CREATING GROWTH THE FUTURE OF THE UK ENTERTAINMENT SECTOR

NNLP_white_paperLP_white_paper 5.indd5.indd 3 001/04/20151/04/2015 08:2508:25 NNLP_white_paperLP_white_paper 5.indd5.indd 4 001/04/20151/04/2015 08:2508:25 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

CONTENTS: Nyman Libson Paul We started in 1933 when the wonderful world of celluloid was in its infancy, TV 6 providing a wide range of services from traditional accountancy and tax compliance to much broader commercial and business advice. Over 80 years Film 10 later we have looked after some of the biggest and brightest stars and projects Animation 14 in Film, TV, Music and Theatre. This continues to the day with our knowledge and expertise expanding into the world of Animation, Video Games and Digital Video Games 18 as we continue to evolve with our client base. Our network and knowledge extend around the world assisting our clients with their global ambitions and Theatre 22 keeping pace with the rapid globalisation of the entertainment industry. References 26 Executive Summary Though a year of uneven economic growth, 2014 was highly successful for the UK’s creative industries. A recent government report reveals that the creative industries are now worth £76.9 billion a year to the UK economy, with the gross value added having risen to 9.9%, a marked increase on 2013.1 What’s more, the UK entertainment industy is predicted to grow annually by 3.1% until at least 2018, giving investors the confi dence to invest even further in the creative industries.2

Indeed, this investment provides an important opportunity for Britain to consolidate its international position. Demand for British television and fi lm content is high across the globe, and by empowering production companies and supporting the expansion of fi lm studios, the UK will be able to entrench its role as one of the world’s leading producers for fi lm and TV. Likewise, the UK has the opportunity to use the global popularity of animation to increase the size of its industry, and allow it to compete for digital as well as cinematic projects for decades to come. Whilst these industries will continue to grow steadily, 2015 will be a dramatic year for British video game producers. As mobile phones overtake consoles as the most popular gaming device, the largely mobile-centred UK industry will have the chance to steal ahead of international rivals, and fi rmly establish the UK’s place as a tech leader. Whilst the UK’s position as the global theatre capital is much more certain, the next year will present the theatre industry with opportunities to follow that popularity with greater profi t, and thus to attract new investors to Britain’s oldest form of entertainment. What is certain, however, is that with game developers growing alongside theatre producers, there has never been a better time to invest in British creativity.

5 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Television The popularity of UK TV exports is greater than ever, with high- end tax relief and new investment opportunities, combined with a global trend for Pay-TV services, increasing international demand for British content. In order to meet this demand, the BBC is due to commission more drama series, whilst pan- European funding agreements are allowing producers to create higher-quality, cinematic programming to meet the needs of today’s more eager and discerning television audience.

KEY FACTS & FIGURES £12.9BN 46% 168 The British TV industry generated £12bn 46% of the BBC’s programming was There are currently 168 TV production in revenue in 2013, of which £1.3bn produced externally in 2011/2, a fi gure companies based in the UK.9 came from sales to international markets that is expected to grow even bigger in the (a 5% increase on 2012).3 coming years.6 1.9 MILLION 1.9 million hours of television was £465M NO. 3 broadcast in the UK in 2013, of which The UK TV industry generated £465m The UK is now marked third in the world 30,092 were fi rst-run original content from television exports to the USA alone. for the export of television content.7 shown on the fi ve PSB channels.10 It is predicted that exports to the ABACUS countries (Africa, Brazil, Australasia, China and the USA) will double by 2018.4 £395M 50% £394m was spent on television production Half of all UK adults now claim to have qualifying for HTR between April 2013 and used a Video on Demand (VOD) service £575M May 2014, including £225m of inward in the past twelve months, a fi gure which A £575M boost to the creative economy investment.8 has almost doubled since 2010. Netfl ix is expected if the BBC decides to focus is the fastest growing VOD service, with a on acting as a publisher broadcaster, 6% growth in popularity between Q3 2013 investing in work from external production and Q1 2014.11 companies.5

