What risks do gaming companies face?

Parker Halligan
Account Executive
29 February 2024
4 minute read

When you’re busy coding new worlds and developing characters, avatars and storylines, it can be easy to get lost in the creativity of what you do as a gaming company. But as with any business, there is the humdrum of the everyday to consider too.

Office space, payroll, regulatory frameworks, subscriptions, hiring and of course — our speciality — insurance. Gaming companies face many of the same challenges as any other businesses, but some are more prevalent and endemic to the work that you do.

So what are the risks facing gaming companies specifically, and what can you do to mitigate them?

What risks are gaming companies facing?

Depending on the types of games you make, you’ll be open to different risks. One universal and omnipresent risk is that of cyberattacks.

We’ve seen an increase in the number of hacking attacks on both high-profile targets like Boeing and 23andMe, and lesser-known firms. According to cyber security firm Astra, 46% of all cyber attacks are on small businesses with 1,000 or fewer employees.

In September 2022, Grand Theft Auto maker Rockstar Games was hacked which saw footage of the hotly anticipated GTA VI leaked. The hackers — who claimed responsibility for an attack on Uber the previous month — claimed to have access to GTA’s source code and suggested they’d sell it.

But how did this happen, you ask? Well, it was as innocuous as a hacker gaining access through an employee’s Slack account, showing how easily it can happen.

One phishing message, an error in judgement and then that’s it — your code or your client data is held to ransom.

Hackers are looking for a range of data from gaming firms that they can use or hold to ransom — from credit card numbers to non-fungible tokens (NFTs), as well as your user’s personal data.

According to a report by consultancy firm EY, some hackers will sell virtual tools, hacks or cheat codes that are actually ransomware Trojan horses built to infiltrate your code.

Of the gaming executives interviewed for the report, 47% of respondents said that a key challenge for them was mitigating cyber risks, and that number ramped up to 58% when asked to look forward three years.

Another common risk is the continuous change in regulation and legislation. Take for example the EU Digital Services Act (DSA) and the UK's Online Safety Act which have both come into force very recently and aim to tackle illegal and harmful content online.

If your game is online, it’s important to consider whether or not you could be affected by these new regulations.

If your game allows user-generated content to be created and shared, has a chat functionality and can be accessed by players in the European Union, you’ll need to comply. Non-compliance could see criminal liability and fines of up to 10% of annual global turnover in the UK and 6% in the EU.

So what can you do to protect yourself?

While not all risks can be mitigated through insurance, it’s often a good place to start. In the UK there’s only one type of insurance that is usually a legal requirement: employers' liability (EL) insurance.

Whether your employees are full-time, part-time, temporary, contractors or apprentice workers, you will likely have to make sure you’re covered.

Outside of EL, there are other covers you might want to consider to protect your business from a variety of angles.

Take, for example, professional indemnity (PI) insurance — also known as errors and omissions insurance — which is designed to protect your business from a range of exposures, especially around the consequences of mistakes in your work.

Say, for example, there’s a failure in your software — players are angry because the game crashes all the time — PI is there to support should you make mistakes when providing your services, you face compensation claims, contract disputes and intellectual property disputes.

Who can forget the highly anticipated yet disastrous 2020 launch of Cyberpunk 2077? Despite the good reviews, the game was riddled with bugs and frequently crashed leading to the PlayStation 4 version being pulled.

This prompted legal action from investors, dissatisfied with the company’s handling of the situation, as well as a class-action lawsuit on behalf of customers which was settled for $1.85 million. Let’s hope they had professional indemnity insurance…

As a gaming company, your intellectual property is also hugely important. You’re designing worlds, avatars, characters and storylines. That’s where intellectual property (IP) insurance comes in, which is designed to protect your copyrights, trademarks, patents and trade secrets.

Then, you have directors' and officers' insurance, also known as management liability insurance, or D&O insurance for short. This cover exists to protect entrepreneurs from the risks associated with running a business. It is available for businesses of any size, whether it’s a small startup or a large organisation.

Finally — and you know we’d save the biggie for last — is cyber insurance. Gaming companies, like many tech-enabled firms, store huge amounts of data, including sensitive user data, which — as we’ve covered — makes them very attractive targets for hackers.

Where to start

There are a host of other covers that may be of interest to you as a gaming company too. Product liability, should you face claims of your game causing harm to players; event cancellation for when you host tournaments; and office insurance, if you have a regular workplace, are just a few examples.

Insurance, however, isn’t just a one-time band-aid you can stick on risk and walk away from — there are other ways you can protect your gaming company, like implementing a stringent cyber hygiene policy.

But by having a gaming specialist insurance broker on your side, you could get one step ahead of the game. Traditional insurance policies can often lack the finesse of a bespoke policy, tailored to the specific needs of such a niche product as gaming.

And you’ll want someone on your level who understands your business and how to best protect it, so reach out to one of our specialist brokers today to see how we can help.

This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer.

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