It's a common example for a patent that had a lot of prior art but was granted anyway.

I don't know enough about patents to say if there was a reason the prior art didn't apply, but I know that Namco was fairly protective of it and it was somewhat limiting for people working in the game industry.

Although, loading screens are less common now than they were back then, and I think that would still be case even if such a thing were never patented.