Entertainment

Extract from a longer article on the evolving role of patents as B2C industries shift toward technology-based competitiveness.

In the Entertainment segment, sustainability and functional improvements are shaping how content is produced and experienced Sustainability is driving studios toward using renewable energy to power their operations and implementing virtual productions - reducing the overall carbon footprint of digital entertainment. Meanwhile, functional improvements are enhancing visual fidelity, real-time rendering, and haptic feedback. The usage of AI to speed up and save costs of production has proved to be especially useful in the gaming sector. these advancements are making entertainment more seamless, responsive, and lifelike than ever before.

Digitalisation is at the heart of the Entertainment industry’s evolution, fundamentally transforming how audiences engage with content. As consumers demand hyper-personalised, interactive, and immersive experiences, companies are investing heavily in AI-driven content curation and recommendation systems. This shift has made patents an increasingly important asset. Protecting and leveraging proprietary recommendation algorithms, AR/VR technologies, and interactive media innovations are key enablers for expanding market share and increasing profitability in an increasingly digital consumer landscape.

In the Entertainment segment, ‘Rapid Expanders’ like Sony, Netflix and Electronic Arts are filing patents in AI-driven recommendation systems, streaming technology, and cloud gaming. At the same time, ‘Consistent Innovators’ like Nintendo and The LEGO Group maintain steady patent growth, protecting technologies related to interactive gaming and immersive play experiences to sustain their competitive edge.

Innovation is also progressing in more traditional formats such as toys, board games, and books, where technology is reshaping how design, functionality, and storytelling are developed and experienced. These advancements increasingly blur the lines between physical and digital experiences, further highlighting the strategic role of IP in maintaining differentiation and market relevance. This segment still includes ‘Dormant Players’ with low patent activity. Such players must assess whether the risk of holding no patent position in an increasingly technology-driven market is strategically justifiable, and whether they possess the innovation capabilities required to build a meaningful and defensible portfolio.

Examples of how Entertainment companies are using patented technology to secure product differentiation and increase market share.

Netflix aims to maintain competitive edge through patented content recommendation technologies

Netflix's proprietary content recommendation system boosts its user engagement and retention. It is protected by patents covering, for example, content selection and presentation methods. Approximately 80% of viewing is influenced by these patented algorithmic recommendations. Netflix actively enforces its patents, exemplified by a 2023 lawsuit against VMware over virtual machine technology patents underlying its streaming services. Though patent litigation outcomes vary, Netflix’s proactive enforcement strategy may help sustain its competitive advantage and protect market share in streaming entertainment.

Nintendo protects lucrative Pokémon franchise through active patent enforcement

Nintendo maintains a patent portfolio protecting its iconic game franchises. In September 2024, Nintendo and The Pokémon Company filed a lawsuit against Pocketpair Inc., alleging infringement of patented game mechanics related to creature capture and riding, which are distinctive elements central to Pokémon’s gameplay. Given the Pokémon franchise’s total revenue of $92 billion, proactive patent enforcement could discourage competitors from developing similar game mechanics that potentially threaten Nintendo’s market position. Although the commercial impact of litigation remains uncertain, Nintendo’s strategy illustrates a commitment to safeguarding its franchise differentiation and securing competitive advantage in gaming.

Electronic Arts adopts open-patent initiative to drive ecosystem expansion and industry influence

In December 2024, Electronic Arts (EA) introduced an open-patent initiative, making several patented technologies including speech recognition and AI-based voice generation, available to developers. This strategic move intends to encourage widespread adoption of EA’s technologies, potentially expanding its influence within the developer community and shaping next-generation gaming experiences. While the ultimate market impact remains uncertain, EA’s approach may help proactively address regulatory concerns around gaming accessibility and stimulate broader industry innovation, potentially increasing EA’s long-term market presence and revenue opportunities.

Sony leverage cloud gaming patents to help secure market leadership

Sony has expanded its patent portfolio in cloud gaming. The acquisition of OnLive’s cloud gaming patents in 2015 enabled PlayStation game streaming without local hardware eventually leading to a jump in PlayStation Plus subscribers and an increase in Network Services revenue. Sony’s browser-based cloud gaming patents extends PlayStation access beyond consoles, contributing to increase adoption and subscriptions. Additionally, Sony’s patented Edge Compute Proxy lowers bandwidth costs and optimises streaming via 5G. These patented innovations, while subject to market adoption, aim to improve user experience and drive greater user engagement. In doing so, they seek to strengthen Sony’s differentiation and market position in cloud gaming, ultimately supporting increased revenues.

In the Entertainment segment, companies are increasingly leveraging AI, cloud technologies, AR/VR, and interactive media to deliver personalised and immersive digital experiences. At the same time, innovation continues in more traditional formats such as toys, board games, and books – where technology is reshaping how design, functionality, and storytelling are developed and experienced. By securing exclusive rights to content delivery innovations, entertainment companies aim to commercialise new experiences, differentiate their offerings, and build sustainable, high-margin revenue streams in an increasingly digital-first landscape.

Conclusion

From tech-enhanced fashion to zero-waste food production, technology is reshaping innovation and competition in the consumer goods sector. As technology-based competitiveness becomes increasingly important, companies must make deliberate, business-driven decisions about how they approach patents.

For “Rapid Expanders”, challenges include to avoid over-filing or filing in areas that don’t add value, and to ensure patents are actively used to support business goals – not left as inactive cost items on the P&L.
“Consistent Innovators” must regularly recalibrate their efforts to stay aligned with evolving strategic priorities and market dynamics. Like the Expanders, they must also ensure that their patent portfolios are actively leveraged, rather than quietly accumulating as overhead cost.
“Sporadic Filers” may need to reassess whether an opportunistic approach is sufficient in the long term. If investment increases, systematically selecting the right areas is key to making patents count and avoiding unnecessary cost.
“Dormant Players” must consider whether they can afford the risk of having no patent position in a tech-driven market, and whether they have the innovation capabilities needed to start building meaningful portfolios.

Independent of profile, companies need a business-driven and proactive approach to patents, both to stay ahead and avoid being caught off guard. This means being able to clearly answer:

Why are we (or aren’t we) investing in patents? What is the intended impact on revenue, cost, and risk?
Are we organised for proactive and impactful IP management? Do we have the right stakeholder interfaces?
Do we have the capabilities and skillsets needed to execute effectively?

Without clear answers to these questions, patent departments in consumer goods companies may struggle to compellingly articulate the value of patents and their contribution to technology-based competitiveness. This increases the likelihood of being seen primarily as cost centres, making it difficult to secure appropriate investment. Ultimately, companies may face misalignment between their business and technology ambitions, falling short in protecting and capitalising on them.