In the last decade the video game industry has blossomed into one of the busiest and profitable sectors in the digital world. Well India anyway, but the reason is because the mobile gaming market in India has erupted with the smartphone users growing up and up and the data plans getting much cheaper and a young tech savvy population. The Indian gaming market will be worth 3+ billion dollars in 2024. 9 billion, and growth shows no signs of slowing down. However, as it grows, it also becomes more vulnerable to hackers and other cyber pirates who could jeopardize data, halt operations, and erode the player’s trust. Well, this led to a whole new type of business insurance, known as cyber insurance, which has now become almost a staple that gaming companies must have to cover their asses from these kinds of risks.
For more information on Cyber Insurance and how it can help your business, visit our industry pages for tailored responses.
Growth of the Gaming Industry and Its Digital Nature
However, with the rise of mobile gaming, online multiplayer platforms, and cloud gaming services, the Indian gaming scene has been booming. KPMG reports that India’s gaming industry is expanding at a CAGR of 22% and is one of the fastest-growing gaming markets in the world. This rapid expansion is mainly due to:
- Mobile Gaming Boom: Most of the gaming revenue comes from mobile gaming. Ever since everyone and their dog got a cell phone, gaming has become so much more accessible; it has changed from people to people playing PUBG Mobile and Free Fire with tens of millions of players.
- Online Multiplayer and Esports: Online multiplayer games and esports are at an all-time high, with millions of players competing in real-time. These games have also drawn in a lot of FDI (foreign direct investment) from domestic and foreign companies.
- Cloud Gaming: Cloud gaming is changing the world of gaming, anyone can play high end games without having to own expensive equipment. It has also allowed the lower income bracket to access the gaming world.
- In-Game Purchases and Microtransactions: The business model of gaming has changed dramatically, with in-game purchases and microtransactions becoming the new cash cows. However, this has only led to further reliance on the safety of online purchases for the companies that do the gaming.
But the flip side of that coin is that the gaming industry is digital, and as such, it is susceptible to hackers. Nowadays, gaming companies have to deal with so much personal information, and then there’s the financial transactions and digital assets. The field of cyber threats they have to worry about has exploded.
Importance of Cyber Insurance in Protecting Gaming Companies
With the gaming industry going increasingly online, the chance of some kind of cyber disaster is higher. Every gaming company needs to have cyber insurance, not only for the money it can provide to help cover some of the losses but also for the knowledge and other things it can provide to help the company deal with the aftermath of a cyber attack.
These are only a few benefits of cyber insurance for gaming companies.
- Financial Protection: Cyber incidents can result in significant financial losses. Which is what cyber insurance is for loss of business, data recovery, legal fees, all the good stuff.
- Risk Management: Nowadays, almost all cyber insurance policies include risk management services that partner with gaming companies to help them detect and correct possible threats before they evolve into incidents.
- Compliance Support: Cyber insurance is a must for gaming companies to comply with many regulations (especially those dealing with personal data). Which would be fines to regulators and lawyers to fight in court in case of a data breach.
- Reputation Management: Hacking into a game company would completely shatter the company’s image and cause all the players to lose trust. Then, there’s cyber insurance, covering any PR damage control necessary to repair the company’s image..
Quick Read: The Evolution of Cyber Insurance in India
Gaming Industry-Specific Cyber Threats
Another form of cyber threat exists in gaming, which requires its defenses. Some of the most significant threats include:
1. Distributed Denial of Service (DDoS) Attacks
A widespread cyber attack that gaming companies must defend against is the DDoS attack. These attacks involve flooding a gaming server with so much traffic that it can’t handle it, crashes, and no one can play. A DDoS attack is especially harmful when it occurs in the middle of a big game or tournament because the company loses money and prestige due to the lack of players.
In 2020, Epic Games experienced a Distributed Denial of Service (DDoS) attack that disrupted the services of their popular game Fortnite. This break in the system’s security led to large service backlogs, and millions of customers were unable to access their games for an extended period of time, which in turn cost the company money and loyal customers.
Data Point: The only thing the A10 Networks 2021 DDoS Threat Report says is that there has been a 50% increase in DDoS attacks in the gaming industry since the pandemic, more proof that online gaming is just a sitting duck.
2. Data Breaches
Gaming companies are often victims of data theft, because they have so much personal data, from player information, to payment information, to gameplay data. Which happens to be the kind of stuff hackers hack to obtain for the purpose of selling the information leaving the poor victim to be victimized again by identity theft and fraud and the loss of confidence from the players. And then there are the huge penalties from regulatory bodies if the company doesn’t adhere to privacy laws such as India’s Information Technology Act, 2000, and the soon-to-be-enacted data protection bill.
