Category Risk Management

That’s (virtual) entertainment!

10 November 2021 Allianz Global Corporate & Specialty

• The virtual events held during Covid-19 lockdowns look set to evolve into a hybrid model of part-live, part-livestreamed content in the future
• Digital technologies and AI are creating new kinds of audience interaction with sports and live entertainment events
• The most critical exposure for virtual events is loss of transmission, so organisers need robust broadcasting infrastructure and backup systems
• As virtual events become more sophisticated, with higher ticket prices and viewing figures, lost revenue from outage or cancellation represents a significant financial risk

The Covid crisis compelled many of us to consume leisure content online in the absence of live entertainment attractions to enjoy in person. We take a look at the incredible growth of virtual events under the pandemic, explore where this might lead in the future, and ask what the insurance implications might be.

When Swedish superstars ABBA heralded their first new album for 40 years with the news that they would be performing a series of London concerts as AI-enhanced ‘Abba-tars’, the livestreamed announcement itself clocked up more than 200,000 viewers on YouTube.

For some, the concept represented a gimmicky betrayal of the wonder of live music and all its unpredictable alchemy. For others, it was a fascinating glimpse of what was to come – a new and exciting dimension to the world of in-person entertainment.

“Whichever side of the fence you fall on, there is little doubt that the nature of live entertainment has been evolving – and the pace of transformation within the industry was turbocharged by the Covid crisis and subsequent lockdowns,” says Michael Furtschegger, Global Head of Entertainment at AGCS. “When the pandemic hit, artists, producers and venues scrambled to host online or livestreamed alternatives for sporting events, concerts, theatrical productions and other cultural attractions that usually gather a crowd.”

Early lockdown 2020 saw a spate of informal performances staged at home from the likes of singer-songwriter John Legend, Coldplay frontman Chris Martin, and Neil Young, who played acoustic sets around his home in the Rocky Mountains, filmed by his wife, actress Daryl Hannah. By June the South Korean mega-band BTS was drawing in nearly three quarters of a million viewers in over 100 countries for its livestreamed Bang Bang Con: The Live event, an extravaganza that was performed across several different rooms and is believed to have generated around $20mn in ticket sales.

With so many live sporting events cancelled, major sporting bodies which had already innovated their own e-sports versions filled the breach with video-game alternatives. Formula 1 staged a Virtual Grand Prix series in 2020 that achieved a record 30mn views on TV and digital platforms, EA Arts’ FIFA soccer franchise added 7mn players in the second quarter of the year, and, in basketball, NBA 2K20 recorded an 84% increase in active players during the same period. (1)

Video game and e-sports revenues reached US$147.7bn in 2020 and the segment is expected to become an almost US$200bn global business by 2025, according to Pwc. (2) Virtual reality is the fastest-growing entertainment and media segment, with revenues increasing by 31.7% in 2020. The report highlighted the changing dynamics within the industry, including the shifting of box-office revenues to streaming platforms, and more content being consumed on mobile devices.

Youngsters mix it up

Live music is forecast to make a strong rebound and a survey of over 25,000 UK live music fans showed 75% of under-24s would be happy to return to events as soon as possible, according to a survey by LIVE (3), a UK music organization. Significantly, the same survey reports 70% of fans saw a live music performance online in 2020 and one in four was interested or very interested in attending online music events in the future.

A hybridized approach to consumption could be the model for media and entertainment going forward, especially if the habits of Gen Z (those born between 1997 and 2007) are anything to go by. These digital natives are consuming culture on a number of platforms, and for them, the boundaries between fashion, music, film and gaming are blurring. Gaming is particularly influential, with just over a quarter of that age group saying that playing video games is their favorite activity, followed by listening to music (14%), according to Deloitte. (4)

This trend was illustrated in spectacular fashion with the live appearances of rap star Travis Scott and singer Ariana Grande in immersive, interactive events hosted by Epic Games’ Fortnite, their avatars performing in virtual spectaculars viewed by millions.

The space where interconnected physical and virtual realities converge – if not quite yet then very likely in the future – is often referred to as the ‘metaverse’, a term that has become something of a buzzword. Mark Zuckerberg has said he sees Facebook transitioning from a social media company to a ‘metaverse company’. “Think of this as an embodied internet that you’re inside of rather than just looking at,” he said in an earnings call in August.

The roar of the digital crowd

Immersive innovations are also shaking up sports broadcasting, with virtual and augmented reality being used to personalize the viewer experience and offer a ‘front-row experience’. Fans of both the NFL (National Football League) and the NBA (National Basketball Association) can use Microsoft Teams to share a collective experience and celebrate with players when they score, while Sky Worlds allows Premier League soccer fans to move around the stadium using an Oculus Quest headset.

