The esports insurance sector: risks and opportunities

The lack of live entertainment has led to a boom in the industry

The esports insurance sector: risks and opportunities

Technology

By Mia Wallace

Even back when huge crowds gathering at in-person concert halls, arenas, theatres and stadiums didn’t feel like ancient history, the esports market was already gathering momentum. In 2019, viewership numbers from the “League of Legends” World Championship finals revealed that just under 100 million unique viewers tuned in to the event online, in direct comparison to the US-viewership figures from the 2019 Super Bowl which reached just over 98 million viewers.

A recent report from Data Bridge Market Research highlighted that global esports revenue is projected to grow 400% to hit $4.28 billion (approximately £3.16 billion) by 2027 and its audience is only set to increase with the COVID-19 pandemic forcing the consumer to embrace a new digital reality. Discussing this, CFC’s media team leader, Jade Giltrap (pictured) highlighted that, with the prospect of mass live events still a long way off, online gaming has risen as a viable alternative in the public eye.

Esports has been around for about 20 years now, she said, so it’s not exactly a new ecosystem, and mainstream esports games such as League of Legends and Fortnite are well established at this point. But, between the technology boom facilitating the required hardware infrastructure and the global spread of internet connectivity, this medium has evolved exponentially.

“It’s a really interesting space, particularly in light of the technology growth and technology movements over the last five- to 10 years, especially in light of 4G and 5G,” she said. “So, it has existed for a good while but it’s primarily booming lately because of increased interest due to the lockdowns and the lack of live events and so few other forms of entertainment. It’s been kind of a perfect, positive storm because people have had increased access to this while also having more time to use it.

“While it’s definitely growing, the massive boom has started to taper off a little and it’s at a more consistent level now. It’s now more about the industry stabilising and continuing to put legal frameworks and regulatory frameworks in place, and about the industry starting to become more professional, in line with any other kind of professional sport.”

There is no doubt that esports is an exciting market, she said, but, in the rush to avail of the opportunities available, new entrants need to understand that the industry operates in a tricky legal landscape and the insurance industry must get to grips with the types of covers that are required.

The foundation of professional lines esports insurance coverages is centred on this being an intellectual property-based landscape combined with a technology landscape which bleeds into the forms of coverage necessary. From intellectual property to defamation and privacy coverages, there are some standardised insurances which sweep the board of this ecosystem. In addition, she said, products including cyber insurance and commercial combined insurances, such as public liability and employer’s liability, are widely utilised.

“[Those coverages] align really well with the general sporting industry and the entertainment industry, in terms of the types of insurances that will be considered or bought,” she said. “The difference between esports and the general sporting environment, however, is that in general sports like football or basketball, the teams play the sport, but they’re not also a broadcaster. There’s generally only one broadcaster in that environment, such as a TV channel who is licensed to showcase the game. In esports, however, every entity involved can be and often is a broadcaster.”

There is a distinct chain leading down from the owner of the IP, the game developer, to the multiple layers of entities who are using the IP often without any clear license agreement, such as Twitch or YouTube streamers, or esports influencers who are using their own social media profiles to stream the content. With this in mind, while the actual intellectual property is owned by one party, the game developer, many parties are utilising this IP all the way down the line which is why the applicable insurance covers must extend down to the final users.

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