Britain’s Creative Industries can be the beating heart of recovery – City AM
City AM recently published the following opinion piece on the creative industries written by Dan Perkins, Managing Director of Great Point Investments. The original article can be found via https://www.cityam.com/britain-must-get-creative-to-shake-off-pandemic-blues/
On Sunday 10th May, Boris Johnson announced the first tentative steps to reopen the British economy after weeks of being in the deep freeze.
The heavily caveated plan has led the Prime Minister to “…believe we can be stronger and better than ever before. More resilient, more innovative, more economically dynamic…”
We couldn’t agree more. However, in the ‘post-coronavirus world’ we must also identify where the British economy is best able to compete and deliver in what will be a much-changed landscape. And in our creative sector, Britain can genuinely lay claim to world-leader status.
Prior to the onset of the coronavirus pandemic, the move towards digital solutions, streaming services and increased remote delivery systems was already well underway. If lockdown has taught us anything over the past two months it is that these sectors and services have become a permanent feature of our daily lives and the UK has to ensure it continues to capitalise once our economy is brought back to life.
Take content streaming as an example. Before the coronavirus pandemic hit, PwC forecast the global streaming industry to show compound annual growth of circa 14% between now and 2023. In the first quarter of 2020, Netflix added 15 million new subscribers. For context, that was nearly a 10% increase on the existing user base which at the start of the year stood at 167 million. Disney Plus, a streaming service that only launched in the UK in March of this year, has grown by an astonishing 22 million in two months to top 50 million subscribers worldwide. Amazon has defied the odds and seen year on year Q1 sales increase by 26%, with Amazon Prime members taking even greater advantage of the content and digital benefits than before.
These platforms, alongside the traditional broadcasters, will continue to demand great content to keep these user bases engaged and occupied and that is where the UK has a real opportunity. Our sector’s ability to create globally consumed content has a long legacy. Monty Python; Downton Abbey; the Great British Bake Off; House of Cards; The Crown; Black Mirror; Planet Earth; Dr Who; The Office; Top Gear; Blackadder – the roll call is long and impressive.
Of course, coronavirus presents our industry with challenges – none less than how we reopen on set and on location production activity in a safe and responsible manner.
However, notwithstanding this temporary production hiatus, the growth of digital content consumption is likely to prove to be a significant opportunity for those involved in the business of content creation, whether that be video gaming, podcasts, e-sports, film & television or the rapidly developing world of virtual reality and interactive content. In all these fields, Britain is leading the way. With an understandable skew towards supporting the MedTech industry, it would be advisable for the government to consider how best to support other high growth sub-sectors, such as the creative industries, once we are able to emerge from our lockdown driven slumber – either with targeted financial measures (like enhanced tax breaks) or a favourable regulatory framework which could allow them to flourish still further.
As an investor in early stage and growth creative sector companies, we have seen how these companies can contribute in a meaningful way to UK plc. At the onset of the recession in the early 90s, the then Chancellor Ken Clarke introduced the Enterprise Investment Scheme (EIS) structure. Last year it celebrated its 25th anniversary and has helped direct over GBP20 billion of investment in to small, unquoted, entrepreneurial companies. It is more than analogous to our present situation.
Whilst the scheme remains a popular one, there have been calls from industry bodies to temporarily increase the tax reliefs available in response to the dramatic decline in inbound investment the sector has seen from private individuals since the lockdown hit. If we are to save our start up economy and emerge from this crisis stronger, we need to act now and drive private capital into supporting the next generation of successful, home grown entrepreneurs.
In a recent report entitled Likely Impact of COVID-19 on the UK media industry, consultancy PwC was quick to point out that the “UK’s Entertainment & Media industry has proved its agility in previous economic and technological cycles, and the high levels of creativity and innovation should support the sector through these challenging times.”
As a country, we have the raw skillset, ability and experience in abundance across all sectors driven by innovation, not least our wonderful creative industries. The UK government should and must bring this to the fore as we forge a path forward in the post-coronavirus world.