Example: Oh, and speaking of CD Projekt Red, didn’t they get hacked last year, and those assholes took the internal data, the source code for Cyberpunk, witcher 3, and GOG Galaxy, and the personal information of the employees. That gap led to a ransomware infection that cost millions and embarrassment.
Data Point: The gaming industry experienced a 30% rise in data breaches from 2020 to 2022, as reported by the Identity Theft Resource Center (ITRC).
3. Cheating Software and Hacks
Ripping all this cheating software and hacks for online games kind of kills the whole idea of gaming. Hackers find a few exploits in the code of the game and use those to get aimbots/wallhacks, and that sucks for everyone because it is not fair to those who play the game. Cheating even costs gaming companies money if someone steals items or money from a game and then sells them in the secondary markets.
Valorant Cheat Detection (2021): According to a 2021 report by Riot Games, the developer of Valorant, there has been a significant increase in the use of cheat software. Their cheat protection software, Vanguard, caught and banned 500,000 accounts in the first month or two. That shows how prevalent it is and the ongoing arms race between the creators and the cheaters.
4. Emerging Risks
With the expansion of the gaming world comes the expansion of cyber crimes. VR/AR is about to introduce a new wave of vulnerability to the gaming world because these platforms will still get the usual personal information, but now they’ll get biometric information. Besides, with blockchain slowly but surely making its way into games (through in-game assets and cryptocurrencies), some previously unheard-of threats involve digital wallet security and smart contract vulnerabilities.
Impact on Operations: Revenue Loss and Player Trust
It’s not even so much money lost then; hackers invaded gaming companies. If a cyber attack occurs, operations shutdown will result, and money will be lost. For example, a DDoS that brings a gaming network down for an hour in the middle of a major tournament could cost millions of dollars in lost revenue, not to mention loss of sponsorship and partnership.
Moreover, cyberattacks can severely damage player trust. Gamers invest so much time and money into their gaming experiences that if someone tampers with their personal information or in-game properties, they lose loyalty. The gaming industry is extremely competitive and relies on player retention to remain successful. After a cyber incident, it can take a long time and a lot of money to regain the players’ trust.
Key Cyber Insurance Coverages
Game companies should have some cyber insurance made exclusively for game companies because they are at so many risks that no other company is at. Key coverages include:
- Business Interruption
This insurance covers any loss of sales and any extra costs that might occur as a result of a cyber incident that interferes with the business function. That’s especially true for gaming companies because if the system goes down, they lose millions of dollars, and even more so if the system goes down at peak time or during a major event.
- Data Breach Response
If in the case of a data breach, this insurance would help cover the costs of responding to the incident, which may include legal fees, notification expenses, credit monitoring for those players affected, and public relations work to keep the company’s reputation intact.
- Cyber Extortion
Even game companies could have cyber extortion insurance to cover ransomware and other types of cyber extortion, including hackers, decryption, and the cost of keeping the stolen data out.
- Customization for Gaming
Gaming companies might need specialized cyber insurance to cover the unique nature of their business, i.e., the security of the platform, the protection of player data, and in-game fraud. For example, a policy could cover losses due to cheating software or the theft of virtual property, which are all unique risks of the gaming industry.
Regulatory and Compliance Considerations
Then there are the games, another controlled field with laws regarding data protection and content limitation by region and age. At the same time, India has some of the most stringent laws in accumulating, storing, and processing personal data according to its It Act 2000 and the Personal Data Protection Bill. Not to mention all the compliance bullshit game companies have to adhere to when they work internationally, such as the European Union’s General Data Protection Regulation (GDPR).
One way to assist these gaming companies in adhering to these laws is through cyber insurance. For instance, in the case of a data breach, cyber insurances cover the cost of regulatory fines and notifications of the breach(which the law usually requires). Or better yet, insurance carriers will offer risk management solutions that will help gaming companies implement data security and best practices so that they can uphold the law and regulations.
What is Happening?
Hackers have been rampant in gaming, and the number of hacking cases has grown exponentially in the past 2 years, 24. There are numerous reasons for this, but one of the largest is the explosion of internet gaming and the fact that in-game transactions, or as they are called, “microtransactions,” are just so damn profitable. Phishing, social engineering, is one of the most common attacks that attackers use to get users to reveal their usernames and passwords or download malicious software.
In early 2024, a prominent Indian game developer faced a significant crisis when several bank accounts were frozen. Aah, well, the banks did it because it was found that the accounts were used to launder money for the cheat software. This cheat program allowed users to cheat the in-game economies, creating millions of fake money. That froze accounts and shut down business for 2 weeks.
The company could not process payments or access funds during this period, leading to halted operations and substantial financial losses. Wow, that really showed how much internet crime and financial fraud have affected the gaming world, mainly cheating and hacking. That’s another thing that has grown before these attacks; now, with cloud-based gaming, people can play their games on whatever machine they feel like, which means more entry points for hackers. The Akamai report highlighted that web application attacks, mainly targeting mobile games, saw a dramatic increase, with vulnerabilities in these applications being exploited by cybercriminals. Moreover, social engineering attacks continue to plague the industry.