6 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

is little doubt that the BBC will continue in the UK in 201426. With major SVOD KEY TRENDS to create many more opportunities for it to providers now producing their own content fl ourish, in order to serve both its viewers (such as Netfl ix’s House of Cards and and the UK television industry. Amazon’s Transparent) this trend looks The Future of the BBC set to continue even further, and the UK Changes to the way the BBC is run are The rise and rise of Pay-TV is leading it. It is Europe’s strongest SVOD market by far, with revenues exceeding creating huge new opportunities for The transformative effects of Pay TV $1.75 billion, more than 30% of all the independent television industry in services on the industry are only just being European SVOD revenue.27 the UK. For several years, the BBC has understood. As well as driving consumers been increasing the number of externally to watch more content, Pay TV is leading Pan-European Collaboration produced programmes it broadcasts, in them to demand a greater variety of order to improve the quality of its content. programming, in many new formats. A These transformations can already be seen A ‘Window of Creative Competition’ was recent report has revealed that rather than in the variety of the content consumers established in 2007, allowing external cutting the cords of unwanted services, are choosing to view online. As well as companies to compete with the BBC for viewers are actually accumulating multiple popular American series such as Breaking 12 25% of its programming. By 2014, Pay TV subscriptions21. Whereas families Bad and Game of Thrones, programmes independent producers were winning once shared a single content package, it is such as the Danish series The Killing all of the commissions in areas such as now common for individual family members and Sweden’s Wallander have achieved drama and natural-world documentaries to hold separate Pay TV subscriptions, global success online, reaching an and the BBC is now expected to abolish signifi cantly increasing household spending audience far greater than their domestic quotas for these categories, allowing on television content. Pay TV services also markets. Indeed, broadcasters in over external producers to produce much lead to greater consumption by encouraging 120 countries, as well as Netfl ix, have 13 more of its content. In July 2014, binge watching, in which viewers watch purchased the rights to The Killing28, and BBC Director General Tony Hall called several episodes of a series in a single sitting. the Danish-UK Chamber of Commerce has 14 for a “competition revolution” that As binge watching becomes an increasingly suggested that it has been so popular that could create £400m in commissioning popular form of relaxation, customers will be it helped to broker a number of trade deals opportunities15. This process began in willing to spend more on subscriptions, and between the countries.29 The global reach October, with the BBC announcing that industry revenues will increase. Indeed, the of The Killing thus reveals the extent to it had cut seven production roles from its full effects of Pay TV on the industry have which online TV services are creating new drama department16, in order to encourage yet to be realised. Despite the fact that 73% possibilities for domestic television content. commissions from external production of all viewers enjoy binge watching22, those With programmes such as Downton Abbey, companies. earning over $55,000 are almost twice which recorded the highest ever viewing as likely to binge watch as those earning fi gures for a première on US station PBS30 When the BBC’s Royal Charter is under $20,000, due to the higher cost of and has been seen by 160 million viewers renewed in 2016 opportunities for British Smart TVs23. As these fall in price, consumer in China31, the UK is especially well poised production companies are expected to demands will increase even further, and to take advantage of Pay TV’s ability increase even further. Pact – the trade transform the television industry. to build a lucrative global audience for association representing British television domestic TV content. producers – has revealed that consumer The rise of Subscription Video on Demand demand for independent content has (SVOD) services, for which consumers The UK is also benefi ting from the new increased, following the success of pay a monthly subscription giving them funding and production relationships shows such as Sherlock and The Voice, unlimited access to movies and television that this audience allows. Following its and expects this trend to continue series, has also led to a signifi cant commitment to invest £600m in original further as the BBC commissions more increase in the popularity of TV content. British content32, in 2013 Sky released of its programming.17 This snowball Indeed, Deloitte has suggested that the The Tunnel, a new TV series that it had effect promises to create even greater distinction between fi lm and television co-produced with French television network opportunities for the independent sector. is being replaced by a two-tier system in Canal+. This partnership allowed the A report by Oliver & Ohlbaum Associates which specially chosen online series are networks to share the £16m production suggests that changes to the BBC’s Royal often preferred over both traditional fi lm cost33, and thus to create a series that can Charter could in fact create £575m in and TV content24. No longer constrained compete with the increasingly cinematic opportunities for the creative sector, whilst by TV schedules, viewers are increasingly television content available online. The offering an appealing £30m saving to the opting for the longer and more rewarding success of The Tunnel has continued to taxpayer18. Likewise, All3Media Managing plots of television series over feature fi lms. direct Sky’s production strategy. Sky has Director Jane Turton has argued that the In a recent survey 29% of viewers with placed it at the heart of a new digital production opportunities would be even SVOD-enabled TVs revealed that they are campaign on YouTube, in order to attract greater were the BBC to open fl agship watching fewer DVDs, whilst 30% are new subscribers.34 Moreover, it has not shows such as Top Gear to external watching more TV than they used to25. only commissioned a second series35, but producers19. With the independent sector at This content has certainly fl ourished on has also announced another partnership an all time high (having grown by almost Netfl ix, with US series Breaking Bad with Canal+, for a European crime drama 7% year on year for over a decade20 ) there responsible for 11.9% of all Netfl ix streams called The Last Panthers36.