“I see more of us getting used to pay-per-view ticketing and watching live events streamed in parallel in the future,” says Furtschegger. “The prospect of a VIP or front-row experience will make the virtual experience more appealing, giving fans a chance to interact with their favorite band or get special access behind the scenes at a big sporting occasion.”

This trend towards customization does not only apply to big-arena events, adds Alastair MacLean, Global Product Leader – Live, at AGCS. MacLean expects to see growth in the number of livestreams from smaller venues hosting comedy and music events. “These events can be more intimate online. You can have interactions with the performer. If you have a very small gig, you can have a Q&A session with the artist. In person, access is restricted because you are not allowed backstage.” Several social-media companies are already offering platforms for livestreaming events, MacLean notes, among them Twitter Spaces, Spotify and Instagram Live.

Transmission failure, no-shows and other perils

Given the combination of changing viewer behavior and rapidly developing technology, it seems likely virtual events will remain a part of the entertainment mix even after the pandemic is over. But even without a physical audience or staged event, things can go wrong in the virtual world.

“With so much technology involved, transmission failure is probably the most critical risk,” Furtschegger says, adding that AGCS has seen a rise in insurance enquiries for transmission of events through satellite, live streaming and pay-per-view contracts. “Transmission could fail because of a weather-related interruption, natural catastrophe, a fire that affects your broadcasting unit, or network issues within your broadcasting infrastructure.”

Events dependent on a single star or band can be left high and dry if the headline act does not show up because of health issues, and for this there is non-appearance cover, Furtschegger explains. “If you have an event centered on a particularly crucial announcement or element – say the 89th minute of a soccer game – you can even specify a ‘critical moment’ and insure against that vital element not going ahead.”

Even if you are running a virtual event without a live audience, you should still be aware of the usual property and casualty perils. “You may not be so concerned about slip-and-fall coverage, for example, but you could still be renting equipment in a studio and staging a smaller-scale event, so you will have some exposures in that location.”

How to reduce the risks

“For transmission, any risk assessment should look at your infrastructure, how you will generate the signal, and how it will be broadcast and transferred,” Furtschegger adds. “What is your reboot time if there is an outage and what backup systems are in place? Then there are more mundane physical risks that need to be managed, like protecting cables to guard against power outage.”

As with live entertainment, for a virtual event you will probably need to mitigate against weather perils, fire, property damage and risk to an audience, if anyone is present in person. Weather perils could increase in the future as a result of climate change, Furtschegger notes. “The Bonnaroo 2021 festival in the US was cancelled this summer due to waterlogging and flooding, so if you’re streaming an event in parallel with a physical event, choose your location with care and consider the vulnerabilities of the physical environment.”

Because virtual events rely so much on digital technology, cyber security is inevitably a concern for organizers and an area of increasing interest for insurers, says MacLean. “With events being livestreamed and heavy use of technology even at venues, there is a lot of interest in coverage for cyber outages. In the future, increasing demand might lead to a specific cyber product offering for events. This is a hot topic across all areas at the moment.”

A bigger, bolder, brighter future

As entertainment offerings proliferate and innovate in the years to come, the financial stakes and investments could be high. With viewing figures for virtual events sometimes running to their tens of millions, lost revenue in ticket sales, merchandising, advertising and sponsorship represents a significant economic risk.

“In terms of future risk mitigation, shows are getting bigger and more exciting. They’re using mixed reality, augmented reality and other immersive technologies, offering more and more ancillary offerings to customize the experience, so this will lead to more demand and capacity. Ticketing is likely to become more expensive,” says Furtschegger.

“I think we all agree there’s nothing to match the atmosphere of live entertainment or sports enjoyed as part of a crowd,” Furtschegger adds. “At the beginning of the pandemic, many people engaged with virtual events and streamed content because there wasn’t much else to do, but going forward it will no longer be such a binary choice.”

After a period of crisis, turbulence and reinvention in the world of entertainment, it appears that the show will go on after all – and in more ways than one.

Find out more about the risks associated with live events here: Live events risks (

[1] World Economic Forum, Game on: How Covid-19 became the Perfect Match for Gamers, September 2020
[2] Pwc Global Entertainment & Media Outlook 2021-2025 Report , July 2021
[3] Live Music Venues Industry and Entertainment, #ReviveLive Music Report, May 2021
[4] Deloitte Insights, Digital Media Trends, 15th Edition, April 2021


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