AGCS identifies risks in the entertainment industry

“The entertainment industry had a very positive year in 2022 and a welcome recovery is certainly taking place, but we are not out of the woods yet,” said Michael Furtschegger, global head of entertainment at AGCS. “In the three years since the coronavirus first hit the headlines, the world has changed. The sector must continue to evolve in line with new technologies, proliferating platforms, and seismic changes in consumption patterns, as well as well as changes in public mood, especially among the younger generations.”

Despite the challenges facing the industry, consumers are returning to their preferred entertainment venues or platforms, AGCS said. Global box office receipts reached $25.9 billion last year, a 27% increase from 2021, according to Gower Street Analytics. However, that number is still 35% below the average for the three years before the pandemic.

Live music revenue is expected to surpass pre-pandemic levels next year, with digital music streaming subscriptions driving growth in recorded music, where revenues are expected to reach $45.6 billion by 2026 , up from $36.1 billion in 2021.

Live theater is also making a comeback, with rising receipts and attendance. The global sports industry is also proving robust, supported by media rights, sponsorship deals, and a calendar of international events and tournaments, AGCS said.

Challenges remain

However, the entertainment industry is not immune to economic trends such as staff shortages and rising costs, AGCS said.

“Our entertainment clients are feeling the effects of inflation, with increased production and live-event costs,” Furtschegger said. “Staff costs have increased following the lack of skills that occurred after the pandemic, when many left the industry. There are fewer venues than before because there are still many shows postponed from the pandemic that need to take place in addition to new events and festivals. Larger events may thrive, but smaller events are more challenged by factors such as venue, transportation, and energy costs. We expect to see more consolidation in the industry, with smaller, struggling production companies and areas being bought by larger operators.”

Quality not quantity

Technology has lowered the barriers to entry for content creators, with almost anyone able to upload content to TikTok or YouTube. Meanwhile, major studios and tech businesses are launching their own platforms. The volume of content distributed today makes quality a key differentiator in a crowded market, AGCS said.

“We’re seeing a move toward quality in filmmaking, but it’s not cheap,” he said Wanda Phillips, head of North American entertainment insurance at AGCS. “Businesses need to know they have adequate insurance cover for sophisticated productions. Where costs increase, so do exposures because costs are higher per day of shooting, and this will be reflected in any insurance loss.

Maintenance concerns

Environmental, social and governance The issues are having a growing influence on the entertainment sector, says AGCS.

This year’s Oscars ceremony will feature green dresses on the Red Carpet as the Academy encourages a more sustainable approach to fashion awards. At live events, British band Coldplay has pledged to reduce the carbon emissions associated with its current world tour, compared to 2016-2017, and has made a range of sustainability commitments, including paying a surcharge for aviation fuel, sourcing ethical and sustainable merchandise , and planting a tree for every ticket sold.

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“The younger generation is particularly concerned about sustainability, and festival organizers are responding to this,” says Furtschegger. “More and more entertainment organizations are committing themselves to sustainability targets to reduce emissions associated with live tours.”

Virtual future

With streaming now a major part of the entertainment and media sector, virtual conferences are a particular growth area, AGCS said. The global virtual event market was valued at more than $114 billion in 2021 and is expected to grow at a compound annual growth rate of 21.4% between 2022 and 2030.

Even without a live audience, virtual events still face risks, including transmission failure due to weather or natural disasters, fires affecting the broadcast unit, or network issues affecting the infrastructure of broadcasting. Leased equipment and studio space may also be at risk of property and casualty liabilities.

Virtual reality is the fastest growing segment of entertainment and media, with global growth between 2021 and 2026 predicted to take the segment to $7.6 billion. Gaming is estimated to account for 85% of total VR revenue by 2026.

“As the worlds of gaming, music and entertainment continue to converge, gaming platforms such as Fortnite and Roblox increasingly serve as entertainment and social hubs, while gaming content crosses social media and streaming platforms,” ​​said by Furtschegger.

Emerging risks

Health and safety protocols, increased weather hazards and people’s safety are some of the top risk concerns that the entertainment sector must monitor, AGCS said.

“The COVID crisis and the recent tragic shooting incident on a film set have shown that the industry needs to remain vigilant about health and safety protocols,” said Furtschegger.

Climate change is another cause for concern.

“We’re seeing more and more abnormal weather-related events – severe storms and flooding in Europe and wildfires in California, for example,” Furtscchegger said. “These will inevitably cause chaos for live events, both in terms of exposure to cancellation but also in terms of injuries and human safety.”

“People always carry inherent risks,” said Kurt Miner, managing director of entertainment at Allianz Risk Consulting, North America. “Event organizers are now better able to monitor large groups of people and keep them safe, as well as artists, using real-time video surveillance. Safety experts can remotely monitor the two or three events, each of which may take place over 15 acres or more, detect hazard concerns such as blocked exits or damaged barriers. They may also monitor social media to prevent rush at the gate and avoid stampedes, sending a security contingent to the location before the situation gets out of control.

Slips and falls are the most common cause of claims from live-event policies, so organizers should ensure that medical staff and transportation to local medical facilities are on-site, AGCS said. .

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