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The rise of the IP bank

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Photo: Micheile Henderson

Photo of Tim Mulligan
by Tim Mulligan

Post-lockdown saw the rise of media fusion into mainstream media formats, with games titles such as The Last of Us being made into episodic TV series. This followed the metaverse V1 experiences of live streamed music concerts from the likes of Travis Scott and Marshmello in Epic Game’s Fortnite. Non-gaming companies have since found licensing opportunities for cosmetic items based on music artists and even film characters to be made available as in-app purchases in Fortnite and similar games. Intellectual property (IP) is morphing beyond format constraints and into the digital lives of fans.

Why is it less about tech and more about IP?

In MIDiA’s forthcoming report, Mainstreaming the Metaverse, we call out how this process of media fusion will only accelerate as the tech vector of virtual reality (VR) enters the mainstream. The new generation of VR headsets, crystallised by the Apple Vision Pro launch in February, are catalysts for the next wave of media fusion as the metaverse 2.0 starts to materialise. If this becomes a mainstream phenomenon, then much of its momentum will have originated from use cases focused on known IP. Known IP is IP that has been around long enough to cut through to mainstream audiences, making it easily identifiable (and thus monetizable). In navigating the emerging metaverse, consumers are more likely to go on the journey if it is to engage with IP that they already know and care about. Companies with IP banks – consolidated holdings of proven intellectual property – will be at a distinct advantage as IP becomes the primary driver for engaging and monetising mainstream consumers in the metaverse. With an increasing diversity of content and a multiplicity of competing fandoms to address, IP needs to be broad and deep to function as an engagement driver. This currently rules out digital native companies lacking in generational IP building expertise as they simply have not been around for long enough.

The streaming TV challenge of building IP banks

The other key challenge for streaming TV is the current fixation on using data to drive commissioning decision making. Traditionally, as TV shows are commissioned for follow on series, the costs involved in production escalate due to a combination of factors, including talent wanting bigger pay checks. Netflix is notorious for axing popular shows before the return on investment becomes eclipsed by the escalating cost of production and promotion. While this ensures tight margin control in operation profitability, it has the unintended side-effect of stunting the evolution of IP fandom.

As we move into an entertainment landscape increasingly skewed towards optimal IP management, Netflix’s habit of IP stunting will increasingly become a strategic challenge for both it and other companies following its approach. IP acquisition moves such as Netflix's acquisition of Millarworld in 2017 are likely to become the new normal as all parts of the ecosystem adapt to the new monetisation reality.

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