On the other hand, the entire gaming industry is online and collects so much information on its users that it is just too much of a temptation for hackers. Companies should have significant cyber security safeguards (vulnerability assessments at least once every three months, more innovative user authentication protocols, etc. Not only their property but also their players.
Choosing the Right Cyber Insurance
It’s not just picking out the best cyber insurance for a gaming company.
- Player Base Size
That and the amount of coverage needed is relative to the number of players. However, as the player base expands, one would have to control more and more to compensate for the risks of holding so much information.
- Platform Security
Security on the gaming network will also impact the type of coverage. The firms with the most security would have extremely low premiums, and the ones with little or no security would be required to have a whole lot more coverage.
- In-Game Transactions
That and how many transactions they have and how many during the game determine their coverage. For that matter, any large-volume transaction company should have some kind of policy regarding suspected fraud and transaction internet crime.
- Tailored Policies
But then again, with all the unusual risks that gaming companies face, there should be some policy made just for the gaming industry. That would be followed by a discussion of future hazards, VR/AR gaming, and the incorporation of blockchain into gaming platforms.
Other Liability Risks
That, along with the apparent hacker threats, means that gaming companies should also be held responsible for other kinds of liabilities, namely:
- Product Liability: Now, that leaves the ones that result from a bug in the game/system itself that somehow harms a player. For example, if some kind of bug in a particular software erases a user’s property in a game, then they can sue the company.
- Legal Risk: Even game companies can get sued for intellectual property rights, copyright infringement, and invasion of data privacy. What type of cyber insurance would cover attorney fees and a settlement?
- Directors and Officers (D&O) Insurance: This insurance covers the company’s executives, so if they are sued or held liable for a decision or action they made, they themselves are not held responsible. More precisely, gaming companies being investigated by a regulatory agency or gaming companies that are defendants in shareholder derivative suits need D&O insurance.
Mitigata’s Expertise
Mitigata has a lot of experience with gaming companies and how to manage and mitigate cyber risks. Our team of experts knows the particular problems the gaming industry is facing and provides customized solutions to defend against everything from viruses to hackers.
Risk assessments, insurance solutions, and ongoing maintenance are all part of ensuring that gaming companies are secure and compliant. Mitigata uses technology and gaming expertise to provide gaming companies with the tools and knowledge to secure their data and cash. From player data security to regulatory compliance management, Mitigata is there for gaming businesses to help them navigate the tangled web of cyber risk.
Conclusion and Next Steps
The Indian gaming industry is experiencing exponential growth, and it’s digital, making it a tempting target for cyber crimes. So yeah, gaming companies SHOULD have cyber insurance; it covers what needs to be covered to prevent losing money and losing the player’s trust and, ultimately, the business itself. With the right policy, gaming companies can focus on what they do best—creating engaging and immersive gaming experiences—while leaving the risk management to the experts. Please call us for more information and schedule an appointment with the Mitigata team to see how Mitigata can assist your gaming company in acquiring proper cyber insurance coverage.
FAQs
1. What is this damn cyber insurance crap, and why the hell does every game company need it?
It’s insurance that shields video game publishers from losses incurred from cyber events such as data breaches, ransomware attacks, or general business disruption. In the world of digital gaming, that kind of insurance is necessary to keep business and to keep the players’ trust.
2.What kind of hacking risks in the gaming world?
DDoS attacks, data breaches, phishing attacks, account takeovers—oh, yeah, that’s just the beginning of what can happen in the gaming industry. Other threats that are starting to appear on the horizon are targeted attacks on gaming consoles and exploits of security flaws in virtual and augmented reality.
3. How does cyber insurance make it possible to comply with all these data protection laws?
So, cyber insurance would cover regulatory fines, breach notifications, and legal defense in the event of a data breach. The other is that many insurance companies provide risk management consulting to gaming companies to help them achieve the most secure data and compliant systems possible.
4. What should game companies seek in a cyber insurance policy?
They should observe the number of users, the security of the system, and the amount of money being transferred in the game. But there have to be laws that consider the risks that come naturally with gaming establishments.
5. What other types of insurance should gaming companies consider?
In addition to cyber insurance, game companies should also examine product liability insurance, legal risk insurance, and Directors and Officers (D&O) insurance. These coverages protect against various risks, from product defects to legal challenges related to intellectual property and data privacy.
6. How does Mitigata help gaming companies with cyber risk management?
Mitigata does risk assessments, tailored insurance, and ongoing assistance. They are experts in the gaming business and can offer solutions to the illnesses plaguing gaming companies online.
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