As entertainment companies search for new ways to monetize valuable intellectual property, a rapidly growing category of immersive and spatial entertainment is forcing studios, lawyers and talent representatives to reconsider long-established assumptions about copyright, licensing and distribution rights. A recent analysis in LA Lawyer Magazine argues that increasingly sophisticated franchise adaptations are blurring the legal boundaries between exhibition, derivative works, live entertainment and interactive media.
The issue has gained urgency as major entertainment companies expand beyond traditional film, television and streaming formats into venue-based experiences that place audiences inside fictional worlds. Examples range from pop-up franchise attractions to large-scale productions such as The Wizard of Oz at Sphere in Las Vegas, which reimagines the classic 1939 film through a combination of immersive visuals, environmental effects and newly created content, including AI-generated imagery. Per the analysis, the production generated nearly $300 million in ticket sales during its first six months, demonstrating the commercial potential of the format.
The success of such projects raises a fundamental legal question: What exactly is being exploited when a studio transforms a film or television property into a physical, participatory environment?
Traditionally, studios rely on well-understood bundles of rights covering characters, storylines, dialogue and trademarks when producing sequels, spin-offs or other adaptations. Immersive productions, however, introduce additional elements such as physical environments, interactive performances and newly created narrative content that do not fit neatly into existing categories.
That ambiguity becomes especially significant under U.S. copyright law. The article notes that immersive productions occupy a gray area between simple exhibition of an existing audiovisual work and the creation of a new derivative work. Courts have generally held that technological modifications, such as colorization or reformatting for new display technologies, do not create a new copyrighted work. But immersive experiences often go further by generating entirely new visual material, expanding scenes or introducing narrative elements not present in the original production.
The growing use of generative AI adds another layer of complexity. In the Sphere adaptation of The Wizard of Oz, designers reportedly used AI tools to create imagery beyond the original film frame, allowing audiences to see elements that were never visible in the original production. Whether such additions constitute sufficient creative transformation to create a derivative work remains an open legal question.
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The classification matters because it directly affects licensing and chain-of-title issues. Many older rights agreements were drafted with theatrical exhibition, broadcast television and home entertainment in mind. They often do not explicitly address what the article describes as “spatial adaptations” that exist simultaneously as physical venues and creative works. As a result, authors, estates and other rights holders may argue that immersive productions require separate permissions or compensation.
The article also argues that immersive entertainment exposes limitations in another common contractual framework: the treatment of interactive rights. While many modern agreements include grants for augmented reality and virtual reality projects, immersive productions may not fall comfortably within those categories because they take place in physical environments rather than entirely digital spaces. Consequently, broad technology-neutral clauses allowing exploitation through media “now known or hereafter devised” may no longer provide sufficient certainty.
Talent agreements present additional challenges. Writers, directors and other creative participants frequently possess consultation or approval rights relating to remakes, sequels and derivative works. If an immersive adaptation contains newly created scenes, dialogue or character depictions, studios may face questions about whether those rights have been triggered.
Similar uncertainty surrounds guild agreements. Existing frameworks developed by the Writers Guild of America and SAG-AFTRA were largely designed around traditional motion pictures, television programming and digital media, leaving unresolved questions about reuse fees, residuals and compensation for immersive productions that incorporate existing performances or create new material.
The analysis concludes that immersive entertainment may ultimately require its own distribution category, much as streaming eventually evolved into a distinct exploitation window. As companies including Netflix and Sphere Studios expand investments in spatial entertainment, lawyers and rights holders may need to revise acquisition agreements, talent contracts and distribution arrangements to expressly address immersive adaptations and the unique mix of exhibition, interactivity and authorship they embody.
