July 21, 2020 by Adam Malik
Brokers don’t need to be young, videogame-playing Millennials to get into the billion-dollar e-sports industry. It just takes getting to know key professionals already working in the area, according to a media underwriting expert.
Working with lawyers and accountants already in the space would be one easy way to break in, as Jade Giltrap, media team leader at CFC Underwriting, explains. It’s a business like any other.
“Think of it less as…you need to be younger to align yourself with [e-sports],” she told Canadian Underwriter. “Once you get into it, it’s really just business and commerce as you would usually expect it to be.”
Don’t try to re-invent the wheel here, she advised. Rather than trying to conjure up new product lines, see where it may already fit. “Just look at what the risks are with these businesses, in line with businesses we would generally try to look at.”
For example, sponsorships and endorsement deals are the bread-and-butter of an e-sports gamer’s salary (a first-round pick in the NBA 2K league makes US$35,000 over a six-month contract). What are the insurance needs around that? “Brokers just need to look at it and take it at face value and work with it,” Giltrap said. “What does that industry need based on what we all already know?”
Take a look at the various contracts that are in place within the industry to see if there are any second-hand exposures. Basically, follow the money, she advised.
“Following where the revenue is coming from. If I was looking at it fresh, that’s probably how I would get myself into the industry in terms of considering risks and exposures there,” Giltrap said.
“When you pull it right back, most of these businesses have tangible exposures that we see in other industries. I keep saying sports and entertainment, but it does definitely feels quite aligned with the sports industry. So brokers just need to look at the connectivity to that space…and align it with industries that we have quite a good knowledge of — and products that really work for — those industries as it stands.”
Most e-sports engagement is online. That’s especially true now, since the COVID-19 pandemic forced the cancellation of in-person events. But the competitions are broadcast, as in physical sports. That’s where e-sports is unique.
Also unique may be the age groups with which brokers in this space would work. While e-sports professionals and specialists have been around the arena for a long time, they’re still relatively young. The average age of a retiring e-sports player is about 25 due to being unable to keep their cognitive capabilities and physical responses in line with younger competitors, Giltrap observed. But they still stay in the industry.
“A lot of the senior people in the e-sports industry as a whole are quite young and it tends to be fast-moving for that reason. They perhaps don’t have the shackles that would apply to other industries [that operate under the principle of], ‘This is the way we’ve always done it,” Giltrap said.
So working with the e-sports industry can move quickly. “But behind all of that still sits the same old legal principles, the same old contracts,” she pointed out. “It’s something that might feel quite complex but actually isn’t that complex once you get into it.”
Feature image by iStock.com/RyanKing999