Creative Industries UK

OVERVIEW

In the UK, many of the world’s major corporations plug directly into the heart of global finance, global creative and professional services, global media and global talent.

They enjoy access to world-class science and academia and link into a wide network of smaller enterprises, many of which are also world leaders in their fields. A unique multicultural and entrepreneurial economy, the UK is at the hub of international business, bringing the world to a company’s door. In short, it is the gateway to the globe. You too can be at the heart of this global crossroads.

UK Trade & Investment is the Government organisation that helps UK-based companies succeed in an increasingly global economy. Its range of expert services is tailored to the needs of individual businesses to maximise their international success. We provide companies with knowledge, advice and practical support.

UK Trade & Investment also helps overseas companies bring high-quality investment to the UK’s vibrant economy - acknowledged as Europe’s best place from which to succeed in global business. We provide support and advice to investors at all stages of their business decision-making. UK Trade & Investment offers expertise and contacts through a network of international specialists throughout the UK, and in British embassies and other diplomatic offices around the world.

Being part of a strong British music presence at Midem in January…has certainly been of great help in establishing Amy as an international artist...

Raye Cosbert,

Amy Winehouse’s Manager.

Creative Industries

This brochure gives you an overview of all aspects of the creative industries. Special attention is paid to design, leisure software, publishing, the screen industries, the performing arts and music.

The UK’s reputation draws from its past, but today the country is increasingly inspired by its future.

A unique spirit of innovation, eccentricity and all-round creative energy is giving the UK a real edge. There is a constant appetite to challenge, invent, question and create. The UK not only attracts the best of global talent, but also acts as a true catalyst, bringing out the best in people.

The creative industries sector comprises 13 different sub-sectors in line with the Department for Culture, Media and Sport’s (DCMS) definition of the creative industries: advertising, architecture, art and antiques market, craft, design, designer fashion, film and video, interactive leisure software, music, the performing arts, software and computer services, and television and radio.

The sector’s strengths lie in the UK’s global reputation for creativity and innovation, together with London’s role as a leading cultural centre. The development of the knowledge economy has given the UK an added advantage, as has international dominance of the English language (particularly important for the copyright-based creative industries) and the perceived strengths of UK education and training.

The creative industries account for 8.2 per cent of UK GDP and are growing at twice the rate of the economy as a whole – averaging 5 per cent a year between 1997 and 2004. Exports grew even faster, averaging 11 per cent, to contribute 4.3 per cent of the country’s overseas sales.

London contributed £21 billion to the total creative industries output of £85 billion (2000). According to the Mayor’s Office, creative industries account for 525,000 jobs (one in five) in the capital, with a growth rate of 9 per cent a year, compared with 5 per cent for financial services.

The sector is largely fragmented and dominated by SMEs, many of which are micro or sole-trader businesses.

Whether it’s film, fashion, design, architecture, publishing or television, the UK offers the excellence, expertise and pure imagination that have built its reputation as a host for global culture.

Creativity promotes diversification, and the merging of ideas is one of the defining characteristics of the UK creative industries. The classical areas of art, music, literature, architecture and design all provide new inspiration for film, television and radio. The success of each of these areas in turn stimulates pioneering technology, from broadcasting to newer fields of mobile entertainment.

UK workers combine technical skill with creative vision. Innovation is nurtured by a strong domestic creative industry and world-class academic institutions. The UK fosters an “edgy” and “individualistic” spirit where the convergence of a variety of cultures has created a melting pot of ideas which help to inspire creative vision.

Creativity generates industry

Architecture

The UK is home to many world-famous practices, including those of Richard Rogers and Norman Foster – whose recently completed Swiss Re building is already a landmark feature of the London skyline. UK architects are in high demand both nationally and internationally, including the more recent talents of Will Alsop and Zaha Hadid – the first woman to win the coveted Pritzker Architecture Prize.

