UK creative industries face threat from emerging nations
25/04/2006
"The UK Creative Industries need a step-change where creative excellence and commercial success are recognised equally as the key to a successful creative business."
"Creating Growth: How The UK Can Develop World Class Creative Businesses " is the first commercially-focussed cross-sector analysis in a number of years and highlights the contribution that the Creative Industries make to the UK economy, the global opportunities that creative businesses should consider and the challenges that they are likely to face.
Launched on the day that the Government holds its first Creative Industry consultation, NESTA hopes the report will form the framework for these discussions. In addition, NESTA will present a series of recommendations later in the year that will help influence an anticipated green paper in Autumn 2006.
The analysis looks in detail at the current economic performance of six creative sectors: advertising; design; film; music; television; and computer and video games and warns that the UK cannot afford to be complacent. Design agency turnover is down 31 percent; film production is nearly a third lower; music exports are down 20 percent and TV exports have fallen for the second year.
In particular, UK creative industries are under threat from increasing global competition. The global market in creative industries is worth an estimated $1.3 trillion and new international centres for creative businesses are developing rapidly across the world, particularly in China and India.
Jonathan Kestenbaum, Chief Executive of NESTA comments, "UK Creative Industries contribute a phenomenal amount of wealth to the UK economy and our creative businesses are the envy of most of the world. But we are in danger of becoming complacent and losing out to new creative centres that are pursuing aggressive strategies to develop their markets.
The global climate for the Creative Industries is undergoing rapid change. The latest sign of the growing threat to UK creative jobs can be seen in recent announcements from Indian companies that are beginning to target technical, editing and production functions in the audio-visual segment of the industry from low-cost offshore locations." (1)
NESTA highlights three main challenges to achieving further growth for the UK 's creative industries: a lack of scale and focus on commercial growth among many creative businesses; difficulty in accessing markets, especially for smaller and start-up businesses; and a lack of awareness of innovation and networks to exploit new business models.
Jonathan adds, "The UK Creative Industries need a step-change where creative excellence and commercial success are recognised equally as the key to a successful creative business. And it is the job of government and organisations like NESTA to help bring this about. We need to encourage the development of more businesses of world-class scale and a wider exploitation of innovation."
- An estimated 70 percent of the global media and entertainment industry, valued by PwC at £770bn in 2005, could be digitised, of which 70 percent could be outsourced, potentially offshore to India. Reuters, the global information group, moved 200 jobs to a new facility in Bangalore in October 2004. Hollywood 's animated film industry has also shifted significant business to India. Recent blockbusters including "Shrek 2," "Spider-Man 2" and "The Chronicles of Narnia" benefited from India-based animators and visual effects specialists.
ENDS
Further information on the report
The Creative Industry sector is defined as those industries which have their origin in individual creativity, skill and talent and which have a potential for wealth and job creation through the generation and exploitation of intellectual property. This includes advertising, architecture, the art and antiques market, crafts, design, designer fashion, film and video, interactive leisure software, music, the performing arts, publishing, software and computer games, television and radio. The Creating Growth: How The UK Can Develop World Class Creative Businesses report is published by NESTA. The research is based on a wide range of sources, including official government data, research and surveys from across the creative industries and original interviews with key informants including creative entrepreneurs and industry commentators.
Contribution to the UK economy:
The Creative Industries are vital to the UK economy and have been cited by the Government as one of the three key drivers for the economy over the next decade.
- The Creative Industries account for eight percent of the UK economy - a total of £56.5 billion.
- Exports by the Creative Industries contributed £11.6 billion to the UK 's balance of trade in 2003.
- Creative Industries also employ more than a million people in over 110,000 businesses making it a bigger employer than the financial sector.
- Between 1997 and 2004, creative employment grew at 3 percent a year, three times faster that the overall economy.
Creative Innovation
The report highlights the need for creative businesses to embrace innovation if they are to respond to increased global competition. Innovation includes moving into new markets and reaching new customers by exploiting skills and resources developed in existing markets, using digital technologies for distribution in order to bypass traditional distribution channels and moving from producing to owning intellectual property. Examples from the advertising industry show the dangers of a failure to innovate and adapt: while the traditional 30 second television commercial format has barely changed in the last 30 years, internet advertising is now the only area of advertising expected to increase its market share significantly over the next five years and the largest generator of advertising revenue on the internet is not an advertising company, but Google.
TheCreating Growth: How The UK Can Develop World Class Creative Businesses report can be download from the NESTA website atwww.nesta.org.uk. The full report and an executive summary are both available.
NESTA, the National Endowment for Science, Technology and the Arts, is working to transform the UK 's capacity for innovation. We invest in all stages of the innovation process, backing new ideas and funding new ventures that stimulate entrepreneurship.
NESTA is the single most potent catalyst for innovation in the UK. Our strong evidence base helps to influence policy. Our partnerships and networks broker ideas across sectors, accelerating the process of innovation. Our pioneering models of investment are being adopted by organisations throughout the UK.
For further information on this announcement or to arrange an interview with NESTA, please contact: Isabel Fox, Ballard Associates, tel.: 020 7062 1111, email: isabel@ballard-associates.com