The Power of Intellectual Property: Why Studios Obsess Over It

The allure of a familiar character or story can be a powerful draw for audiences, and that’s exactly what intellectual property (IP) offers. But what makes IP so valuable in the world of entertainment, and why do studios continue to obsess over it? The Built-in Audience Familiarity
IP-based storytelling arrives with built-in audience familiarity and interest. You already recognize Super Mario or Dracula, and that recognition represents the closest thing to a sure bet studios can find in today’s challenging market. The familiarity factor is what makes IP so attractive, and it’s what allows studios to tap into existing audiences and build upon their interest. Strategic Deployment and Risk Mitigation
The data backs up the importance of IP in the entertainment industry. Across the eight major U.S. streaming platforms in Q4 2024, existing IP-based film and TV accounted for at least 38 percent of customer acquisition and 34 percent of customer retention, according to Parrot Analytics. This means that existing IP drove around a third of new subscribers and retained customers. IP-based programming consistently punched above its weight by contributing more revenue than its share of supply. A Shift in Medium and Storytelling
The medium of underlying IP has broadened over the last decade, and what was once necessary for a green-lighting project can now be condensed into a shorter form. The success of Hulu’s The Dropout and Netflix’s Inventing Anna, which are rooted in investigative journalism, provide a roadmap for shorter-form written content to translate to the screen. Similarly, Amazon adapted Homecoming from the Gimlet Media podcast, while the Oscar-winning Whiplash began as a short film. Best IP for the Screen: Books, Real Events, Manga, or video games?
Today’s major franchises span feature films, TV series, consumer products, theme parks, video games, stage plays, comics, and other experiences. But which IP types are most prevalent, which mediums suit them best, and who represents their ideal audience? Literary Sources
Literary sources, such as apple tv+’s Presumed Innocent or Netflix’s Fool Me Once, maintain the highest share of IP-based premieres yearly and have held remarkably steady over time. Go books! For example, Harry Potter appeals “to all ages and is more easily passed from generation to generation than DC Comics,” Dale Nelson, an IP attorney at Donaldson Callif Perez LLP who has helped grow and protect Warner Bros. IP, told Observer. Prequels, Sequels, Remakes, Reboots, or Spinoffs
Though prequels, sequels, remakes, reboots, or spinoffs have declined slightly recently, they still represent the second-largest IP source. This explains the fourth Captain America movie. Manga and Video Games
Manga, the primary source material for Japanese anime, has risen in recent years as headlined by Netflix’s One Piece. video game adaptations now enjoy commercial success after three decades of futility. Hollywood has effectively anointed the medium as comic books’ heir apparent for blockbuster entertainment. Interestingly, a clear divergence between family-friendly video game films and adult-skewing video game TV series has emerged. Profitability of IP-Based Content
Different platforms leverage different IP to different effect. Disney+ leads the pack with 45 percent of its library comprising IP-based content, generating more than 60 percent of its estimated U.S. and Canada (UCAN) revenue in Q4 2024, according to Parrot Analytics. Apple TV+ boasts impressive efficiency as its 32 percent IP-based library delivered 54 percent of its UCAN revenue in Q4 2024. The Importance of Organic and Earned Media
Franchises cannot reach full potential without organic and earned media. Social media’s importance for Gen Z and Gen Alpha is emphasized by Dale Nelson. “If younger generations aren’t seeing it on their phones, then they’re not seeing it at all,” she said. Blumhouse targeted these younger consumers with the video game adaptation Five Nights at Freddy’s, delivering one of 2023’s most profitable films with a sequel on the way.

The Bottom Line
The value of intellectual property in the entertainment industry is undeniable. By tapping into existing audiences and building upon their interest, studios can create a loyal following and drive revenue. While the market is still refining the formula as it searches for the perfect blend of IP, medium, audience demographic, and platform strategy, the data suggests that IP-based content will continue to play a major role in the future of entertainment. “Risk mitigation is more prevalent in the marketplace now than it was five years ago,” says Marc Simon, an entertainment IP attorney with Fox Rothschild LLP.