Cities throughout the UK are enjoying an architectural renaissance, with major city-centre plans having been undertaken in Birmingham, Leeds, Manchester and Cardiff.

The UK is also at the forefront of energy-efficient housing. Prefabrication, intelligent materials, energy-efficient ventilation and combined heat and power are just some of the innovations that have made their way into today’s architectural practice.

In addition, architectural design generates further creative work in such fields as interior design, lighting and flooring.

Recent worldwide flagship projects by UK-based architects and practices include the Rosenthal Centre for Contemporary Art in Cincinnati (Zaha Hadid). Foreign Office Architects also recently completed work on the Yokohama Port Terminal in Japan and was part of a team shortlisted for the rebuilding of the World Trade Center in New York.

Many UK architectural practices have extensive experience in conservation or heritage work, while others specialise in sustainable and low-energy designs, such as the award-winning BedZED, an energy-efficient mix of housing and workspace in Surrey.

Furthermore, cities throughout the UK are enjoying an architectural renaissance, with major city-centre plans having been undertaken in Birmingham, Leeds, Manchester and Cardiff.

Design

The UK design industry is large and diverse, spanning disciplines from branding and graphics, packaging and commercial interiors to product design, multimedia and crafts. Its diversity of talent and expertise and its willingness to adopt new ideas ensure that it will always have a leading role to play in guiding consumer tastes, as well as predicting and reflecting consumer trends.

London is a world centre for design. Its reputation for cutting-edge, innovative design in all fields underpins its position as one of the key international creative cities.

Ken Livingstone

Mayor of London

Design, closely allied to innovation, is – now more than ever – the key to standing out and maintaining competitiveness in increasingly challenging markets. This is true for all organisations, no matter what their size. Design helps businesses connect strongly with customers by anticipating their real needs. That, in turn, gives companies the ability to set themselves apart in increasingly tough markets and also to set the pace rather than just respond to the competition.

In the UK, design is viewed as being an integral part of a wider strategy. UK consultants excel at translating ideas into commercial success. UK designers use the inclusion of a strategic approach to problem solving as a fundamental business tool. This is applied across all design disciplines, from identity, product design and commercial interiors to the authoritative design of digital content and its delivery.

Using design helps businesses compete on value rather than price – and it helps them set the pace in crowded markets. UK designers are renowned throughout the world for their ability to deliver effective design solutions. They also have a unique ability to design for the international marketplace.

The UK is a creative hotbed and an ideal gateway into the international market. This, coupled with the fact that organisations have instant access to a highly qualified and very flexible freelance design talent pool, has led multinationals to turn repeatedly to the UK for excellence. For example, Yamaha Music Corporation has a European design centre in the UK, as have Nissan, Samsung and Motorola.

In 2005, the industry’s turnover was £4.6 billion, with fees of £4 billion. The UK design industry consists of 4,000 commercial design consultancies and many independent or freelance designers. In total, the consultancy industry employs approximately 70,000 people.

Design-literate consumers and a strong design education sector have attracted high levels of inward investment. Moreover, an increasing proportion of the UK’s 20,000 first degree and postgraduate design students come from overseas, attracted by the quality and kudos of UK courses.

London is recognised as a major centre for the international fashion trade, along with Milan, Paris and New York. This global status has fostered many of the world’s most famous names in designer fashion. Alexander McQueen and Stella McCartney, for instance, are global players, both heading up major international fashion houses.

Independent designers and design groups boast world-renowned names, including Jasper Conran, Nicole Farhi and Paul Costelloe.

The UK still excels in men’s tailoring, where designers such as Paul Smith and Ozwald Boateng have an international following. Many of the greatest names in UK design also collaborate with major high-street chains and department stores to create mid-market and diffusion ranges.

Case Study – Midea

Midea, the second-largest home appliance manufacturer in China, is dedicated to innovation and co-operation to ensure it can offer cutting-edge designs at an affordable price. To that end, it has a number of strategic technology partnerships in place with GE, Toshiba, Sanyo, Merloni (Indesit) and Oracle to deliver the latest technology to consumers.