7 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

ONES TO WATCH Tinopolis Kudos Films Tinopolis is one of the UK’s largest Kudos, founded in 1992 and sold to production and distribution companies, Shine Group in 2007 for around £35m47, All3Media and is responsible for the UK coverage is one of the production companies that of Premier League and Champions has benefi ted the most from the BBC’s All3Media Group is the largest independent League football, as well as long-standing decision to embrace drama from the TV production company in the UK, with a factual programmes such as Question independent sector. Despite the fact that its turnover of £515m37. It now comprises 18 Time. Recently, however, the Tinopolis founder Stephen Garrett warned in 2010 different businesses, and was itself bought Group, estimated to be worth £300m43, that it would struggle to make dramas by Discovery Communications and Liberty has begun to purchase a number of such as the hugely popular Spooks under Global in a joint venture for £550m in much smaller independent documentary increasingly stringent BBC budgets48, October 201438. The Group’s success can production companies, including Kudos has gone on to produce some of the be attributed not only to its acquisition of Firecracker Films, which pioneered ‘shock most successful UK drama series of recent the companies behind some of the UK’s documentaries’ such as The Boy Who years, and it is now responsible for some most successful shows, from Masterchef Will Never Grow and Diary of A Teenage of the BBC’s most highly anticipated series. to Skins, but to its efforts to maximise the Virgin44. Ron Jones, Executive Chairman Kudos was responsible for The Tunnel, global value of that material. In 2013, the of Tinopolis, has explained that the rise the Anglo-French drama broadcast on Sky Group’s CEO Ramzan Golant announced of online television has challenged the Arts that was funded through an innovative a three-year strategy, under which it control of traditional TV networks, creating partnership between Sky and Canal+. would focus on building revenue from an additional audience of digital browsers, Likewise, Broadchurch, named the best existing assets, rather than acquiring new whilst driving the networks to look for television series of 2013 by the Radio businesses39. Under this plan, All3Media new content45. Factual entertainment, Times, with an average of over 9 million will substantially increase what it earns such as Firecracker’s ‘shock docs’ and the viewers per episode, was funded in a from outside the UK, currently 50% of its pop concert fi lms such as Justin Bieber: unique collaboration between ITV, German revenue40, by establishing an international Never Say Never and Katy Perry: Part public-service broadcaster ZDF and BBC distribution arm and strengthening its of Me produced by production company America49. The content produced through business in key markets such as the USA. Magical Elves, also purchased by Tinopolis these partnerships has allowed Kudos All3Media formats The Cube and Are You in 201446, are especially popular with the to win several BBC drama commissions Normal? are already very successful in next generation of viewers who are used in recent years. It is responsible for the China41, whilst hit series The Missing has to searching for their own content. Having recently extended Death In Paradise, been commissioned for a second series expanded its portfolio with such tactical produced in partnership with France following demand from both UK and US acquisitions, it won’t be surprising if the Television, and From There to Here. In networks42. Tinopolis Group exceeds its valuation of 2015, the BBC will broadcast Rivers, a £300m after having been put up for sale highly anticipated police drama produced itself in October 2014. by Kudos, starring Swedish fi lm-star Stellan Skarsgard. By pursuing new relationships, Kudos has been able to produce award- winning drama for several networks, and is perfectly poised to win new quotas once the BBC abandons its quotas.

