The global video streaming market size is expected to reach in 2022 USD 932 billion. The growing fondness towards streaming services like Netflix, Hulu, Amazon Prime, and others can have a tremendous impact on the market growth in the forthcoming years. It is therefore not surprising that the major providers protect the various user experiences of their platforms with patents in order to gain market share and customer loyalty. The streaming business has benefited from work from home and lockdown during the epidemic. Consumers are adopting media streaming services to spend more time at home entertaining themselves. Furthermore, the post-pandemic market expansion will be driven by rising advances in 5G technologies and its acceptance and major companies’ ongoing innovation in higher quality content.

The development of streaming platforms was the big step to transform the media sector. And the media eco-system is a leading example how the digital transformation changes businesses. The first example that comes to mind is Netflix. Netflix is one of the most successful entertainment media companies of all times. It originally began its ascent in 1998 by providing services to customers through means of mailing out physical copies of movies, shows, video games and other forms of media through the standard mailing system. Through its successful start and the rapid changes that technology introduced over time, Netflix converted its business model. They went from handing out physical copies to allowing their customers to stream their favorite content on their own.

Today, the platform has advanced to streaming technologies that have elevated and improved Netflix’s overall business structure and revenue. The platform provides its viewers the ability to stream and watch a variety of TV shows, movies, documentaries and much more, through means of using a software application. Since Netflix converted to streaming, it is the world’s ninth-largest internet company by revenue, with a presence at a global scale. For a better overview how the business model changed, the business model canvas of Netflix can be analyzed. Please have a look at the following video:

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Business model innovation and patents

To make the change of business models successful and sustainable, companies have to define their patent strategies and build a strong and fitting patent portfolio. In the case of streaming services companies try for example to make use of the data of the buying behavior of the streamers to introduce targeted advertisement personalized for the individual streamers. A current example for the optimal implementation of this type of new business model is the cooperation between the Chinese tech-company Tencent with the British AI and product placement experts of Mirriad, who have a very strong European patent portfolio to protect the new AI-based business models.

What is AI-based digital product placement

The ever-increasing production costs for streaming content cannot be financed solely from subscription fees. And classic advertising is here out of the question because its absence is one of the basic promises of streaming services. This is how streaming platforms came up with the concept of AI-based digital product placement. In the case of digital product placement, the product placement is subsequently inserted into the original content using digital technology. This has many advantages over classic product placement:

  • The placement can be integrated without the usual time and organizational pressure, since the product is not integrated directly on the set and the integration does not have to be synchronized with the usual film processes.
  • The artistic creation process is not disturbed. The director and the actors do not have to adjust to the product during the actual production and can fully devote themselves to the film
  • The product placement can be controlled in detail. While the design of the placement is influenced by many people in the classic case and rarely can be planned perfectly beforehand, you have full control when you edit it later.
  • The product placement can be removed, updated and customized at any time analogous to today’s search engine marketing

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Background: Who is Tencent

Tencent is a Chinese technology company active in social media, gaming, video streaming and many other business areas. They started their business in the social media sector and are operating WeChat with today more than a billion users mostly in China. They are also very active in the gaming sector, where they own amongst others Riot games and 40% of Epic games, making them the biggest gaming company by investments in the world. They founded in 1998 Tencent music, which is a music streaming service targeting the Chinese market, where it has more than 50% of the total market share. In 2011 they launched Tencent Video, a video streaming service which has over 900 million active users. Outside of the media sector they are also operating electronic payment systems and are active in AI-based healthcare.

Questions:

  1. Please explain how the digital transformation changed the business model of media companies from video renting companies to operators of streaming platforms using the example of Netflix.
  2. Please explain which aspects of the business model of Tencent and Mirriad, which is based on digital product placement, are patent protected?
  3. Please explain the role of the following patent in the protection of the business model:
    1. Group 1: EP2304725B1: Apparatus and method for identifying insertion zones in video material and for inserting additional material into the insertion zones
    2. Group 2: US10362364B2: Process and apparatus for advertising component placement
    3. Group 3: EP3379837B1: Predicting future insertion zone metadata
    4. Group 4: EP3742738B1: Incorporating visual objects into video material
    5. Group 5: EP3076681B1: Producing video data

Group 1: Maria Boicova-Wynants, Veronique Bolinches, Felipe Bustos, Ricardo Cali

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Group 2: Peter Conlon, Andrea Foglia, Johannes Holzmair, Yanan Huang, Anders Isaksson, Terita Kalloo

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Group 3: Konstantinos Kontogiannis, Rita Labundy, Clement Lim, Claire Laurens de Lopez, Shu-Pei Oei, Branimir Puškarić, Timofey Rubchenko

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Group 4: Nora Rüter, Steffen Rutter, Merve Şimşek, Nina Šlat, Sachin Seshadri

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Group 5: Andreas Werner, Anita Yaryna, Greta Zekiene, Sinara Travisani Cardozo

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