To maintain its position as a market leader, Midea targeted Europe, its largest market outside China, in order to enhance its industrial design competence and establish its first overseas product design centre. Midea chose to locate in the UK because of its long history of world-leading product-oriented design, its large pool of design talent and its potential to create innovative products that will be designed and supported locally.

Eric Su, executive vice president of Midea, says: “Working with UK Trade & Investment was a crucial part of our success in expanding to the UK. The organisation is extremely knowledgeable and its network of contacts throughout the UK and Europe will prove to be invaluable. It has been a constant partner in the process and provided a very personal service, taking time to understand my needs and those of the company.”

Working with UK Trade & Investment was a crucial part of our success in expanding to the UK.

Eric Su

Executive vice president

Midea Household Appliance Europe

Games

Games are a significant creative and economic force in the UK. In the 1990s, there were over 400 independent UK developers working on small-scale, low-budget innovative games. In 2000, there was a consolidation in the market, creating more wholly owned studios, with publishers buying up talented teams to capture and control skills and to reduce development costs.

The UK games industry is the third-largest interactive entertainment market in the world.

In 2004, the UK computer and video games industry recorded sales of more than £2 billion for the third year running, accounting for more than 15 per cent of the global video games market.

Since 1995, more than 25 million dedicated gaming devices have been sold in the UK (not including PCs); almost enough for one in every UK household.

Two hundred and eighty million units of leisure and games software have been sold in the UK during the same period; enough for every household to own 11 titles.

The UK games industry is the third-largest interactive entertainment market in the world, with the highest number of games development companies and publishers in Europe. There are 6,000 professionals working in the games development industry (half are in-house developers) and 3,000 professionals working in games publishing.

Due to consolidation in recent years there are now 160 games studios in the UK compared with 270 in 2002. However, the number of people employed in games development has remained much the same (6,000).

The main wholly UK-owned publishers in the UK include Eidos/ SCi, Codemasters and Empire. The UK’s best-selling series (FIFA Soccer, Grand Theft Auto, Harry Potter) now sell close to one million copies each in a year across all games hardware formats.

Top UK companies include:

• Developers – Kuju, Rebellion, Blitz, Lionhead, Eutechnyx, Atomic Planet, Climax, Free Radical, Gusto, Juice, Pivotal, Sports Interactive, Tales, Realtime Worlds, Eurocom, Rare and Bizarre (both MS owned)

• Publishers – Codemasters, Empire, SCi/Eidos. European HQs of Electronic Arts (USA), THQ (USA), Sega, Sony, Activision

• Outsourcers – Babel Media

Music

The UK has the fourth-largest music publishing market in the world, with a 9.8 per cent share of international revenues.

The music industry is one of the UK’s biggest and most culturally significant creative sectors. It encompasses composers, producers, managers, music publishers, artists, concert promoters, record companies and online music entrepreneurs that interact to produce a dynamic, vibrant and ever-changing industry.

The UK is the third-largest market in the world for sales of music, and the market leader in Europe. In 2005, sales of music in the UK accounted for 10.4 per cent of all units (singles, albums, DVDs and videos) sold across the globe, with the overall UK retail value representing 10 per cent of the global total.

The industry estimates that it is worth around £5 billion a year and has an export value of £1.3 billion.

Sales of digital music are also showing rapid growth as downloading music becomes increasingly popular. In 2005, the total number of digital single tracks downloaded online or to mobile phones reached 470 million and in the UK the total value of digital sales hit US$69 million.

The industry is also a major employer, generating the equivalent of some 126,000 full-time jobs in the UK. The UK is also the world’s greatest music consumer, buying more albums per head than anywhere else in the world. The UK’s consumption of music is reflected by its production, second only to the USA as a source of repertoire. In addition, as one of the country’s leading art forms, music continues to reflect the exhilarating cultural diversity in the UK in the 21st century.

