Although it began as an underground activity, Esports (aka electronic sports) has become one of the fastest growing industries of the 21st century. Briefly, esports is competitive video gaming where people play against each other either online or at events, usually for a cash prize. Unsurprisingly, esports has become its very own entity, with its own tournaments throughout the year, professional players, teams, and games for fans to follow worldwide.
Viewers can watch games live online via streaming platform, with larger esports tournaments pulling in millions of spectators. Global revenues from esports — including advertising, sponsorship, merchandise, and ticketing — rose significantly year-on-year to surpass $1 billion for the first time this year. It’s expected to hit $1.8 billion in 2022.
Why is Insurance for Esports Company Important?
The esports industry is changing and growing rapidly. Although esport companies face similar risks as other businesses, many exposures are unique to the industry. Consider hosting a tournament where the venue requires liability insurance to book the space. In the gaming world, events must go smoothly to keep momentum. Having the right types of coverages mitigates any risk exposures that may arise in this industry.
In addition, there are higher barriers to entry as more sports move towards a franchise model. Teams need to work harder and consider ways to protect themselves from the associated risks and increased costs. As levels of corporate investment increases in the industry, teams need to demonstrate to investors that they are protecting themselves from the unexpected.
The importance of computers and system integrity for e-commerce companies cannot be overstated, so let’s start with some of the risks insurance addresses. The theft of customers’ personal info — or worse yet, their financial info — is a looming threat for online retailers. Bad actors can wreak havoc by stealing data, encrypting your data and extorting you, or shutting you down with a DDoS attack. These challenges can cause lasting damage to a company who isn’t prepared to face them.
The reality is that mass gatherings like esports events are vulnerable to attacks and a great number of things can go wrong. Event organizers must take all potential threats to security very seriously when dealing with such large crowds.
Legal & Regulatory
Widely growing and unregulated betting & gambling market pose compliance challenges for esports companies. There have been a number of government legislation changes or even bans as seen in China recently with some games.
The industry is still in the early stages of development, competition can be fiercer and costs can run high with new entrants vying for position and new unforeseen risks continue to appear.
Over half of all gamers have experienced a cyberattack, whether it was via a login or more significant threat. That said, DDoS attacks are a go-to for cybercriminals, with a wave of these threats occurring in 2020.
Recommended policies for Esports companies
These coverages form the foundation of any risk management program for Esports companies:
General liability offers broad protection against some of the most fundamental risks companies face. Known as “slip-and-fall” or “all-risk” insurance, this policy covers personal or property damage and bodily injury occurring on the business premises.
When employees sustain work-related injuries, employers are typically responsible for their medical costs and lost wages. This policy covers these expenses, protecting employees while simultaneously keeping e-commerce companies running smoothly.
Cyber insurance protects companies from third-party lawsuits relating to electric activities (i.e., phishing scams). Plus, it offers many recovery benefits, supporting data restoration and reimbursement for income lost and payroll spent.
Employment Practices Liability Insurance
Any company with employees faces the risks of allegations, such as discrimination, wrongful termination, breach of contract, etc. This coverage protects companies against lawsuits related to employment practice
Esports Specific Coverage
These policies are essential for Esports companies. They can also be tailored to the needs of companies operating in the Esports space:
Directors & Officers Insurance
Shareholders, competitors, investors, etc., can sue a company’s directors and officers, putting their personal assets at stake. Directors and officers (D&O) insurance protects these assets from lawsuits alleging leaders of wrongful acts managing the business.
Whether it’s a devastating fire, natural disaster, or burglary, property insurance responds. This policy reimburses companies for direct property losses, supporting recovery and momentum.
Key Person / Contract Frustration Insurance
In the unfortunate event that an essential member of your team passes away, this coverage responds to many professional concerns. It provides funds to help your company recover from the loss and eases investor’s financial concerns while letting you focus on your team and business’s future.
Types of Esports Companies that need insurance
- General Gaming Facilities
- VR Facilities
- Esports team
- Esports organization
- Game & Software Developers
- System & Console Developers
Frequently Asked Questions
The cost of insurance for esports companies will depend on several things, including the company’s size and development stage. Other factors include:
- Exposures: risks being insured
- Company practices: views on safety, compliance, and risk management
- Program structure: the amount of deductible and willingness for a company to assume more risk
- Claims history: the type and amount of past claims against the company