The Sports Law Review: Topics in Japanese Esports
The esports industry in Japan is growing at a quick pace and, as a result, organisers and players are beginning to look to Japan as a destination for global tournaments and events. Despite this, the legal framework relating to esports in Japan (such as restrictive regulations regarding prize money and a rigid immigration system) have not yet adapted to the rise of esports, and any player or organiser looking to conduct esports activities in Japan must make sure to navigate the regulations successfully.
Section II of this article provides a summary of the esports landscape in Japan before discussing how Japanese immigration laws affect participation in esports in the country in Section III. Section IV then discusses the recent debate on gaming disorders, a topic closely related to esports currently being discussed in Japan.
II Overview of the Esports Industry in Japan
Japan is the home of many popular video game companies, including Nintendo, Sony, SEGA, CAPCOM, BANDAI NAMCO ENTERTAINMENT, SQUARE ENIX and KONAMI. Thus, the Japanese video game industry is robust, bringing in US$20.6 billion in game revenue in 2020.2
However, while Japan's video game industry as a whole is strong and Japan is the third-largest video game market worldwide, esports is less popular in Japan than in other countries, such as the United States, China and South Korea. Revenue from the Japanese esports market in 2020 was only $60.5 million,3 accounting for roughly 0.3 per cent of the total revenue of the Japanese video game industry.
However, the landscape is changing quickly, and Japanese esports is in the midst of a boom. The 2020 revenue figure of US$60.5 million grew from a mere US$3 million in 2017 and is expected to rise further in 2021. Given the fact that the worldwide esports market brought in US$947 million in global revenue in 2020,4 Japan is an important emerging market for esports.
One of the reasons that the development of esports in Japan has been hindered is the uncertainty of interpretation of legal regulations restricting the amount of prize money and the operation of esports businesses. Because of the market's rapid growth, solutions to these regulatory issues are starting to come into place.5 However, much of the discussion of the regulatory hurdles facing esports has overlooked the immigration aspect, despite the fact that immigration issues are critical given the international nature of the esports industry. Given this, this article aims to provide a basic overview of Japanese immigration laws as they relate to esports as a starting point for future discussions.
iII General immigration requirements for foreign esports players
Japan has held and will continue to hold several tournaments involving international players, including Evo Japan6 and the League of Legends7 Japan League. Foreign players wishing to participate in these tournaments are subject to the Immigration Control and Refugee Recognition Act (the Immigration Act).
The Immigration Act requires that esports players obtain visas in order to participate in esports activities in Japan. However, esports competitions take various formats, such as league style, knock-out tournament style, one-day competitions, exhibition matches and tournaments hosted by local esports cafés. Because players may get involved in esports in a number of different ways, the types of visas that foreign players must obtain varies.
i Specific visa requirements for foreign esports players
More specifically, the possible types of visas for foreign players are the entertainer visa and the temporary visitor visa.
Players must obtain an entertainer visa if there is any possibility that they will earn remuneration from their esports activities in Japan. Furthermore, even if players will not earn any prize money directly from an esports match in Japan, they must still obtain an entertainer visa if they are professional players and their activities in Japan are regarded as part of their professional activities.
Procedures for obtaining an entertainer visa
Under the Immigration Act, the specific requirements and documentation to support an application for an entertainer visa vary based on the circumstances. First, to obtain an entertainer visa, the organisation in Japan sponsoring the player must apply for a certificate of eligibility (COE) with the Immigration Bureau. Once the player has received his or her COE, then the applicant must submit it to the local Japanese consulate to apply for the visa. It takes approximately two months for the COE to be issued and five working days after acceptance of the visa application for the visa to be issued. However, the Immigration Bureau may expedite the process if the circumstances require. As a practical example, if the qualifying round for a tournament in Japan is held outside of Japan, the players participating in the qualifying round might consider applying for the COE upon advancing past the qualifying round, and it would be advisable for the sponsoring organisation and qualifying players to have their application documents prepared before the qualifying round in order to minimise delays.
A sponsoring organisation in Japan, not an applicant, applies for a COE. So the players must find a sponsoring organisation to accept them. If an esports tournament organiser invites esports players to its tournament, for example, then the organiser could serve as a sponsoring organisation. That said, a tournament organiser may not be willing to sponsor. In the past when that has happened, an international esports team sometimes establishes a Japanese company, such as a share company (kabushiki kaisha), limited liability company (godo kaisha) or a foreign company (gaikoku kaisha). For the purposes of acting as a visa sponsor, any type of corporate formation is allowed, but given that each form has different corporate governance, taxation and maintenance costs, careful consideration should be made in determining which formation is suitable for the team.
