The evolution of gaming & how the right insurance can fuel future success

The world of gaming and the intricacies of its development has always been something that interested me. From the first time I played Pokemon on my Gameboy Advance with a torch under my duvet until 2 am so my Mum wouldn’t catch me, right through to spamming the refresh button on Amazon for 40 minutes straight to ensure I could get my hands on a PS5 on release day. 

Video games and insurance aren’t two things that most people consider in the same sentence (and neither did I, until recently). Yet contractual stresses, copyright infringement, and confidentiality leaks have led to not only bad gaming experiences and delays in rollouts but also billion-dollar lawsuits. Below, I’ve highlighted some of the most pertinent risks and some real world recent examples as well an idea of the Insurance that could have helped soften the blow.

Intellectual property theft 

There have been a number of high-profile legal battles regarding the use of intellectual property; notably copyright. Most of these lawsuits relate to the ‘originality’ of the games developed but can also include everything from proprietary products and parts to the use of visuals, music, and software.

Notable cases 

2018 - Epic Games (Fortnite v PUBG) - Similarities in-game style -The makers of Fortnite, one of the world's most popular video games, were accused of copying rival title PlayerUnknown's Battlegrounds (PUBG). The studio behind PUBG asked a court in South Korea to determine whether Epic Games copied its intellectual property

2019 - Epic Games (Fortnite v Alfonso Riberio) - Use of ‘The Carlton Dance’- Alfonso Ribeiro attempted to sue two video game developers for selling a dance popularized by his "Fresh Prince of Bel-Air" character.

Breach of Contract 

A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract. The breach could be anything from late payment to late delivery or failure to produce a promised asset (in this case, a game).

Notable Cases

2020 - Epic Games (Yes, again) Fortnite v Apple- on Aug. 13, when Epic Games released Fortnite to the Apple App Store, it included a method of payment for in-game content without providing Apple its usual 30% cut. Apple removed the app from the App Store, and Epic Games sued Apple later in the day.

Apple retaliated by suspending Epic Games’ developer account on Aug. 28, which prevents the company from creating new apps or updating Fortnite on Apple’s platforms.

Unhappy investors/ Misleading the shareholders

Occasionally known as ‘corporate fraud’, is a deceptive practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of securities laws.

Notable cases 

2020 - CD Projekt Red (Cyberpunk v Their investors)- The makers of Cyberpunk 2077 could end up being sued by their own investors, who are angry the company’s share price is down 41% due to not only the delayed release of the game but the backlash it faced for its unfinished feel.

2015 - Activision v Their shareholders - A US law firm threatened to file a class-action lawsuit against Activision Blizzard, accusing the company of having “made materially false and/or misleading statements” concerning the company’s partnership with Destiny developer Bungie, Which came to an end earlier in the same year.

So, what covers do gaming companies need? 

For both large and small gaming syndicates and development companies, having the right insurance can be the difference between a successful night at the gaming awards and being sued for not having a game finished in time with your reputation in tatters. These are the covers that most gaming companies will want to consider when designing an insurance package.

Professional Indemnity Insurance

This provides liability coverage for expenses, legal defense and any damages you incur as a result of any third-party action against you for any actual or alleged loss suffered by a third party as a result of your advice, design, or consultation. Coverage is also provided for any actual or alleged infringement of intellectual property or breaches of contract. Simply put, professional indemnity is an absolute necessity for gaming developers. 

Cyber Insurance

This cover protects you against a range of digital, cyber, and privacy-related risks. From the costs involved in having to pay or sort out any ransomware or extortion issues, to all of the crisis management and liability costs (including those imposed by any national data protection authorities) of handling a data breach, to even any business interruption caused by a security or system failure; cyber insurance is a must-have for those in the gaming space.

Directors & Officers

Directors and officers, or management liability insurance, is specialist insurance to protect a company and its directors and officers if and when named in a lawsuit. Absolutely anyone from employees and customers, to regulators and shareholders can accuse you of not running your business with ‘due care’ if they suffer any financial loss, injury (incl. mental anguish) or other damage. Why is this important? Directors are held personally liable for their actions and decisions. 

If you’re in the world of game design and development, feel free to drop me a message to discuss your insurance needs.

Or if you fancy a conversation on the masterpiece that is ‘The Witcher 3’, feel free to get in touch too!

GB