8 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Blinkbox Chalkboard TV THE NEXT 12 MONTHS So far, Blinkbox, the Video service founded Founded in November 2013, Chalkboard in 2007, has remained the underdog in an TV is one of the UK’s newest TV production industry dominated by Netfl ix and Amazon. companies. However, with a commission 2015 will be a year of tremendous change Though it was bought by Tesco in 2011, for a three-part series from ITV53 and a and opportunity for the UK television Blinkbox announced that it made an development and distribution partnership industry. The fi rst months expect to see £18.5 million loss in 201450. The service with Sky Vision54, it has already achieved substantial takeover bids for Tinopolis is highly innovative, however, and with signifi cant industry support. These deals and Blinkbox, following 2014’s run of TV Vodafone preparing to bid for it, so that have contributed to an industry-wide industry acquisitions. Having begun by 57 the phone network can compete with the doubling of fi rst-look distribution deals purchasing Cable & Wireless in 2012 , content provided by BT and EE, Blinkbox in 2014. This can be explained by the 2015 is expected to be the year in which is likely to remain central to the future fact that, from its creation, Chalkboard Vodafone launches its home and mobile- of UK TV. In November 2014, Blinkbox TV has targeted the ever-expanding TV packages, further revolutionising the announced that it would allow its users to export market. Chalkboard was founded digital content market. UK terrestrial download its content to the hard drive of by highly experienced executives from television is also expected to receive a their device, enabling them to watch it on the BBC and Shine, the UK’s biggest TV shake-up, whatever the outcome of the the go51. This gives it a huge advantage producer, and as Barnaby Shingleton, General Election in May 2014. With the over Netfl ix and Amazon Prime, which Director of Entertainment and Factual at BBC itself pushing to commission more place restrictions on the content that users Sky Vision, explains: “The ambitions for content externally, and both of the major are able to save to their devices. With both Chalkboard TV and for Sky Vision parties prepared to reconsider the terms of 10 million Britons now watching television are totally aligned; the creation and its Royal Charter, a boost for the industry is on a mobile or tablet, a 300% increase on distribution of entertainment programming inevitable. 2015 will also see the release the 2013 fi gure52, this will give Blinkbox a of scale and quality with global appeal”55. of highly anticipated new series, produced huge advantage in appealing to changing Likewise, the Middle Eastern/ European through innovative new partnerships. Sky consumer habits. Likewise, a recent study Production Group Izen has invested in Atlantic and Canal+’s second collaborative in the US has shown that users now spend Chalkboard, with the express intention series, The Last Panthers will be broadcast more time looking at their mobile phone that it will produce content they can export in 2015, whilst River, commissioned by than they do the television. By preparing to to their markets56. With its fi rst format, a the BBC and produced by Kudos, will air bid for Blinkbox, Vodafone recognises that fl y-on-the-wall documentary about offi ce later in the year, ensuring that 2015 will the future of television is outside the home, Christmas parties, due to be broadcast in be as exciting for viewers as it will for allowing it to signifi cantly strengthen its the UK in December 2014, Chalkboard industry professionals and investors. mobile offering. is living up to the expectation that it will focus on universal formats.

9 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Film Film was the fi rst creative industry to benefi t from UK tax relief, the success of which has seen it extended to other industries. This has provided the infrastructure to ensure that the UK can compete to produce international block-busters such as Star Wars: Episode VII and The Avengers: Age of Ultron, alongside British franchises such as James Bond and The Woman in Black, that continue to dominate the global box-offi ce.

