Transcript Document

COMMERCIAL CREATIVE SECTOR RESEARCH
presentation for
One North East & Culture North East
nmp
think…inspire…do… ®
26th September 2007
The presentation
Creative industries in context
Research programme
Sector overview and growth potential
Support infrastructure
Key issues and themes
Conclusions and recommendations
Creative Industries in Context – the policy context
• Creative Economy Programme
• Knowledge Transfer Network
• Business Support Simplification Programme
• Review of Sub-national Economic Development and
Regeneration
The Creative Industries
“Those industries which have their origin in individual
creativity, skill and talent which have the potential for wealth
and job creation through the generation and exploitation of
intellectual property”. DCMS
Advertising
Architecture
Art and Antiques Market
Crafts
Design
Designer Fashion
Film and Video
Computer and Video Games
Music
Performing Arts
Publishing
Software
TV and Radio
The UK’s creative industries
• The UK has the largest creative sector in the EU, and
relative to GDP probably the largest in the world
• The UK’s creative industries accounted for 9.2% GVA in
2004 (the latest year for which figures are available)
• They generate over twice as much value added as
tourism, and are now comparable in size to the financial
services industry
• Exports totalled £13 billion in 2004 which equated to 4.3
per cent of all goods and services exported
The UK’s creative industries
• They grew by an average of 5% per annum between
1997 and 2004. This compares with an average growth of
3% for the whole economy over this period
• Creative employment totalled 1.8 million jobs in 2005
• Over the period 1997-2004, total creative employment
grew at a rate of 3% per annum, compared to 1% for the
whole of the economy
Commercial creative industries – definition
“Commercially creative businesses compete in the
internationally tradeable service sector and make a
significant contribution to modern economies… The major
elements of the commercial creative sector are those
businesses which offer opportunities through the
commercial exploitation of creative Intellectual Property
(IP). Examples include digital industries, television, film and
commercials, new media, music and content creation.
Commercial creative businesses have particularly specialist
needs around the exploitation of IP and wider technology
issues, for example distribution and access to markets.”
(‘Leading the Way’, Regional Economic Strategy 2006)
ONE’s Commercial creative industries
A sub-sector of the broader Creative Industries:
• Advertising, design and brand communications
• Performing arts (with a focus on content creation)
• Publishing (with a focus on content creation)
• New media, games and interactive software
• Film, TV and video
• Music (origination and distribution)
Interrelation of commercial and non-commercial CIs
Research programme
• Secondary research review
• Sector mapping database
• Quantitative profiling survey (telephone and online)
• Support service depth interviews
• Business depth interviews
• Stakeholder workshop
• Analysis and reporting
• Mapping database of 1,052 companies for GIS Mapping
• Quantitative profiling survey – Data from 232 surveys
• 19 support service depth interviews with:
NFM
Cohesion
Nesta
Generator
Baltic
Digital City
a:design
ITV
NStar
ACE North East
Codeworks
New Writing North
Teeside Music Alliance
Codeworks Connect
Tyneside Cinema
Business Link North East
• 13 business depth interviews with:
Ipso Facto Films
Push Creative
Dance City
Sumo
Standing Stone
Eutechnyx
Design Event
Independent Northern Publishers
The Sage Gateshead
Dodgy Clutch Theatre Company
Northern Screen Writers
Captains of Industry
Media 19
Key research questions
• Why these 6 sub-sectors? What is their true value?
• What do we mean by high growth?
• What about low growth / subsidised sector?
• Is the objective to keep the value chain in the region?
• Should we intervene at all parts of the value chain?
• What types of intervention should we provide?
Key findings – sector employment
• 2,195 Commercial creative enterprises in the NE
• 18,200 Full-Time Equivalent Employees (FTEs)
• 9,100 Freelance employees (estimated)
• Total CCI employment in the region 27,300
• Account for 2.3% of the region’s total workforce
• Average of permanent 9.6 FTEs per enterprise
• 100% of CCIs in the region fall into SME category
Distribution of enterprises
Number of FTE employees
Key findings – sector turnover
• £780 million total sector turnover in past 12 months
• £750 million sector GVA in past 12 months
• Sector accounts for 2.2% of the region’s GVA
• £364,000 average turnover per CCI
• £44,000 average turnover per FTE employee
• 23% CCIs the region had received public funding
subsidy within the last financial year, while 11% had
received private investment
Total turnover by sub-sector
Turnover by sub-sector enterprise
% Receiving funding / finance
% Sales / income by area
% Sales / income by area
% Sales / income by area and sub-sector
% Supply spend by area and sub-sector
Length of time trading
Geographic distribution
Strengths
•Lower costs of running businesses
•Strong digital industries and new media cluster
•Positive, can-do attitude of key industry figures – desire
for partnership with public sector
•Strong cultural sector
•Contribution of culture to regeneration recognised
•Strong talent base from the universities
•Location – London, Manchester and Edinburgh are all
accessible
•Good “soft” financial investment infrastructure
•Good HE/FE infrastructure
•Growing recognition of the value of creative industries to
the interconnecting economy of the region
Weaknesses
•Low value commissions
•Absence of major buyers to stimulate production
•Perceived poor connections to London and Manchester
•Fragmented region
•Negative external image of region
•Lack of recognition at political / council level
•Low confidence - apparent lack of belief and ambition
•Culture of grant dependency
•IP value drained from region in some industries
•Duplication and gaps in support
•Poor networks across subsectors
•Shortages of high level, experienced talent
Opportunities
•BBC move to Salford
•Convergence
•Connections with other regional economies
•Growing reputation as a creative place
•Markets for content development & ownership are
maturing rapidly
•Encourage a culture of people collaborating – big buyers
are increasingly looking for a creative business solution.
•Focused inward investment effort
•A new, strategic, bespoke support system designed for
the sector
Threats
•Comprehensive spending review
•Potential for failure to positively engage with NWDA on
the Media City development
•Must not fail to change the culture dominated by lack of
belief and ambition
•Change of government may mean changes in RDAs /
priorities
•Reduction in European funding to the area – primary and
secondary effects of this
•Other nations/regions are actively interested and could
develop more effective strategies to drive commercial
growth
•ONE could fail to get buy-in from partners
Advertising, design and brand communications
Strengths
Opportunities







