will be used and who owns it. The question of the propertization of personal data is one that we will revisit later in this series; but suffice to say for the moment that it is clearly desirable for players to have some degree of control over their own personal data22 – just as they should over their own privacy.

How can players protect their privacy rights and proprietary data?

The key question going forwards, as VR Technology continues to advance, is how should players protect (and monetize) their rights to control their privacy and personal data?

In many jurisdictions (particularly professional sports leagues in the US and much of Europe), players may look to operate collectively (usually through players' associations (PAs)) to assert control over their rights to privacy and personal data. PAs carefully negotiate their players' rights with the relevant leagues/owners in collective bargaining agreements (CBAs) and it is in these documents that we expect privacy and data rights to be delineated. Alternatively, rather than in CBAs, players and PAs may look to the international federations' regulations (e.g. FIFA or FIBA) to obtain protections. In jurisdictions where PAs are heavily regulated (or even banned) and for amateur players, other solutions not-requiring collective bargaining or international regulations may have to be found.

Naturally, it is impossible to foretell with certainty how the negotiations will play out. We can simply try to make sensible predictions based on current practice and emerging trends. We consider four options, both with and without the need for collective bargaining, below.

Option 1 – generally prohibit use of personal data and privacy violations and tightly regulate licensing on a case-by-case basis

In the NBA, as a result of the concerns mentioned earlier, some personal data protections already feature as part of the 2017 CBA negotiated between the NBA PA and the federation. Subject to further agreement, the NBA CBA:

  1. prohibits the use of all wearables during games;

  2. limits wearables able to be used in training to specific products, subject to approval by a six-member panel;

  3. prohibits the publication of the data or its use for commercial purposes;

  4. strictly prohibits use of the data in contract negotiations (or for any non-medical/performance related use); and

  5. incorporates an agreement to: "continue to discuss in good faith the use of Wearables in games and the commercialization of data from Wearables".23

The latest MLB CBA includes some similar provisions in the form of a side letter attached to the main CBA24 – albeit without the express prohibition on the use of data from wearable technology in contract negotiations – and, in the 2017 season, four wearables were approved for in-game use.25

Currently, these provisions relate only to wearables rather than data collected through VR Technology. Considering the impact that VR is having, one would expect even tighter restrictions to be requested by the NBA/MLB PAs to cover general rights to privacy / protection of personal data as part of the negotiations for the next CBAs.

This approach is cautious, no doubt, but it appears to balance both: (a) the major concerns that players have over their privacy rights and personal data; and (b) the significant commercial opportunities that could arise (and that are left open to negotiation on a case-by-case basis). The ability to assert and retain this level of control and regulation, though, will ultimately depend on the bargaining strength and unity of the relevant PA.

Option 2 – broader licensing of use of the data / privacy rights via player associations with limited regulation

Other than the NBA and MLB, most leagues (particularly those with older CBAs) currently have limited clauses in the CBAs protecting such rights over personal data. For example, the NFL CBA, dated 4 August 2011, has no provisions protecting the players' rights over their data at all except that the standard 'NFL Player Contact' includes a provision assigning the right to use/license all player data to the NFLPA.26 The Major League Soccer CBA, running from February 1, 2015 until January 31, 2020, includes no references to player data whatsoever.27

Without regulation, something of a power struggle is emerging in the NFL regarding the collection and use of personal data. The league and the NFLPA have both independently entered into agreements with third parties providers of wearable technology. We already mentioned the NFL's agreement with Zebra to collect in-game tracking data. It is understood that such data is entirely controlled by the league rather than the NFLPA. In the face of this, having previously fought off the league's attempts to collect (and control) sleep data themselves in 2015,28 the NFLPA have entered into an exclusive agreement with WHOOP to give every NFL player the ability to monitor their strain, recovery, and sleep with a WHOOP wristband which collects and records this data for the players to analyse.29 Crucially, the league has no involvement in the deal and the players themselves own and are free to use (and sell) this data through the NFLPA's group licensing program. Naturally, the NFL does not permit WHOOP wristbands to be worn during matches;30 partly to avoid this data conflicting with Zebra's in-game data that it is exclusively licensed to collect.

The idea of putting control over their own data directly into the players' hands is an exciting one but doing so without careful regulation raises a number of significant caveats.

First, how can players' safely sign away broad rights to their personal data when so little is understood, even by companies such as WHOOP, about how this data is to be used and what its potential value is? We have already considered the potential invasions of privacy and significant personal (and financial) consequences that could arise from the sale of this data. How much greater are the risks when the technology delves even deeper than WHOOP does, as VR Technology undoubtedly will?

This is particularly perilous in the situation where the providers are emphasizing the financial rewards available to the players. In the case of WHOOP, the NFLPA also has a direct investment in the company such that the players stand to gain directly from the success of the company.31 Therefore, the players are left conflicted between protecting their privacy and personal data and making money.

Second, how can the profits be fairly distributed through PAs with an opt-in system and numerous different technologies? Splitting transactions and profits between players could be something of a challenge for PAs (particularly as usage and commercialization increases beyond the fairly low levels seen today). However, there are various technologies (particularly blockchain) currently gaining traction parallel to VR technology itself that should significantly reduce the complexity of financial administration such as this.

Third, opening-up the market too quickly without proper regulation in a CBA could lead to an open power struggle between the owners / federations and the players. Indeed, though this may be resolved during the negotiation of the upcoming CBA, this is broadly what is happening in the NFL – the president of the NFLPA's licensing and marketing subsidiary, Ahmad Nassar, even described it as: "sort of like an arms race".32 In such a situation, it might be preferable for players to first secure their rights to protect and control this data in a CBA before commercialization begins in earnest and the financial consequences (and hence the stakes of the negotiations) increase.

