If 2020 was the year when the music stopped, the theaters went dark, and soccer players scored goals to deafening silence or recorded cheers, the entertainment sector is hoping 2023 will be the year it can finally reclaim the collective experience of full houses, packed movie theaters, and booming arenas.

“We had a very positive year in 2022 and a welcome recovery is definitely underway,” says Michael Furtschegger, Global Head of Entertainment at Allianz Global Corporate & Specialty (AGCS). “But we’re not out of the woods yet. In the three years since the coronavirus first hit headlines, the world has changed. The sector must continue to evolve in line with new technologies, proliferating platforms, and seismic shifts in patterns of consumption, as well as changes in the public mood, particularly among the younger generation.”

Meanwhile, economic and geopolitical pressures wait in the wings.

Despite the headwinds, consumers are heading back to their favorite entertainment venues or platforms in encouraging numbers. Global box office hit $25.9bn [1] in 2022, reports Gower Street Analytics, a 27% gain on 2021, but still 35% behind the average for the three years before the pandemic (2017 to 2019). Live music revenue is expected to exceed pre-pandemic levels in 2024, with digital music streaming subscriptions fueling growth in recorded music, where revenues are projected to reach $45.8bn in 2026, up from $36.1bn in 2021, according to PwC [2] Live theater is also staging a comeback. The Society of London Theatre [3] reports attendance in 2022 was up by 7.21% and capacity by 7.9% compared to 2019, although box-office revenue fell by 1.1% in real terms, while Broadway shows grossed $51.9mn [4] during the 2022 holiday week, compared to $26.3mn for the comparable week the year before.

The sports sector is proving particularly resilient. Fitch forecasts a ‘mild recession’ in the US for Q2 2023 but reckons teams will maintain growth in attendance and revenue [5]. “Compared to other entertainment sectors, the global sports industry enjoys a relative degree of certainty provided by media rights, sponsorship deals, and a calendar of fixed international sporting events and tournaments,” says Furtschegger.  

So what are the trends driving growth and shaping the risk landscape for the entertainment industry as it continues its recovery? Here, AGCS entertainment experts share their insights for the sector going forwards. 

The sheer volume of content that is now being created and distributed makes quality a key differentiator in a crowded market. “With only so many venues and facilities available and personnel resources under pressure, how long can the industry ride this wave before the volume of content flattens out?” asks Furtschegger.

Technology has lowered the barriers to entry for content creators, when almost anyone can upload to TikTok, YouTube or Instagram, while at the other end of the scale, the major studios and tech businesses are launching their own platforms.

“AGCS has been a part of Hollywood history since the early 20^th century,” says Furtschegger. “This year we insured five out of the 10 nominees in the Academy Award Best Picture category. We’ve been on a long journey with the film industry, from silent comedies to immersive modern epics. High quality content doesn’t come cheap, and where production costs increase, so, too, do exposures.”

Businesses need to know they have sufficient insurance cover for sophisticated productions because the costs are generally higher with each day of shooting and this could be reflected in any insurance loss. “We’re still suffering the after-effects of pandemic-related postponements and that is putting industry resources – including human resources – under pressure. It can make any rescheduling following an interruption more challenging,” adds Furtschegger.

In a world of endless streaming options, the big studios are playing it safe for the moment – in 2022, nine out of the top 10 highest-grossing films at the global box office [6] were sequels or part of a franchise. “Cinemas are adapting their offerings in response to fewer films and moviegoers moving through their premises,” adds Wanda Phillips, Regional Head of Entertainment, North America, at AGCS. “Membership schemes and luxury seating with dine-in options can entice audiences back to enjoy the full moviegoing experience, which is not only visual but audio too.”

This year’s Oscars ceremony will see green dresses on the red carpet as the Academy partners with the women-led sustainability organization RCGD Global to encourage a more responsible approach to awards-season fashion. It reflects the growing influence of ESG, or environmental, social and governance, on the sector. British band Coldplay has pledged to halve the carbon emissions associated with its current Music of the Spheres World tour, compared to 2016-2017, and has made a raft of sustainable commitments, including paying a surcharge for aviation fuel, sourcing ethical, sustainable merchandise, and planting a tree for every ticket sold.

“The younger generation is particularly concerned about sustainability, and festival organizers are responding to this,” says Furtschegger. “Live Nation entertainment company has a Green Nation charter with a target of reducing carbon emissions by 50% by 2030. AEG Presents also has an initiative called Climate Positive Touring, a team of industry professionals aiming to reduce the emissions associated with live tours.”

The sector continues to face criticism about slow progress on diversity and inclusion, however, in particular the film industry. The Inclusion in the Director's Chair [7] report by USC Annenberg (January 2023) reveals that of the 111 directors hired to make the 100 top-grossing films of 2022, just 10 were women and only 20.7% were from an underrepresented racial/ethnic group.