Current attempts to develop market
Business Link work on design
commissioning
High turnover per employee
Loyalty of regional buyers
Ideally placed to service emerging
technology platforms
Weaknesses




Low value commissions
Lack of sophisticated support
services
Small talent pool and lack of
mobility within the industry
Lack of social centre / networking
Adoption of digital technology
Firms can specialise to compete
nationally

Design centre

Proliferation of media platforms

Technology enabling easier
access to national clients

Emergence of revenue share
business model
Threats




Decline in regional TV
advertising spend
Emergence of revenue share
business model
Reduction in print
Convergence of media means
more complex marketplace
Performing arts
Strengths
Opportunities


A few strong organisations
Strong support for new creative
writing

Strong cultural infrastructure

High physical profile
Weaknesses





Long development timeframes
make VC-style funding
inappropriate
Issues with visitor numbers and
offer of big cultural buildings
Difficult to spot the next big thing
Increasing links with other
industries reliant on content (film
TV and video, new media)
Threats
Funding cuts at Arts Council and
Lottery
Publishing
Strengths
Opportunities

Strong support for new writing

Talent pool

Links with university

Product based business model
Weaknesses





London-dominated publishing
industry
Fragility of writing as a career
Impossible to predict the next big
thing

Digital distribution may diversify
the market
Links with TV, radio, new media
Threats

Industry structure predicates
against successful mid-scale
publishing
Reduction in Arts Council England
funding
New media, games and interactive software
Strengths
Opportunities
Strong cluster in the region
Good networks in the sector
High levels of support, particularly for
games and interactive software
Recognition by public sector
Existing commercially successful serious
games company
External perception of success (Digital
City)
Developing client base within the region
BBC move to Salford
Developments in online game playing
Developments in virtual worlds
Emerging market in serious games
Self-publishing
Selling content skills outside the
entertainment industry to blue chip
buyers
Fragmenting markets enabling niche
business strategies
Threats
Weaknesses
Some evidence of “entitlement” attitude
around support
Weak business skills amongst new
graduates
Lack of investment available locally
Most businesses led by technologists
No local distribution presence
Rapidly moving market
Dominated by publishers based
elsewhere
Relatively high cost of keeping pace
Increasing global competition
BBC move to Salford
Subsidy in other countries for the
industry – hard to compete
Film, TV and video
Strengths
Opportunities