KEY FACTS & FIGURES $4.1BN £100M 420 British fi lms took $4.1bn at the global box The UK fi lm industry has benefi ted from In 2013 the BFI recorded 420 production offi ce in 2013, 11% of the global share.58 generous tax relief, worth over £100m a companies in the UK, up from 392 in 2012.63 100,000 year.61 241 The British fi lm industry alone employs £1.075BN The number of fi lms produced in the UK in more than 40,000 people and is This has seen inward investment increase 2013, of which 137 had budgets of over responsible for more than 100,000 jobs.59 by an incredible 14%, to £1.075bn.62 £500,000.64 £1.6BN UK Film-making generates more than £1.6bn a year – excluding the income it generates by providing additional services.60

10 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

KEY TRENDS The Rise of Video on Demand Crowd-Funding Subscription Video on Demand (SVOD) Crowd-funding, which allows projects services such as Netfl ix and Lovefi lm to seek fi nance from consumers directly, Developing the Infrastructure for are transforming the movie industry. At has transformed a number of industries the Future of British Cinema the end of 2014, US spending on video in recent years. It is thought to have For several years now, there has been subscriptions exceeded video rentals raised over $6bn in 201379, but until a sustained global demand for British for the fi rst time73. In the UK, the SVOD now movies have been under-represented cinema. Box offi ce revenues of British market was estimated to be worth £323m amongst its success stories. Tough fi lms have exceeded £1bn in every in 2013, up by 37% from 2012, and by rules from the Securities and Exchange year since 201165, and the UK now over 400% from 200274. What’s more, Commission in the USA mean that anyone continually represents 11-15% of the this expansion is only just beginning. investing for equity in a fi lm must already global fi lm market66. This success looks Netfl ix, the world’s largest SVOD provider, be ‘fully accredited’ 80. With projects in set to continue, with forthcoming releases has earmarked $400m for the next stage America therefore unable to offer a return including James Bond 24 and The Woman of its expansion in Western Europe75. The on investment to their funders, it has In Black 2: Angel of Death, both of subscription service is also planning to been diffi cult for them to reach the high which are part of hugely successful global increase its share of the movie industry. levels of fi nance needed to support a franchises. 2012’s Skyfall has earned over At present, TV shows constitute 80% of fi lm production. Thus, only 40% of fi lm $1.1bn worldwide67, making it both Sony all Netfl ix viewing activity76 – encouraged projects reach their target, most of them Picture’s most successful release and the by exclusive series such as House of low-budget productions81. highest grossing British fi lm ever. With the Cards. However, with the sequel to the This is not the case in the UK, however, fi lm industry increasingly dominated by 2000 smash-hit Crouching Tiger Hidden where the next-generation of crowd-funding a few global blockbusters, these brands Dragon set to be released straight to the platforms, which do offer investors equity, promise to keep Britain at the centre of the subscription service, and many more fi lms have taken off. One such platform is industry for years to come. expected to follow, the SVOD services will transform the movie industry in the years Syndicate Room, which has been used by Such successes have led to investment in to come. Tomb Raider director Simon West to raise the studio infrastructure that allows the UK over £1m for a forthcoming fi lm, Salty82. to produce such mammoth fi lm projects. The rise of SVOD comes at a time of solid Combined, West’s fi lms have made over The Pinewood Studio in Buckinghamshire, growth for the global movie industry, $1bn at the box offi ce83, and his decision at which Skyfall was shot, is due to which is predicted to increase in value to use equity crowd-funding is regarded by undergo a £200m 100,000 sq m by 4.5% annually until 2018, and many as a turning point for the fi lm industry. expansion that will see it able to compete most commentators are confi dent about In the US, it is expected that the SEC will with Hollywood for the biggest international its impact77. A recent survey of over a relax its rules on equity investment, bringing fi lm projects68. Pinewood’s second London thousand industry professionals revealed a model that is taking off in the UK to studio in Shepperton, which produced the that 61% expect that within four years Hollywood84. Equity crowd-funding not only recent Avengers movie, has also seen an the revenue from video on demand promises to allow fi lm projects to reach their 86% occupancy rate and a 10% boost in services will match that of DVD sales investment targets, but will help to ensure its profi ts69. Likewise, Elstree Studios in at their peak78. Another thing that most that projects retain support through to their North London is undergoing a multi-million commentators agree on is that SVOD release. Without industry investment, crowd- pound extension that will expand its studio services are changing the movie industry, funded fi lms such as Borrowed Time often space by a quarter, allowing it to move its with consumers watching a greater variety struggle to obtain a broad release. However, focus from television to fi lm production70. of fi lms, but choosing to see only a few Salty, which will see equity split between of them at the cinema. The UK fi lm studio investors and crowd-funders, promises The UK is also set to benefi t from the industry, which supports a healthy mix of to combine industry support with thousands £14m expansion to Belfast’s Titanic independent and block-buster movies, is of new investors, to create a crowd-funding Studios71, and the proposed creation of a thus well poised to benefi t from the rise of model for fi lm that will transform the industry. £40m fi lm studio in Scotland72. The UK SVOD. Services such as the British Film thus looks set to benefi t from a current Institute’s BFI-Player will bring hundreds Europe-wide shortage of studio space, of British fi lms to a global audience. At the further establishing itself as a world-leading same time, SVOD promises to benefi t high- centre for fi lm production. budget fi lms. Distributors get approximately 70% of the revenue from Netfl ix views (as opposed to 50-60% from cinema), and Netfl ix offers a more stable distribution channel, making it easier to raise initial investment.