The rise of intimacy coordinators on film sets reflects a growing understanding of the need to safeguard the wellbeing of actors filming intimate scenes, particularly in the wake of the MeToo movement.

With streaming now fundamental to the entertainment and media landscape, Furtschegger sees virtual conferences as a particular growth area. The global virtual events market size was valued at over $114bn in 2021 and is expected to grow at a CAGR of 21.4% [8] from 2022 to 2030.

Even without a live audience, virtual conferences still carry risks, including transmission failure because of a weather event, natural catastrophe, fire affecting the broadcast unit, or network issues impacting broadcasting infrastructure. Rented equipment and studio space can also be vulnerable to property and casualty liabilities.

Reality and live content are also continuing to grow, facilitated by on-demand services and social media platforms. Virtual reality (VR) is the fastest-growing entertainment and media segment, reports PwC [9], with global VR growth between 2021 and 2026 expected to bring the segment to $7.6bn. Gaming is forecast to be 85% of total VR revenue by 2026.

In 2022, MTV introduced a new award category for the Best Metaverse Performance, which was won by South Korean K-pop band Blackpink for a performance hosted by the PUBG Mobile game. Fellow South Koreans, BTS, were nominated for the band’s Minecraft concert experience, alongside Ariana Grande for her Rift Tour in Fortnite, among others.

“As the worlds of gaming, music and entertainment continue to converge, gaming platforms such as Fortnite and Roblox are increasingly serving as entertainment and social hubs, while gaming content is crossing over to social media and streaming platforms,” says Furtschegger. HBO debuted ‘The Last of Us’, a video-game adaptation set in a post-apocalyptic world, in January 2023 to critical acclaim. Meanwhile, video games continue to develop as a spectator sport, with the total number of esports viewers worldwide possibly exceeding 640 million by 2025 [10], according to a recent report.

Phillips cautions that streaming particularly high-profile events, especially those with lucrative ancillary fan-based activities, heightens the potential losses associated with any transmission failure. “The viewing figures for some global events are immense – Blackpink attracted 15.7 million viewers – and if technical issues were to bring about a failure in transmission, the damages from a major outage could be immense too.” 

“Now that we’ve experienced the Covid crisis, the industry needs to remain vigilant about its health and safety protocols,” says Furtschegger. “We don’t yet know if pandemics will occur more frequently or when the next one could strike.”

Climate change is another cause for concern. “We’re seeing more abnormal weather-related events – heavy storms in Europe and bushfires in California, for example. These inevitably cause havoc for live events, both in terms of cancellation exposure but also human safety, whether it’s extreme heat or flooding.”

Influencer marketing has become a multibillion industry since 2021 and it is estimated that influencer earnings exceeded $16.4bn [11] in 2022 – a market that is expected to grow.

“Social media influencers, who are often entertainment celebrities, can wield massive power, but they can also be rogue,” says Phillips. “Without hands-on management or due process governing their actions online, they could unwittingly share confidential information, reveal a movie spoiler or plot twist, slander a fellow star, infringe copyright, or simply post content that is deemed inappropriate, leaving a promoter or production company vulnerable to reputational damage or litigation.” 

“The Covid crisis hit the live theater world particularly hard, with theaters going dark practically overnight,” says Phillips. “So we’re really excited about the reopening of Broadway shows and recent audience figures. As more hit productions are rolled out in cities internationally, we are restructuring our theater policy to meet the needs of today’s market. We have the ability as a global insurer to provide coverage for these blockbuster shows around the world.”

Phillips is optimistic that the entertainment sector will thrive if it can adapt to the rapid pace of change it faces. “To remain relevant and sustainable, we must exploit what we have today, build upon it, grow it, and then examine what that means for our development. We must serve the present but explore the future.”

“Crowds have always carried inherent risks,” says Kurt Miner, Managing Director, Entertainment, at Allianz Risk Consulting, North America. “But we’re now better able to monitor large groups of people and keep them safe, as well as artists, with the use of real-time video monitoring. I can sit in my home office and monitor two or three events, which could each be taking place over 15 acres or more. I can spot things like blocked exits or damaged barriers that I might miss if I was on site. We can also monitor social media to pre-empt gate-rushing and prevent stampedes, sending a security contingent to the location before the situation gets out of hand.

“Communication in general is very important, between staff on the ground and the relevant authorities. Safety procedures should be constantly reviewed, using a standardized approach such as the Incident Command System or National Incident Management System. Clearly marking the exits, keeping a close eye on weather forecasts, adequate staging, and secure storage of flammable materials are all essential.

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