Activities allowed under the entertainer visa
As a basic rule, the entertainer visa allows holders to engage in 'theatrical performances, musical performances, sports or any other form of show business'.Generally, a player cannot perform any commercial activity outside of this scope. However, as it is common for esports players to participate in interviews, commercial shoots, fan events or video streams on Twitch or YouTube, careful consideration needs to be paid to what kinds of activities are allowed. Interviews strictly pertaining to the competition should be allowed without any special permission under the Immigration Act, but the player would probably need to obtain separate permission to conduct any interviews unrelated to the tournament, commercial shoots or fan events. Therefore, if the player wishes to participate in these sorts of activities, another application would be required.
On the other hand, video streaming for compensation would be prohibited because the Immigration Act does not have a category covering video streaming. Therefore, esports players may not stream their game plays or programs on Twitch or YouTube as a business in Japan even if they have the entertainer visa. In other words, players should make sure they are not involved in streams for compensation during their stay in Japan.
In limited circumstances, an entertainer visa may not be required, and a temporary visitor visa may be sufficient. Under the rules regarding the temporary visitor visa, visitors with such status are permitted to sightsee, perform recreational activities, play sports, visit relatives, go on tours, attend lectures or meetings, meet business contacts or conduct other similar activities during a short period of stay in Japan.8 However, the Immigration Act states that temporary visitors may not conduct activities related to the management of a business involving income or activities for which they receive remuneration.
Under the Immigration Act and its ministry order, anything considered an 'incidental reward in daily life' is not regarded as remuneration,9 and players can legally receive this type of award while on a Temporary Visitor visa. Therefore, if a visiting esports player is not a professional and will receive no prize money or only receive an 'incidental reward in daily life', then the player may enter Japan as a temporary visitor. As there has been no official announcement regarding the line between 'remuneration' and an 'incidental reward in daily life' under the Immigration Act, it is highly recommended that visiting esports players, teams and organisers seek the advice of Japanese counsel on this issue.
Furthermore, if the player's country has concluded a visa exemption arrangement with Japan, the player does not have to obtain a temporary visitor visa. Rather, the player is exempt from obtaining a visa at all, receiving the benefits of a temporary visitor upon entry into Japan10. As of September 2019, 68 countries had a visa exemption arrangement with Japan, including certain Asian countries, Australia, New Zealand, many European countries, Canada and the United States.11
To be clear, if a player is a professional, or if prize money other than an 'incidental reward in daily life' may be earned in Japan, the player will be considered to have earned remuneration, and the player must obtain an entertainer visa. Any compensation outside of Japan will also be included in remuneration. Even in situations where professional players participate in a demonstration event without any remuneration, the event will be regarded by Japanese immigration authorities as a professional activity. In these situations, the players may be refused entry or even charged for performing on temporary visitor qualifications only. In other fields, foreign entertainers have been sometimes refused entry to Japan when they failed to obtain entertainer visas even though they were to participate in unpaid activities only, such as interviews or shoots for promotional videos.
While the Japanese esports industry has been developing and growing, regulations governing the industry remain immature. The Immigration Act and corresponding visa regulations have uncertain application or they have not yet adapted to accommodate esports players, as certain routine activities such as video streaming are not allowed in Japan as of the writing of this chapter.
However, considering the internationality of esports industry, it is necessary for players, teams and organisations to understand and follow the regulations of the Immigration Act in order for esports activities in Japan to run smoothly. Accordingly, it is highly recommended to seek the advice of a local Japanese counsel to ensure compliance with the latest developments.
IV Esports and Gaming Disorders
In recent years, there has been a common sense of crisis about the global environment and human rights, and the realisation of a sustainable society has become a fundamental concern. Therefore, sustainable development goals (SDGs) and environmental, social and governance (ESG) criteria are increasing in importance for many businesses, and esports is no exception.
Competitors of any race, age, nationality, gender or disability can participate in esports. In this respect, esports are closely tied to the diversity and inclusion (D&I) goal of SDGs. According to a report by the Japan eSports Union, which serves as the governing body for esports in Japan, esports meets 14 out of the 17 SDGs, and therefore constitutes a socially beneficial entertainment that contributes to the SDGs.12
However, the SDGs of accessibility and D&I also present problems in terms of 'gaming disorders'. The WHO included 'gaming disorders' in the International Classification of Diseases in May 2019, which stimulated significant debate. In 2020, with the impact of covid-19, traditional entertainment such as sports and live events has proven difficult owing to stay-at-home and social-distancing initiatives. At the same time, these orders encouraged participation in esports, including by star players in traditional sports, because participants can play while maintaining physical distance. However, since many esports player are minors and can enjoy esports without time and place limitations, it is necessary to pay more attention to the growing problem of gaming disorders, especially their impact on minors who keep playing long hours late at night by participating in international competitions.
