Overview of the Esports industry
Although it began as an underground activity, Esports (aka electronic s
ports) has become one of the fastest growing industries of the 21st century. Esports has become its very own entity, with its own tournaments throughout the year, professional players, teams, and games for fans to follow worldwide. It is basically competitive video gaming where people play against each other either online or at events, usually for a cash prize.
Viewers can watch games live online via streaming platform, with larger esports tournaments pulling in millions of spectators. Global revenues from esports, which includes advertising, sponsorship, merchandise, and ticketing, rose 33.9% year on year to reach $660 million in 2017. This is expected to hit $1.5 billion in 2020.
Some of the biggest risks Esports companies face
Why is Insurance for Esports Companies Important?
The esports industry is going through rapid change and growth. The risks that are present in the gaming and esports industry is similar to other business risks, but there are also exposures unique to the industry. Maybe you’re hosting a tournament where the venue requires liability insurance to book the space. In the gaming world, you want everything to go smoothly and according to plan. It is important to have the right types of coverages in place to mitigate any risk exposures that may arise through your business operations in esports and gaming.
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.
What Insurance do Esports companies need?
Property can be argued as one of the most important coverages needed for any player or team. Imagine a poorly secured hotel or an event setting in which your gaming hardware gets stolen. Theft is a pretty common risk in many industries but for Esports its impact is immediate because it is everything needed for teams and players. Property coverage makes sure if something does happen, you’re protected.
Ket Person/Contract Frustration Insurance
Key Person or Contract Frustration Insurance (CFI) is recommended for Esports. It provides coverage for some of the worst “what ifs” that can impact teams. Mainly what happens when someone pivotal to the organization passes away or becomes disabled. Not something we want to think about, but this can negatively impact operations, Because of that, CFI policies kick in to allow new strategies or replacements to be found which are costly.
Tech E&O/Cyber Liability
Esports companies, particularly those who are involved with providing the technology behind it (video streaming, games servers, etc) need insurance to cover professional liability and cyber exposures.
Event Liability & Event Cancellation Insurance
Due to unforeseen circumstances, events can get cancelled. Without event insurance, this could be a huge financial burden to your team / business. Having this coverage in place will also reassure attendees and exhibitors that you have thought about and covered all potential risks. An event cancellation insurance policy will cover everything from financial losses to ticket sales to reputation damage control.
Directors & Officers Insurance
D&O coverage is still new to the Esports space but is essential as teams and organizations in the space experience rapid growth and success. At its core, the coverage is intended to protect senior management and board members of the organization from claims arising from decisions, actions taken and regulatory lawsuits naming the company or its directors and officers.
How much does Insurance for Esports Companies cost?
An insurance quote for an esports company will depend on specific variables including:
- Operations occurring
- Expected revenues
- Number of employees
- Value of gaming equipment
- Event Size & Location
Types of Esports Companies that need Insurance
The Esports industry have given birth to a plethora of new opportunities and markets in the space. Esports, which many can argue is the offspring of the digital gaming era, has made significant strides, roughly valued at $903M in 2018. From traditional competition setups to real Gaming Sports Leagues, the esports industry has grown to include various components made up of a wide range of companies. These include:
- General Gaming Facilities
- VR facilities
- Tournaments / events
- Esports teams
- Esports organizations
- Game & Software Developers
- System & Console Developers
How it Works