For example, on April 23 this year, Fortnite, one of the world's most popular games, broke its previous streaming records when 12.3 million concurrent players logged in to watch rap star Travis Scott's "Astronomical" in-game event. More than 27.7 million viewed the concert over the five events that ran until April 27.

Esports coverage options

With estimates that esports audiences will reach 495 million people this year, it's no surprise the demand for this industry is escalating. However, as brands pile in, the rush to grab a slice of the pie could create the perfect storm as this rapidly emerging industry operates in an extremely vague legal landscape, and the insurance industry is only just beginning to come to grips with the type of covers that it requires.

There are several components to the industry.

• Brands and sponsors are the largest revenue source. Teams, players, streaming platforms, influencers and event organizers can all promote brands and sponsors through clothing, equipment, screen space, product placement and highlight reels, capitalizing on the audience exposure they have.
• Game developers and publishers create and can control all intellectual property (IP) for their games. They can organize and manage their leagues, or they can license their games to external league organizers and streaming platforms who must get their approval on hosting competitions, streaming and playing the games.
• Platforms and broadcasters will offer live streaming and video on demand. They often seek to obtain exclusive broadcast rights.
• Players can earn money individually as well as in teams, but they can increase their income through prize money from playing in multiple teams and leagues, streaming, advertising revenue, individual sponsorships, as an influencer, fan donation and merchandise sales.
• Different tournament and league organizers require appropriate licensing to stream, host and play.

Esports is creating opportunities for many corporates and individuals, but with these opportunities come new and enhanced risk and exposure. Key areas to look out for include:

Media

Advertising, endorsement and merchandise opportunities must comply with advertising regulations and also have contractual exposures attaching. Intellectual property rights (including copyrights, trademarks, patents and licensing agreements) will need to be managed either by protection of first-party intellectual property rights on both sides of a deal or management of intellectual property license agreements when using third-party intellectual property.

Contracts should be put in place for platforms and broadcasters for online streaming rights, as well as sponsorship agreements, as there can be legal and commercial consequences when contracts are unclear or not effectively put in place.

As esports are generally broadcast to fans, various parties will work with a game's intellectual property. Some of these will use the content without permission from the publishers and other content owners, others will have obtained the correct licenses. The fluidity of this landscape will mean that eventually, legal disputes will arise to manage and control intellectual property rights and brand messaging.

Employment

Players and teams will manage their employment contracts differently and how they do this will impact them concerning employment practices, independent contractor management and could also include visa requirements and duties of care.

Governing bodies

There are many governing bodies emerging and this landscape will grow and shift as the industry develops. Each will have its own rules and framework in place that will be implemented over time.

Cyber

Given the environment in which esports operates, data security related to player data is a significant concern. Equally, system damage leading to failure of transmission of events needs consideration, particularly given the potential audience reach. Cyber events could give rise to losses in this industry.

The esports industry is hugely exciting and its expected growth provides ample opportunity for many different businesses to get involved, especially given the current climate. There is also a significant opportunity for the insurance industry. We just need to tap into the existing covers that we have at our fingertips and apply some creativity to pull a comprehensive solution together that works for this unique and fast-growing sector.

Jade Giltrap heads up the media team at specialist insurance provider CFC Underwriting. With over a decade of experience working both as an underwriter and broker, she is constantly exploring how the dynamic world of media and entertainment is fundamentally changing media insurance as everyone becomes a creator of content. Contact her at [email protected].

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