Number of nationally successful film and
TV production companies

Broadcasters subject to regional quota
legislation

The Communications Act established the
principle of rights retention for the
production community

TV Investment Fund

A number of successful returners in the
region

History of talented writers and filmmakers

2 Broadcasters present
Weaknesses















Low network output
Lack of production fund
Little industry infrastructure
London-based national industry
No engine of production
BBC and Tyne Tees have little
commissioning power
No super indie in the region
BBC move to Salford
Ofcom targets for regional PSB
PSP
Possible establishment of
soundstages in the region
Threats
BBC move to Salford
Shortage of key talent
Few ongoing employment
opportunities
Music
Strengths
Opportunities

Talent – relatively untapped compared to
other regions

Established and respected support
provider (Generator)

High profile capital investment for music
(Sage Gateshead)

Strong live music scene
Weaknesses







Very little intervention to date
Small and relatively fragile sector
Under-developed infrastructure
Industry based in London
Few ways to retain IP in the region
Potential to grow something with a
distinct regional identity
Threats

Lack of investment due to lack of
immediate returns
Falls between two stools
Key findings – growth potential
• 81% anticipate increase in coming years, as
compared with 38% of all UK SMEs expecting an
increase in turnover
• 1,160 companies looking to take on additional
permanent employees over next 5 years
• 6,625 additional permanent FTEs required in next
5 years; 6% increase in FTE employees in the sector
year on year
Key findings – growth potential
• The Advertising, design & brand communications,
New media, games & interactive software and Film,
TV & video sub-sectors account for 88% of the
projected additional staff required in the sector over
the next 5 years
• calculate that an additional 3,300 freelancers will be
required by the commercial creative sector
• Total CCI employment of 37,250 in 5 years time;
accounting for 3.2% of all regional employment (all
things else remaining equal)
Business growth activities
Perceived barriers to business growth
Support services accessed (past 5 years)
Key issues with support provision
• Need for ongoing public support for the less obviously
‘commercial’ creative industries
• Worries about channelling funds into more capital
investment
• Lack of insight into industry issues
• Increasingly confused support landscape
• Supply driven support
• Referral must work
• Need for cross-sector connections
• Equity gap – need for more strategic investment
Summary - Key issues
• Scale
• Business performance
• Skills
• Public / private sector engagement
• Geography
• Networks
• The support sector
• Convergence
• Culture
Conclusions
• The NE punches above its weight
•Its crucial that the ecology is maintained
•There is a need for clarity in the support offer
•ONE should focus its effort where it has most expertise - on
Games/New Media; TV/Film and Advertising & Brand
Communications
•There should be an MOU with other partners to support
Performing Arts, Publishing and Music
• The opportunity is on the cusp of content & technology –
and possibly outside traditional markets
•The networks need strengthened
Recommended actions
Theme 1: Pioneering digital technology and content
• Stimulating demand for content - attract a technology
company or new platform buyer
• Support and promote knowledge transfer
• Encourage opportunities that combine technical and
creative skills
Recommended actions
Theme 2: Supporting the sector’s growth
• Information and brokerage
• Company development:
o Intensive, targeted support for high growth companies
o IP based businesses
o Facilitate growth of the region’s many micro businesses
into SMEs
o Increase the number and lifespan of business start-ups
Recommended actions
Theme 3: Coordination and collaboration
• The support sector and the simplification agenda
• Public / private collaboration
• Networking – support sector
• Networking – practitioners
• Transport
• Connectivity
specialists in digital & creative sector –
IP management, market foresighting,
corporate growth and international
distribution & finance network
Specialist providers such as NFM,
Digital City, Codeworks, ACENE,
Generator, New Writing North etc
‘Generic’ business support services
such as Business Link
think…inspire…do…®
Recommended actions
Theme 4: Talent Development and Retention
• Engaging the workforce of the future
• Building a creative, technological workforce
• Portable skills development in the 21st Century
• Talent retention
Recommended actions
Theme 5: Looking outward, together
• Media City and the Northern Way
• Learning journeys
• Thinking big
Recommended actions
Theme 6: A region of next-generation learning
• A learning region
• Continued Professional Development
• Innovation in learning
Experienced &
knowledgeable
consultancy team
Corporate
Development
Experience
nmp
think…inspire…do…
Economic
Development
Experience
Glasgow
Manchester
London
Bradford
Strong
intelligence hub
Ability to deliver
Global
Perspective