DESIGN LAB 2: Development key to industry growth
The key to growth in the West Midlands Creative Screen Sector lies in embracing opportunities to develop IP, diverse talent and international opportunities in a changing media ecosystem, according to speakers at the second Design Lab.
Speakers from a wide range of creative screen industries at the Royal Shakespeare Theatre in Stratford Upon Avon suggested the region had a chance to seize the initiative in a period of disruptive change.
But they also warned that it required a shift to a more entrepreneurial, inclusive and dynamic culture.
The main theme was that success needed to be built on a collaborative industry network, with clear leadership and a shared sense of purpose.
Jack Powell, Senior Policy Analyst at the BFI, who has been working with the development of creative clusters around the UK, said there were three key pillars to building regional investment and growth:
Finance and investment
Skills and training
The work of the first Design Lab had reached similar conclusions and both Labs came with an understanding that achieving ambitions meant recognising that the West Midlands had some catching up to do in all those areas.
The Labs, which have now been attended by 150 individuals and businesses from across the regional screen sector, have created a mandate for the work of the West Midlands Screen Bureau clusters project, which is supported by the BFI (through National Lottery funding), the West Midlands Combined Authority (WMCA) and Birmingham City Council.
The Design Labs are part of a broader mission to work with industry to make a contribution in the following areas:
A clear sense of direction, based around a clearly understood and shared vision
Building industry-led structures to deliver value with the highest levels of business engagement
A mechanism for creating pathways from entry-level to elite business
Analysis, channelled through those industry structures, on what is needed to seize opportunities
A distinctive West Midlands entrepreneurial culture with a global reputation for turning ideas into IP.
All of the different parts of the screen sector have been through a period of radical change that is far from over. What is emerging is a mixed economy with opportunities for entrepreneurial, agile industries, willing to work together to develop IP.
Games has become a mixed economy where smart, agile teams have found space to develop worldwide successes.
“The games industry started in a very singular way,” said Nick Harper, COO of Leamington Spa-based Exient.
“You made a console game for the Sony or Nintendo platforms and then Microsoft. Then when mobile came along, especially smartphones, it really exploded. Developers could be a single man or 100 or 200 developers.”
That mixed economy has been the basis for the growth of a dynamic cluster of businesses.
The growth of the Leamington Spa cluster was largely built on console and PC and some of the bigger companies might spend £50- £60m on development before even starting on marketing. Now there are successful companies working in the mobile space with budgets that are a tenth of that size.
“It is about layering up,” said Harper, “Smaller developers in mobile are able to get a foothold. Having said that, in the last two or three years, the mobile market is maturing as well, so it is hard to guarantee that you can get up there with a top game.
“You need to know what your preferred creative direction is and what kind of audience you want to access.”
Television and film
There are close similarities between those games opportunities and those in film and television. The market is becoming heterogenous, international and centred on changed patterns of audience demand, facilitated by digital technologies.
We are now firmly in a global on-demand world, suggested John McVay, CEO, of PACT (pictured above). While Netflix has received enormous attention as the first dominating voice, he said Warner Bros, Disney and Comcast would make a huge impact over the next two or three years. (Since this report was first published, Disney has bought out the Comcast stake in Hulu, which may be bundled with a powerful combination of Disney+ and ESPN+)
He said the global reputation of the UK would make it an obvious place to start in acquiring and commissioning content (although he warned other countries were trying to catch up) - and it was now much clearer where the best opportunities for growth lay: “What changes the economy – and what could be a strength for the West Midlands – is returning series. That is what changes the dynamics for everyone, including post-production.”
The West Midlands also had opportunities to grasp from out of London spending rules on public service broadcasters. “It is a great opportunity. In order for Channel 4 and BBC to hit its targets (on regional spend), it will have to have more returning series outside London. So why not here? And why does the BBC have to make it? Why not one of you guys?”
Emerging formats were also potentially valuable, if so far unproven, speakers suggested, including Virtual Reality and Alternate Reality. McVay said the new Quibi platform for short mobile content looked particularly interesting.
Each of those areas has been recognised as having major potential but as yet are in the early stages of finding the breakthrough content, or business models around which a region could build a narrative. (This project is undertaking research into the development of new formats).
There are screen formats, which have made a big impression, albeit often under the radar of the mainstream industries. The West Midlands boasts a number of successful YouTube ‘influencers’ - online video stars with a big reach, often into the younger, more diverse demographics with which more established industries have struggled to attract. (See below)
John McVay reminded the audience that there was a time when many believed that cross-media content would come to supplant the established single platforms, such as TV and console games.
In some ways, the last few years have shown the resilience and adaptability of more traditional forms, as evidence by the rise of new kinds of mobile games, and the strength of streaming services for television and film content.
Nonetheless, delegates were reminded that IP could be built across different parts of the screen sector - with Marvel Studios, being the best-known exemplar of turning their story universes into content, which can be accessed on a wide range of platforms, from graphic novels to games.
Nick Harper, at Exient, offered a strong local example in the mobile game created by his company for the BBC Strictly Come Dancing series.
