"Black Myth: Wukong" goes viral, "crashes" Steam, do we need to buy insurance before playing games in the future?

Recently, the domestic AAA game "Black Myth: Wukong" has been trending on various social media platforms, causing a sensation on the internet.

According to its development team "Game Science," the game sold over tens of millions of copies across all platforms within 3 days of its release. The peak concurrent players on the game platform Steam reached 2.4 million, making it the most played single-player game in the platform's history. Goldman Sachs predicted in its latest report that the game is expected to sell between 12 to 20 million copies on Steam, with revenue potentially reaching 3 to 5 billion RMB.

The popularity of this game has also led to a surge in various industries. Under the prosperous trend, brands such as Luckin Coffee, Didi, JD.com, and NVIDIA have collaborated with the game to develop co-branded drinks, co-branded car models, collaborative gaming consoles, exclusive drivers, and many other products. Shanxi Tourism has also launched the "Follow Wukong to Shanxi" activity, inviting gamers to drive to visit the ancient Shanxi buildings featured in the game and experience the brilliant ancient culture behind the game.

According to analysis by Titanium Media APP, the flourishing development of the domestic gaming industry is closely supported by the insurance industry. Insurance companies have been promoting the development and international expansion of the gaming industry by introducing various types of insurance such as cyber insurance, virtual property insurance for games, and platform insurance for gaming overseas.

Industry insiders believe that "game insurance" is mainly related to the development of the gaming industry, showing growth in recent years with significant potential for future development and growth.

Frequent Network Security Incidents

On the evening of August 24th, "Steam crashed" trended on social media. Many players expressed on Weibo that they were unable to access the game.

Professional institutions such as Qihoo 360's XLab analyzed that this crash was caused by a DDoS attack. The attack commands surged more than 20,000 times in a short period, involving 107 Steam server IPs in 13 countries globally, receiving a total of 280,000 attack commands targeting the Steam platform. Due to the sudden crash of the Steam platform, the real-time online player count of "Black Myth: Wukong" plummeted from over 2 million to below a million.

Microsoft's in-depth technical architecture white paper for gaming believes that for games, even attacks of tens or hundreds of Gbps will cause game servers to be unable to timely receive and process client data, leading to players experiencing screen freezes, high latency, or even disconnections. These not only severely impact player experience and retention but also result in significant economic losses for game publishers.

With the increasing frequency of network security incidents and escalating losses, it has become an opportunity for the rapid development of the new format of "network security insurance."

As a new type of insurance specifically targeting risks in the digital economy, network security insurance is an insurance product that focuses on the security of insured information assets (integrity, confidentiality, effectiveness, etc.).

In recent years, the network security insurance market has shown tremendous market demand and development space. According to the "2022 Global Network Security Insurance Market Report" released by Research And Markets, the global network security insurance market size was $9.29 billion in 2021, is estimated to be around $11.9 billion in 2022, and is expected to reach $29.2 billion by 2027, with a high compound annual growth rate of 19.47% According to data from iMedia Research, the scale of China's network information security industry has been continuously increasing from 2016 to 2021. It is expected to break through the one trillion mark in 2022 with a growth rate of 25%, reaching 146.55 billion yuan in 2023.

Source of the image: iMedia Research

In 2023, the Ministry of Industry and Information Technology and the China Banking and Insurance Regulatory Commission jointly issued the "Opinions on Promoting the Standardized and Healthy Development of Network Security Insurance." The opinions point out that with the rapid development of China's digital economy, the foundational and protective role of network security has been enhanced. Network security insurance, as a new type of insurance covering network security risks and a new model of network security services, is conducive to enhancing the ability of industry enterprises to cope with network security risks, promoting the digital transformation and development of small and medium-sized enterprises, advancing the construction of a socialized network security service system, promoting the high-quality development of the network security industry, and supporting the building of a manufacturing power and a network power.

"As of July 2023, there are 37 insurance companies in China (including foreign-invested and joint venture insurance companies) offering 89 network security insurance products for sale (including 9 additional insurance products), among which there are 42 property and casualty insurance products and 22 liability insurance products, as well as some other types such as comprehensive network security insurance and emergency response special insurance." Huang Peng, Chief Engineer of the National Industrial Information Security Development Research Center, estimated that the premium scale of China's network security insurance in 2022 is about 140 million yuan, doubling from 2021, maintaining a high growth rate.

"China's network security industry is facing a favorable development trend. The digitalization has brought about new security situations and demands, driving the continuous expansion of security boundaries into the network-physical integration space and promoting the iterative upgrade of security demands. Network security products are rapidly developing towards customization, lightweight, and scenario-based directions. Network security insurance is expected to become an important part of the socialized network security service system, building a solid security barrier for industry enterprises." analyzed by Academician Yin Hao of the Chinese Academy of Sciences.

There are two main service models for China's network security insurance products. One is the "insurance service + security risk control" model for the network security risk management needs of industry enterprises. The other model is the "security protection + insurance coverage" model for the residual risk transfer needs of network security products.

Huang Peng introduced that in the first model, insurance companies play a leading role, utilizing the network security technical capabilities, scenario assessment and analysis capabilities, and data integration and analysis capabilities of network security enterprises and professional network security assessment institutions to carry out product development, underwriting pricing, disaster prevention and loss reduction, and other insurance services, providing network security property loss insurance, liability insurance, comprehensive insurance, and other insurance products for industry enterprises.