In Japan, the Ministry of Health, Labour and Welfare convened a meeting of officials in charge of measures against game addiction, and the pros and cons of regulations to prevent gaming disorders are being studied.
ii Regulation in Kagawa Prefecture
To tackle the issue of gaming disorders and addiction, Kagawa Prefecture enacted the Kagawa Prefectural Internet Game Dependence Prevention Ordinance on 18 March 2020, which came into effect on 1 April 2020.
The ordinance stipulates not only the duty of guardians of minors but also the responsibility of the prefectural government, educational institutions such as schools, and businesses such as publishers to prevent 'net game dependency'. Although there are no penalties, its provisions are controversial. The key articles can be outlined as follows:
Article 2 (definition)
(1) Internet/game addiction: a situation in which incorporation into a net game hinders everyday life or social life.
(2) Internet games: internet and computer games.
(3) Online games: computer game played via a communication network such as the internet. . . .
(6) Smartphones, etc: smartphones, PCs and console games that are capable to view information (including viewing motion pictures) via the internet.
Article 18 (restrictions on the use of smartphones by children)
1. When children use smartphones, the guardian shall discuss with the child the risks associated with the use of the smartphones and the harmful effects due to excessive use, etc., taking into consideration the age of the child and the actual situation of each family, etc., and establish rules for the use of the smartphones and review them.
2. In the case set forth in the preceding paragraph, the guardian shall, in order to ensure the child's sleep time and to acquire a well-regulated lifestyle, when using computer games that lead to the child's internet/game addiction, endeavour to limit the amount of time spent per day to 60 minutes (or up to 90 minutes during school holidays) and, when using smartphones, to stop using them by 9pm for children before completing compulsory education and by 10pm for other children, and endeavour to comply with the rules set forth in the preceding paragraph.
The Kagawa Prefectural Bar Association issued a statement of its opposition to the Kagawa Prefectural Ordinance on 25 May 2020. The statement asserted that the Ordinance should be repealed on the grounds that it lacks legislative facts fundamental for legislation. The statement further argued that Article 18, paragraph 2 of the Ordinance in particular must be deleted immediately because it not only violates the right of self-determination assured by the Constitution in Japan but also violates the spirit of Articles 12 and 31 of the Convention on the Rights of the Child.
On 2 June 2020, the chairman of the Kagawa Prefectural Assembly argued that:
- there is a significant need for society as a whole to prevent gaming disorders in minors, and so the legislative facts are sufficiently acknowledged;
- the law does not deny the usefulness of the internet; and
- there is no direct obligation on children and the right of parents to educate children is not excessively restricted.
Following passage, a high school student and his mother filed a lawsuit for ¥1.6 million as compensation for non-pecuniary damage against Kagawa Prefecture on the grounds that the Ordinance is unconstitutional. The lawsuit is still pending, and future developments will be noteworthy.
According to a survey by the Kagawa Prefectural Board of Education, the daily hours of use of smartphones have been decreasing since the passage of the Ordinance, suggesting that it may have had the intended impact. On the other hand, there is also an evaluation that the dependence of junior high school students and high school students on smartphones has increased. The effect of the Ordinance is worth watching closely.
There are various discussions and perspectives on the prevention of game addiction, both inside and outside of Japan. In South Korea, for example, the Youth Protection Law prohibits the provision of internet games to young people under 16 years of age between midnight and 6am (Article 26, paragraph 1 of the Youth Protection Law), and game providers are at risk of fines or imprisonment for violating these regulations. Great efforts to prevent game disorders are expected to continue to be made in the future, and laws should constitute one such measure. The lawsuit against the Ordinance in Kagawa Prefecture can provide insight into how these regulations will play out in the future.
1 Shigeru Nakayama is a partner and Masakatsu Nagashima is a senior associate at TMI Associates.
5 For example, a regulation regarding prize money is progressing, as stated in announcements by the Consumer Affairs Agency on 5 August and 3 September 2019 (www.caa.go.jp/law/nal/pdf/info_nal_190805_0001.pdf, www.caa.go.jp/law/nal/pdf/info_nal_190903_0002.pdf).
7 League of Legends is a multiplayer online battle arena video game developed and published by Riot Games for PC. This is one of the most popular esports titles in the world (https://na.leagueoflegends.com/en/).
8 Article 19(1)(ii) of the Immigration Act.
9 Article 19(1)(i) and Article 19-3(i)(d) of the Regulation for Enforcement of the Immigration Control and Refugee Recognition Act.
10 See the latest information about visa exemption at www.mofa.go.jp/j_info/visit/visa/short/novisa.html.
12 Study Group on Measures to Revitalize e e-Sports, 'Toward the Development of Japan's e-Sports: from the perspective of further market growth and social significance', page 34 (https://jesu.or.jp/wp-content/uploads/2020/03/document_01.pdf)) of the Order (March 1992).