The industry is booming – but with growth comes complexity
Canada’s video game industry is booming – but with growth comes complexity. As studios and publishers scale operations to meet rising global demand, they’re also encountering a host of emerging risks that could threaten their success, from live-service shutdowns to influencer liability to fickle consumer markets.
According to Marco Andolfatto (pictured), chief underwriting officer at Apollo Insurance, the risks facing developers today fall into three key categories: operational, legal, and financial. Understanding how these exposures interact (and how they can be mitigated) is becoming increasingly critical for game creators, investors, and insurers alike, he said to Insurance Business.
Operational risk: When games go dark
For developers and publishers, the operational risks are not unlike those in other software-based industries – yet they’re often amplified by the dynamic and global nature of video games, Andolfatto said.
Among the most pressing concerns are cyber-related incidents. Studios increasingly operate in an always-on, digitally distributed environment where games aren’t just sold – they’re serviced.
That real-time interactivity makes games particularly vulnerable to cyberattacks that can bring platforms down entirely. Whether it’s a ransomware attack locking access to critical development assets or a DDoS assault that renders a live game unplayable, the result can be significant financial loss, reputational damage, and disruption to carefully planned release schedules, he said.
Beyond cyber threats, Andolfatto noted that studios also face the same physical risks that affect other industries – fires, floods, and extreme weather events can all derail production. “You have the same issues that other types of software development businesses may have,” he said.
And in a world increasingly shaped by global conflict, even war has proven to be a very real disruptor. He pointed to the example of the studio behind Stalker 2, which had to relocate from Ukraine to other parts of Europe to continue development amid the country’s ongoing conflict. While such events are often uninsurable, they underscore just how vulnerable creative production pipelines can be to geopolitical upheaval.
Legal risk: IP disputes, influencers, and a shifting liability landscape
While many legal risks in video game development resemble those found in adjacent creative industries like film and television, the interactive and online nature of gaming brings a unique twist, Andolfatto explains.
Much like a TV show or movie, a video game is a composite of intellectual property – graphics, code, storylines, audio, and character designs all bundled into a single product. That makes studios especially vulnerable to IP disputes and licensing complications, whether it’s an in-game asset resembling someone else’s protected work or a soundtrack that hasn’t been fully cleared for global distribution.
But the legal minefield doesn’t end with in-house development. The rise of influencer marketing in the gaming world has added another layer of complexity to the industry’s risk profile.
“Influencers have a huge role when it comes to marketing video games,” Andolfatto said. “They can develop into interesting risk profiles themselves.”
As influencers livestream gameplay or promote titles through sponsored content, new liability challenges emerge. A streamer might misrepresent a game’s features or create controversy that reflects poorly on the brand, Andolfatto said.
Alternatively, they may incorporate a game into their own monetized content without proper permissions – blurring the lines between user-generated content and commercial use.
Studios and publishers must now account for these external voices in their legal strategy – vetting influencer agreements carefully, managing rights of use, and preparing for reputational fallout that may not be within their direct control.
Financial risk: High stakes in a crowded market
Beyond operational and legal concerns, studios in Canada’s video game and eSports sectors must also contend with considerable financial risk, especially as industry economics grow more complex and volatile, Andolfatto said.
That intense competition creates significant uncertainty for studios – especially when developing or launching a new title can take years and millions of dollars in investment.
Even established studios face financial volatility when shifting consumer tastes or evolving production models derail original plans. In some cases, large publishers or investors may fund game development only to pull financing mid-stream, deciding that a title no longer aligns with market trends or internal priorities, he said.
Adding to the disruption is the increasing use of AI in development workflows – a trend that is transforming both production costs and business strategies. While AI offers efficiencies, it also introduces uncertainty around creative processes, staffing needs, and competitive positioning, Andolfatto said.
The sheer volume of new content hitting the market underscores the scale of the challenge. “Steam, which is a PC digital game distributor, releases over 1,600 new games every single month,” Andolfatto said. “That’s like 50 games a day you have to compete with.”
In that environment, simply launching a game – let alone turning a profit – has become a high-risk proposition. Studios must be nimble in managing burn rate, understanding monetization potential, and distinguishing their titles in a saturated landscape.
Yet Andolfatto also sees a silver lining.
“The good news is, the market’s expanding,” he said. “More and more people are participating in gaming, and there are so many different niche segments within the industry.”