OriginalitY, authenticity AND AUDIENCES
The emerging ecosystem may offer many routes to business success but every single new format, global business model and fresh content is reliant on great stories and brilliant ideas.
McVay at Pact said: “Quality, creativity and authenticity are the three words you hear most often everywhere.”
Much of the global media and entertainment has reached maturity and is generally over-supplied with content. But the supply or original, authentic and exciting work is never saturated. Every commissioner, distributor and broadcaster of content needs to find differentiation to win audiences.
He said drama series on global platforms had received the lion’s share of attention as SVOD had emerged as a force but he warned: “Drama has become really comeptitive, very high budget, very hard to get into and the people who are in it already are bloody brilliant.”
Great ideas and storytelling skills could potentially find better routes to international markets through factual content with the potential for export and franchising. Such work was still big business and was a great place to develop business at a relatively lower entry point and with potential for IP development on other media platforms, such as mobile, he suggested.
McVay said: “You should be asking ‘what are we doing to support factual in your region?”
Authenticity and the new influencers
Zac Hancock, of social media marketing agency Social Chain, said today’s marketing industry was increasingly built on notions of authenticity.
“The world is very different from 2016. People want realism.”
“Red Bull, for example, spends a whopping 80% of its marketing budget on ‘experiential activations’, influencers and events. It doesn’t tell us to buy their stuff because, as their marketing director says, no one is going to spend 45 minutes looking at people drinking.”
Audience desire for diverse authentic voices has given rise to a new generation of content creators.
“I don’t like the term influencer,” said Birmingham-based creative director and artist Amrit Singh - MrASingh. “Influencer now has negative connotations because a lot of big influencers have faked their way to the top and have paid for followers and likes.”
He says he is classed as a ‘micro-influencer’, working with major brands, such as Google and Amazon, meaning that he builds followers by “sharing a passion for art.” In other words, he is seen as an authentic voice, sharing his work and passions with an audience that might otherwise not find a way to connect.
What he discovered through live-streaming work through social media is that his work could find fans around the world. His first art exhibition took place in San Francisco. He draws a distinction between direct engagement of like-minded audiences and a search for fame and money that drives some others to seek online influence.
What matters for him is the work itself and the sharing, and that takes time and dedication, he said. He said he would work full time all day and then live-stream for three hours in the evening and it took time until he was in a position to quit the job.
The growth of the influencer economy may offer clues to the development of the diverse screen economy that many aspire to in the West Midlands.
Perhaps the greatest advantage of the digital era in the Creative Screen Sector has been the ability to reach beyond borders.
Most of the growth in the UK film and television sectors, for example, is in global commissions, according to PACT’s John McVay.
“TV income in the UK is flat and is going to stay flat. All we are really trying to do is eat each others’ lunch.” There are domestic opportunities in television for the region, mainly because of the mandate on public service broadcasters to shift more production to the nations and regions and also because those broadcasters too need to be more adventurous and diverse to win audiences.
But the big focus is international. Subscription Video On Demand (SVOD) giant Netflix alone spent £150m on UK commissions last year and that investment is increasing.
McVay said PACT worked ‘relentlessly’ for 10 years to get into international markets and he said it had made a huge difference. He said significant number of his member companies, particularly outside of London, say that 70% of their business comes from non-UK commissions.
The UK now has a global reputation for talent and experience, and benefits from having a stable environment of tax breaks and production incentives.
He suggested that the West Midlands is at no particular disadvantage in the global markets, with no need to worry about establishing a regional ‘narrative.’ “The world doesn’t care,” said John McVay. When you talk to the international market they don’t care where you are from they just care if you’ve got great ideas and can you do it.
Hugely experienced award-winning Stratford-Upon-Avon-based television producer, Will Hanrahan has been among the pioneers of this more international approach with his FirstLookTV company.
“We went through a very strict period of research in 2015 and we discovered that there was a global phenomenon in buying one particular genre - crime programming. The buyers were the emerging SVOD streamers, like Netflix and Amazon, Discovery and A&E in the US and some launching networks and cable networks in the US. We didn't bother with the BBC and Channel 4 any more. We found the best way to business was to get on a plane to the United States.
The problem for the West Midlands remains one of infrastructure with limited studio space in comparison to more established areas. Addressing those concerns remains a priority but in the mean time, speakers suggested, there was plenty of room to establish a strong business culture that can grasp emerging opportunities in international markets.
The games industry has established a still stronger position with an area, such as Leamington Spa, enjoying a global reputation for work that sells worldwide. Gaming does not generally face major disadvantages, such as language, and the global penetration of mobile devices has created vast new markets. It is by nature a business with a global outlook, in contrast to some television production, which has historically been more focused on the domestic market.
Nick Harper, at Exient said: “The audience in all countries is growing. Success in consoles these days might mean a million copies sold, but with some mobile games I have worked on, we have had nearly half a billion downloads worldwide.”
The audience does not care where the game originated but success can quickly attract the interest of the digital superpowers, says Southall, of Sumo Digital. “Someone like Microsoft will invest on the basis of the team, what tech they have and what creative talent they have.”
That ability to make big global revenues and attract investment from multinational conglomerates has dramatically increased the profile of gaming and convinced government of the value of granting it tax breaks.