The UK has the fourth-largest music publishing market in the world, with a 9.8 per cent share of international revenues arising from payments for a piece of music, be they for sheet music, playing a piece of music in a shop or using music in a film or television programme.

Recent years have seen an improvement in the performance of UK music internationally, particularly in the USA. In 2005, a number of UK artists competed successfully on the global stage, including both established acts such as Paul McCartney and The Rolling Stones, and newcomers like James Blunt and Franz Ferdinand. Coldplay’s X&Y was the biggest-selling album in the world, achieving number-one status in 32 markets including the USA. Gorillaz’ second album Demon Days sold two million copies in the USA, winning a Grammy award in 2006. UK artists have also demonstrated both innovative and entrepreneurial approaches, with the use of viral marketing and do-it-yourself business models to promote their music both in the UK and overseas.

PERFORMING ARTS

The performing arts industry typically covers the fields of drama, dance, mime and physical theatre, opera, musical theatre, puppetry and circus. The work can take place in traditional performance spaces (e.g. theatres and arts centres) or non-traditional performance spaces (e.g. schools, industrial spaces and open spaces).

The UK performing arts have a language of their own, one which is imbued with a rich cultural history of performance and artistic expression.

As in the other creative industries the UK excels in the performing arts. The country boasts an artistically literate population that has produced a number of internationally renowned performers. The success of home-grown talent has helped further strengthen the UK’s performing arts institutions.

As a result, recent years have seen the UK stage attracting major Hollywood stars, including Nicole Kidman, Woody Harrelson and Kevin Spacey.

The UK is also home to major international festivals at Edinburgh and Chichester, as well as world-famous specialist venues at Stratford, Glyndebourne and Aldeburgh. There are many strong, locally supported orchestras, opera groups and theatres across the English regions, Northern Ireland, Scotland and Wales.

DCMS-estimated figures for the gross value-added economic contribution of the performing arts (figures also include music and visual arts) show a £3.7 billion contribution in 2003, representing 0.5 per cent of GDP, and an annual growth rate of 8 per cent for 2002-2003. For the same year it is estimated that the sector’s exports were worth £240 million.

The UK performing arts industry has an important role in promoting not just UK culture and ideas, but also technical expertise and artistic excellence. From the more traditional, classic repertoire to cutting-edge, challenging new work, the UK’s performing arts are respected throughout the world. This is in no small part due to the global use of English, not just as a mother tongue but also as a second or third language. Essentially though, the UK performing arts have a language all of their own, one which is imbued with a rich cultural history of performance and artistic expression.

This is enhanced by an extraordinary range of creative work and artistic technique which increasingly embraces multiculturalism and themes of global relevance, resulting in an outward-looking industry.

PUBLISH ING

Annual industry turnover is estimated at £3.3 billion, with export earnings representing £1.3 billion.

The UK publishing industry creates and disseminates content in a variety of formats, including newspapers, books and magazines, academic journals and online educational products. The publishing industry has a special role in terms of promoting UK culture and ideals. Its importance on the global landscape is partly due to the dominance of the English language and because much education internationally is delivered in English.

Also, English is spreading beyond the traditional English-speaking areas of the world as it becomes the preferred second language in many countries. This is creating new opportunities for UK publishers in non-English-speaking countries.

Books, Journals and Online Educational Products

Annual industry turnover is estimated at £3.3 billion, with export earnings representing £1.3 billion.

These figures do not include licensing and rights sales (estimated at £600 million), investment in established markets such as India, or the development of new media products. The book and journal market can be divided into three sectors of roughly equivalent value: Academic and Professional, Educational and English Language Teaching (ELT) and Consumer Books. For all these sectors, content is delivered through digital channels in addition to printed formats. Larger publishers have the capacity to create content for particular local needs, generally educational.