Fourth, given the consequences of collecting and licensing player data, it is understandable that every player will have a different risk appetite and will attach varying levels of importance on their privacy. Broad licensing schemes such as WHOOP are usually on an ostensibly opt-in basis but it is important to consider the situation of those players that do not wish to opt-in. Whilst WHOOP is fairly easily managed on an opt-in basis at the moment, what happens when market understanding improves and the data gets more valuable and widely-used? Players that do not wish to opt-in to the use of VR technology to collect their personal data might be left with no choice. For example, teams may prefer to work with players who provide every detail of their biometric performance data and sponsors may find a player willing to allow fans into their private lives via VR to be a more attractive spokesperson. Without regulatory protection and slow integration of the technology, this scenario could arise very soon. Eventually, what happens when VR Technology becomes intrinsic to official matches? It may become impossible to play the sport without allowing your data to be collected. Regulating the collection and use of player data on a general level33 (not simply licensing it out freely) will hopefully ensure that every player can be (a) comfortable with its use, and (b) able to provide informed consent, before the technology is forced upon them.

Option 3 – licensing directly by individual players

In leagues such as minor league baseball or NCAA sports, players are still performing at a high level but without the player-power and collective bargaining capabilities of those in, say, the NBA or the NHL. In these, and other situations where collective bargaining is challenging or impossible, it may be necessary for the players to control the collection and licensing of their data individually.

This would attach many of the same dangers identified as regards open licensing via the PA particularly:-

  1. How can players ensure that use of VR technology is voluntary and they are not forced to give-up their data / privacy?

  1. How can players ensure they are fully informed before signing away their rights – particularly, how best can they be protected from mis-selling by third party providers and conflicts of interest?

In the context of young athletes pushing for a professional career (or others struggling to make ends meet in the minor leagues) though, the dangers are all the more severe. Without the protection and expertise of working through a PA, the players will have much less access to reliable information and be far more exposed to pressures and abuses (by both teams and third-party providers) and the consequences of making ill-informed decisions regarding particular pieces of technology could be career-ending.

Informed consent is the key. Regulations such as the EU General Data Protection Regulation (GDPR) ensure that consent is required before data can be collected, but how can players ensure that they understand what they are consenting to? It may be up to the NCAA / the relevant international federations to ensure that players of all levels are educated on the full context and consequences of their data and privacy decisions.

Option 4 – license collection of the data rather than use

This fourth option provides an intriguing alternative to the individual licensing model that might be less cumbersome for those players without access to PAs or collective bargaining capabilities. Rather than entering into multiple licensing agreements, players might enter into a single agreement with one third-party provider (a data manager). That company can then manage the collection and commercial exploitation of the player's data / privacy on their behalf.

This would simplify matters from the players' perspective and ensure that their data is managed / licensed by someone experienced in the field so as to avoid mistakes or exploitation.

However, this approach is not without its dangers. As with agents in football and in many less regulated markets, there would be a danger that a small number of data managers would be able to obtain huge amounts of influence and dominate the market. This is particularly true when the market is expanding and developing rapidly and unpredictably. If players are to sign away their rights to control their privacy and personal data, they will need assurances regarding the good behavior of the company they are handing control to. Ideally then, the data managers themselves would be subject to some form of effective regulation ensuring that they are not able to abuse their positions of control over the players. For example, perhaps the data managers could be officially licensed and/or regulated by federations or even local legislation (though both of these means of regulation, naturally, have issues and limitations).

Another possible issue relates to how the data would be priced (in fact this pervades almost every option). Given how new and unpredictable the market is, it is impossible to accurately estimate the value of the data and access that VR Technology will allow data managers to collect. Therefore, it will not be appropriate to use fixed-price contracts. Instead, adopting percentage profit sharing mechanisms would ensure a fair distribution of the value (based on the actual value of the data / access at any given point) between the players and the data managers.

Way forward

The full impact that VR Technology will have on players' privacy and data rights remains to be seen but one thing appears certain – the value and importance of controlling these rights will be vast. It is clearly in all players' interests to: (1) assert ownership and control over their own privacy/data rights (in whatever way possible), and (2) ensure that they consent to the exploitation of these rights only in limited circumstances and alongside carefully worded agreements.

Over the next few years we expect more and more players and PAs to take action to protect privacy rights in the face of VR technology – whether through CBAs, federations' regulations or standalone contracts. Naturally, broadcasters, owners and federations will push back and, in most cases, some compromise will need to be reached.

The one size-fits-all options discussed above will no doubt be significantly more complex in practice. Perhaps owners will be able to use privacy and personal data that is collected in-game but players will be able to protect and carefully license all out-of-game data? The result, no doubt, will depend on the comparative bargaining strength of the player / PA. Certainly, the players / PAs will hope that privacy and data rights will become a major source of independent income – just as image rights have been for the major sports PAs in the US and FIFPro. The early signs give grounds for optimism.

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Nan Sato

Nan Sato

Nan Sato is an attorney qualified in New York, Pennsylvania, and New Jersey. She advises international and Japanese players’ associations, commercial sponsors, clubs, and athletes in a number of sports, including football, baseball, rugby, and American football. In addition to contractual and labor issues, she has developed a strong focus on the intersection of technology and sports. Nan works in English, Japanese, Chinese, and Spanish.

More information about Nan, including a list of publications and speaking engagements, can be found here. You can connect with Nan on LinkedIn.

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Sam Beer

Sam Beer

Sam Beer is an (England & Wales qualified) solicitor based in Herbert Smith Freehills' Tokyo office. He advises a broad range of international and Japanese clients in relation to complex cross-border disputes – particularly focussing on international arbitration. Sam has experience working in a number of sectors but is developing a specialism in sports-related disputes and is currently studying for a Master's degree in International Sports Law at ISDE in Madrid.