All the speakers were convinced that the emerging ecosystem opens up opportunities for fast development of ideas that can make that global impact.
What matters again is the originality of ideas and the talent to turn them into exciting content and viable IP and the drive to get to market fast. “We need to get our entrepreneurs and businesses into those global markets quicker,” said McVay.
Start-up to global is the key thing as quickly as possible.
And then the necessary skillset is in marketing and distribution, which are again critical issues for anyone with international aspirations.
Or, as Sarah Ellis, Digital Director of the Royal Shakespeare Company put it: “Content is king but distribution is God.
Speakers from across the sector were united in their belief that industrial growth was fundamentally about businesses building Intellectual Property (IP) that can continue to deliver value over time.
Frances Anderson, IP and Creative Industry Specialist, at legal firm VWV, offered a useful definition of IP as the synthesis or embodiment of creative effort in its various guises.”
Intellectual Property is what can be owned and exploited over many years.
But PACT’s John McVay said the temptation to take short-term contracts over long-term IP development was strong at a time when the big money was being invested by global streaming platforms, such as Netflix and when accessing development finance in today’s market was so difficult.
“You shouldn’t always have to sell 25 % of your company to worldwide. You want to own and control your business.”
He said independent production had historically been something of an ‘oxymoron’, because of the reliance on commissions from public service broadcasters. Through legislation and new economic opportunities in recent years, producers had been able to assert real independence through controlling their own IP.
“We are now a very entrepreneurial sector but we have to make sure we are still getting access to new slots and new IP.”
The trick in today’s economy, he suggested was finding a balance between service-driven productions with revenues but no rights, and IP development and ownership. Service driven productions provide stability and training opportunities whilst the IP builds profit and value for the company. Both add value.
Speakers accepted that today’s businesses would probably need to have a mixed model, in which they serviced global contracts for the SVOD giants and invested some of the proceeds in developing their own IP.
Caroline Percy, investment manager at Ingenious said: “It used to be all about rights but the new players want to take away those rights.”
Of course, they pay for the privilege but it still leaves businesses without core assets and even Netflix could be flexible, willing to negotiate some territorial rights with those producers with whom they had strong relationships
Close links were key, she suggested: “It is like gold dust getting to a name at Netflix but once you have a relationship they can be quite loyal to their producers.”
The hard reality for the West Midlands mission is that these new opportunities require risk-taking at a time when public and private finance tends to be risk averse.
The need for R&D development funding is clear but there is little evidence that public funds have much appetite for encouraging such risks.
The West Midlands’ best option is to at least create a culture of collaborative development, in which all members of a cluster or network recognise the common value in risk-taking.
John McVay, of PACT, said in thinking about building the West Midlands Creative Screen Sector: “The first thing I would do is get development finance. That’s the hardest money for producers. It is the hardest for the public sector because they don’t understand that we are a hits-based business. We have to develop quite a lot of product before we get any return.”
The games industry offers some guidance.
“Noone really knows what we are doing but we all have levels of expertise that lets us get a weighted roll of the dice,” said Nick Harper, of Exient.
He said shared knowledge made a big difference but also pointed to agile development systems that had proven capable of making an impact on reducing risk.
He said games publisher called Voodoo had been sweeping the mobile industry with its ‘hyper casual’ games.
Its methodology was based on using small teams to continually test a wide range of ideas on small budgets and then making quick decisions when they see one that looks like it will succeed before putting huge amounts of marketing behind it to get to the top of the app stores.
He also highlighted the most successful mobile company in Finnish developer Supercell, founded by ex-Nokia employees with an annual turnover of around $3billion revenue from four or five games. “They are making two or three million every day and they have several million players, who they retain incredibly well and come back everyday and want to keep playing it.
“But for every game it releases, it will have failed on seven or eight titles that don’t make it to market. If you are company of that size, and that is still your hit rate, you can imagine how difficult it is for a small developer on its own.”
Harper said what mattered today was agile testing of ideas with a willingness to fail and learn before committing to the big markets. “The reality is that marketing has to be massive because nobody finds things organically. That is just a myth.”
A culture of collaboration and shared risk does not come naturally but it may become essential, particularly for new businesses looking to make a mark in often over-supplied markets.
Frances Anderson, at VWV, said: “There is a dichotomy between risk taking and protection. So if you have an idea, particularly if you are quite new to the industry you might be fearful that other people will steal it. On the other hand if you stay in your room and never talk to anyone, nothing you do will get made anyway.”
That culture needs support in terms of space and, crucially, finance. It is impossible to ‘fail fast’ and experiment if there is nowhere and no money to create.
Producers, particularly in the film world said what mattered was making work that could push boundaries, and that required funding for content, not just training.
Film Producer Anne Beresford said: “We don’t just want training schemes, we want money to make the things to show what we can do.”
The question is an important one for policy and funds in the region. What might be needed is greater experimentation and originality but that can only come from actually creating content.
The solution for much of the sector may lie in new kinds of development processes, particularly in the earliest stages of projects, that are focused on international IP, changing patterns of audience demand and are closer to the ‘fail fast’ agile approaches, mentioned by the games developers.