There are 3,500 companies that publish on a regular basis, with 15-20 firms accounting for approximately 80 per cent of turnover.

As many as 85 per cent of the book publishing houses employ less than ten people, with only 2 per cent employing more than 100. The UK and the USA are each other’s largest markets and there is considerable crossover between them.

In export terms, the USA is the UK’s main competitor. While its domestic market is five times the size of the UK’s, the value of US and UK books and journals exported is roughly equal.

Papers and Periodicals

The industry generates more than £5.9 billion annually (consumer magazines £3 billion, business magazines £2 billion). There are over 1,000 companies that publish 8,500 titles on a regular basis; of these, approximately 300 produce only one title.

There has been considerable growth in the multinational exploitation of titles over the last two decades. This has been achieved through exports to newsstands, licensing, franchising and international subscriptions. Licensing in particular has shown extensive growth as a form of export. UK publishers produce more titles than any other nation. A high proportion of business magazines’ content is now available online. The UK’s main competitors in this sector are Germany and, in certain regions, the USA.

Screen industries: FILM

The UK is considered a world leader in film production. There are over 100 production studios in the country.

As a prime filming location, a source of the finest talent – both in front of and behind the camera – and as a world-leading centre for production, the UK offers everything the film industry needs.

The film industry is a large and, overall, a profitable business in the UK. Film has made a positive contribution to the UK balance of payments every year since 1995. Moreover, a recent study indicates that every pound invested in the industry benefits the UK economy by up to £2.50.

The industry contributed £3.1 billion to UK GDP in 2004 and around £850 million to the Government’s Exchequer, of which £550 million came from inward investment films.

Talent

From writers to directors to actors to experienced technicians and crews, the UK offers a powerhouse of talent for the film industry. There are many important and famous names to mention: Sir Sean Connery, Richard Curtis, Terence Davies, Dame Judi Dench, Minnie Driver, Ralph Fiennes, Terry Gilliam, Anthony Hopkins, Keira Knightley, Ewan McGregor, Charlotte Rampling, Lynne Ramsay, Ridley Scott, Dame Maggie Smith, Emma Thompson and Rachel Weisz.

Film Studios

The UK is considered a world leader in film production. There are over 100 production studios in the country, ranging from large studios capable of housing the biggest sets to small studios catering for music videos and commercial work.

The most famous are:

• Pinewood Studios (Lara Croft: Tomb Raider; Eyes Wide Shut)

• Shepperton Studios (Indiana Jones; Harry Potter and the Philosopher’s Stone)

• Elstree Studios (Star Wars II – Attack of the Clones; Saving Private Ryan)

• Three Mills Studios (Lock, Stock and Two Smoking Barrels; 28 Days Later)

• Ealing Studios (The Importance of Being Earnest)

Postproduction

The UK postproduction sector is characterised by a substantial and highly skilled workforce with a broad range of capabilities and world-class companies:

• The sector ranks with the USA as one of the top providers of visual special effects for the global film industry. To put it into perspective, postproduction in the UK has an annual turnover in excess of US$2.6 billion.

• The sector incorporates close to 1,000 companies employing 15,000 people to provide sound, graphics, music and the physical and visual effects for film, television, commercial and corporate productions across the globe.

The UK Audience

The UK population comprises many different cultures and interests – a fact that is reflected in the tastes of its cinema-going and rental audiences. Consequently, the UK is not only a great patron of the silver screen, but also provides one of the most diverse markets for film-related businesses anywhere in the world.

Location, Location, Location

The UK is one of the world’s most desirable locations for shooting. Whether it’s because of its historic buildings, the country’s prominence in world history, or simply because of the diversity of countryside and communities that exist there, the UK regularly provides the backdrop for scenes in movies. So much so, that the country is now a favourite setting for “Bollywood” movies as well as many big-budget US pictures such as: The Da Vinci Code, Basic Instinct 2, Children of Men, V for Vendetta and Match Point.