"The second model is led by network security enterprises, where network security enterprises provide network security protection products to industry enterprise users while adding specialized network security insurance, such as explicitly including network security insurance products that provide service liability coverage in tender documents." Huang Peng pointed out.

However, there are still many pain points and challenges in China's network security insurance market. Industry insiders point out that China's network security insurance still faces issues such as limited product supply capacity, difficulty in meeting diverse insurance needs, lack of consensus on development, difficulty in breaking through cross-industry cognitive barriers, urgent need for industry demand release, and the need to build a network security insurance ecosystem Protecting Virtual Game Assets

As important as cybersecurity, "whales" in the gaming community are most concerned about their accounts, equipment, and more. For players, virtual characters in games are like their second lives, and the in-game assets are acquired through a significant amount of real-world time, effort, and money, equivalent to their own property.

Virtual property insurance is when the insurer insures the insured's virtual assets in the network. It mainly includes virtual property loss insurance and virtual property liability insurance.

Due to the unique nature of virtual property, especially its lack of any physical appearance, virtual property has not received the attention it deserves. In cases of loss, theft, and other accidents, victims often find it difficult to reduce or recover losses due to incomplete protection systems, complex filing procedures, limited recovery methods, and other reasons.

In recent years, with the popularity of online games, there has been a surge in theft cases of virtual property such as game equipment and items. Every day, millions of virtual assets are stolen by criminals, causing countless netizens to suffer losses.

In 2011, Sunlight Insurance and the domestic online game company GAMEBAR signed a strategic cooperation agreement, officially releasing the world's first virtual property insurance: Network Game Operator User Loss Liability Insurance, to safeguard the security of virtual property for network game users and reduce corresponding disputes.

It is reported that this insurance product has introduced a third-party social supervision mechanism and the data hosting institution China Copyright Protection Center. The insurance company will establish a virtual "treasure bank" to store game data, which will be hosted by the Copyright Protection Center. After an incident occurs, the Copyright Protection Center will issue an independent data analysis report to determine the extent of the loss, serving as the basis for compensation.

In 2013, Tencent Games collaborated with Ping An Insurance to launch a personal online game virtual property insurance business. Players of "The Legend of Mir" conduct virtual property transactions worth hundreds of millions of yuan in the game every month. In the event of in-game equipment loss, theft without recovery, or reset, players can apply for cash compensation, receiving at least 100 times the premium in compensation, with a maximum payout of up to 30,000 yuan.

Image Source: Weibo

A report from the Tsinghua University PBC School of Finance pointed out that in the online gaming market, it is difficult to determine when game equipment and accounts are stolen: insurance companies cannot determine if an account has truly been stolen, which can easily lead to insurance fraud or adverse selection behavior. If this identification is done unilaterally by the insurance company, it is clearly unfair. Therefore, cooperating with third-party appraisal agencies has become one of the current solutions.

Empowering Games to Go Global

According to statistics, "Black Myth: Wukong" currently ranks as the global weekly sales champion on the Steam platform, dominating screens in 12 countries including the United States, Singapore, Thailand, Canada, Brazil, and Italy, attracting numerous players overseas and sparking a huge "Chinese trend."

Experts point out that this is a milestone for China's cultural industry to go international, and should be used as an opportunity to promote the internationalization of cultural and creative industries, spreading Chinese culture worldwide Guotai Junan's research report pointed out that "Black Myth: Wukong" has profound significance for Chinese games going global, and the attention to the gaming sector is expected to continue to rise.

Data shows that in the first half of 2024, China's self-developed game overseas market sales revenue reached $8.554 billion, a year-on-year increase of 4.24%. Chinese gaming companies are continuously deploying global strategies and deepening their presence in overseas markets, moving towards a broader global market development. A report from CITIC Securities pointed out that top Chinese mobile games have achieved rapid revenue growth in the United States, with growth significantly outpacing the US market, further expanding China's advantage in exporting games to the US.

Image Source: CITIC Securities

In February this year, Sinosure (China Export & Credit Insurance Corporation) launched specialized insurance services for game "going global" for the first time. The Xiamen branch of Sinosure issued the first game "going global" platform insurance policy in the country, providing insurance coverage for overseas accounts receivable of Xiamen Dream Plus Network Technology Co., Ltd., a key national cultural export enterprise, in countries such as the United States and Russia, with an expected coverage amount of $3 million.

An official from Sinosure stated that the issuance of the first game "going global" platform insurance policy in the country is not only a strong support for the internationalization of the Chinese gaming industry but also a promotion of China's cultural soft power.

With the continuous development of the gaming industry and the continuous advancement of technology, the game insurance market will also usher in a broader development space. In the future, more innovative insurance products can be expected to appear, such as specialized insurance for game "going global" and professional insurance for the esports industry, to meet the diversified risk protection needs of the gaming industry.

Chen Hui, Director of the China Actuarial Science and Technology Laboratory at the Central University of Finance and Economics, stated that gaming is a global industry hotspot and an important sector for the development of China's digital economy, becoming a core track for expanding digital economic industry scenarios and accelerating economic growth. Insurance companies need to promote product innovation and leverage insurance technology to drive the development of "game insurance"