Our proposed strategy of acquiring the leading emulators serves a two-fold purpose of building intellectual property rights and protecting corporate assets from emulation. Console manufacturers should acquire best of breed emulators and use the acquired IP in their defense against other emulator developers (who often emulate source code from the leading emulators). Yet this action alone is not sufficient because it fails to address the customer demand that sustained the leading emulators. Rather than just litigating, console manufacturers should embrace emulation and launch their own best emulators for older console systems. By entering into the business of emulation themselves, console manufacturers simultaneously co-opt the emulation market and then eliminate it by responding to the latent customer demand for access to older games.
Embracing emulation provides console manufacturers an opportunity to seriously rethink their business models. Instead of supporting a traditional emulator, they may consider it more feasible to make all game software backward compatible and/or explore alternative business models, such as the Blockbuster/Netflix.com model, which allow customers to rent rather than purchase media entertainment. Console manufacturers must remain vigilant and carefully observe the market; the solution provided by embracing emulation will be short-lived if console manufacturers are not poised to respond proactively to the next trend. Finally, console manufacturers should use the full range of the available intellectual property protection to their advantage. As copyright is a relatively weak form of protection, when appropriate, they should seek to obtain patent and trade dress protection.
As this article has emphasized, a successful strategy for intellectual property management in the information goods industry entails the integration of the full range of intellectual property enforcement tactics with proactive business thinking. Absent such an approach, the players are left to the sales strategy of competing on price, a certain method for killing profit margins.
judicious application of the law in developing a workable solution to the challenges posed by emulation. Figure 13 summarizes our proposed strategic response to emulation.
Develop emulators for discontinued consoles
Monetize older games
Support backward compatibility
Explore alternative business models
Expand IP portfolio
Protect corporate assets
126 L.J. Flynn, 2004, at C2.
, N.Y. TIMES, Jan. 26,