Tax Relief

The benefits of qualifying as a British film attract many international productions to the UK. Working towards and attaining qualification provides a number of advantages: productions are eligible to apply for national funding and for the benefits of the UK’s tax-relief structures.

British Qualification

In order to qualify as British, and access tax relief, a film must pass the new DCMS Cultural Test by scoring points in four categories – cultural content, cultural contribution, cultural hubs and cultural practitioners.

Levels of Benefit

For films that cost up to £20 million, the film production company (FPC) will be able to claim an enhanced deduction of 100 per cent, with a payable cash element of 25 per cent of UK qualifying film production expenditure.

For films that cost over £20 million, the FPC will be able to claim an enhanced deduction of 80 per cent, with a payable cash element of 20 per cent of UK qualifying film production expenditure.

The minimum UK-spend threshold for qualifying films will be set at 25 per cent.

Tax relief is available on qualifying UK production expenditure up to a maximum of 80 per cent of total qualifying costs.

For further information, go to: www.ukfilmcouncil.org.uk/filmmaking/filmingUK/taxreliefbritfilms/

Screen industries: Television

The UK is the world’s most advanced digital TV and radio market. Some 60 per cent of households now receive digital TV.

The UK is internationally recognised as producing some of the highest-quality TV programming in the world. Shows such as Walking with Dinosaurs, Who Wants to Be a Millionaire? and Teletubbies have secured unprecedented success in the international arena and have made the UK the second-largest TV exporter in the world.

Around 1,500 independent production companies contribute some £12 billion to the UK economy, with exports of about £440 million. Recent legislation has strengthened producers’ intellectual property rights, creating an even more favourable environment for programme development and production.

Key successes include comedy series The Office, which in 2004 was the first non-US winner of the Golden Globe award for Best Television Series – Musical or Comedy. In terms of creativity, the UK leads the world in animation. The industry, which has produced such global, high-quality hits as Bob the Builder, Noddy, Wallace & Gromit, and The World of Peter Rabbit and Friends, has a world-class reputation. The UK’s success and reputation in the animation sector are by no means limited to film and television. New breeds of animation, such as CGI and Flash, are both playing an increasing role in advertising, websites and computer games.

Many international companies specialising in these areas are therefore utilising the UK’s animation expertise as a crossover skill in web design and computer game development, thus adding even greater depth and variety to an already burgeoning industry.

The UK is the world’s most advanced digital TV and radio market. Some 60 per cent of households now receive digital TV. Substantial HDTV production and postproduction facilities are already in place as high-definition (HD) satellite services come onstream and “HD-ready” receivers become available. This is also the world’s most advanced DAB market, attracting investment from a growing number of global manufacturers.

As one would expect from the home of the BBC, the UK is a pioneer in the field of digital broadcasting and development of broadcasting technology, both in terms of TV and radio.

At the end of 2003, it was estimated that more than half of all UK households – over 12 million dwellings – were accessing digital TV via a cable, satellite, ADSL or digital terrestrial television. This gives the UK the highest household digital penetration rate in the world.

The UK Government is committed to the total eradication of analogue terrestrial TV services by 2012. This move to digital has led to the UK being the largest established digital TV market, with all platforms being utilised and explored (DTT, DSAT, DCable, DAB, DVB-H mobile, IPTV and HDTV). It is therefore the obvious place to reconcile consumer needs.

With over 250 radio stations, the UK is home to more than half the DAB services broadcasting in the world today. DAB transmissions cover over 85 per cent of households and are rising. The market continues to grow thanks to the greater accessibility of technology from the highly competitive consumer electronics market.

High definition (HD): BSkyB launched its high-definition services in the UK in 2006 and the BBC has already announced its commitment to commissioning all its content in HD by 2010. The increased penetration of HD will put the UK production sector (one of the world’s largest providers of originating content) in a better position than ever before to promote programming opportunities to the USA and the Far East, who are already broadcasting in HD.