Why isn’t Sega Overprotective of its Intellectual Property? https://youtu.be/IwTXCwqurNQ (47 minute video)
Sega is actually very protective of its IP† (such as Persona, and historically, abusing trademark law for copy protection purposes on the Genesis), but purposefully overlook Sonic fan works to garner goodwill as a front of Sammy’s less reputable and stronger pachinko and pachislot business.
That home gaming only made up a small part of SegaSammy’s revenue also led to the neglect that caused several years of weak Sonic games, until the company refocused on home gaming with a series of acquisitions. Even when combined with the arcade game business, home gaming still plays second fiddle to pachinko and pachislot, until the pandemic happened and nobody’s out gambling.
Moreover, the loose enforcement of Sonic IP almost allowed Ken Penders to walk away with it all.
† “Intellectual Property” is an umbrella term covering copyright, trademarks, patents, trade secrets and more. There are usually separate laws with very different rules for each. The term “Intellectual Property” makes it too easy to conflate between copyright, trademarks, and patents.‡ However, it’s sometimes useful to discuss them as a group.
‡ Not an approval of the author’s neckbeardism.