11 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Distribution ONES TO WATCH Working Title Film distribution too, is transforming. For Working Title is one of Britain’s most several years there has been a trend in the successful production companies, and UK for smaller cinemas, serving wealthier Pinewood Studios has been responsible for some of its most communities. Over 70% of those in the iconic fi lms from Billy Elliott to Bridget After nearly being forced to close in the highest income bracket visit the cinema at Jones. In 1999, Polygram, Working 1990s, Pinewood Studios has gone on to least twice a year, compared with just 39% Titles’ corporate backer, was bought by become a highly profi table global brand. of those in the lowest bracket85. It is this NBCUniversal96. Since then, Working As well as recording a signifi cant increase increasingly high-paying and homologous Titles’ international reach has signifi cantly in profi ts at its studios in Shepperton and cinema-going audience that led membership increased, and looks set to grow much Hertfordshire, Pinewood has agreements of the independent Picturehouse Cinema further. The studio’s 2013 fi lm, Les with studios in Toronto, Atlanta, Malaysia group to rise by 140% in 2012 alone86. Miserables, took over £41m at the UK and China91. Having re-established itself as Cineworld then bought Picturehouse for Box Offi ce, and has made over $400m one of the world’s greatest fi lm studios, and £47.3m87, and the group’s profi ts have worldwide97. In the year of its release it with global franchises such as James Bond continued to grow ever since. was the highest grossing British fi lm at the and Star Wars set to return to the studio, UK box offi ce, and entered the ranks of the Pinewood is set to become increasingly This increasingly dependable audience most successful British fi lms of all time. powerful92. In November 2014, Pinewood is also behind the development of Working Title’s global reach looks set to Shepperton acquired the 50% stake, Picturehouse’s ‘Our Screen’ service, which increase. In 2015 it will release Everest, which had been bought by Aviva in 2006, will allow customers to select which fi lms are a $65m 3D adventure thriller starring Jake for £36.8million93. With full control of the screened at their local cinema. This service Gyllenhaal and Kiera Knightley. It will also studio, Pinewood is expected to expand was fi rst pioneered by US start-up Tugg, air About A Boy, a new television series its Shepperton site even further. What’s which had organized for over 180 fi lms to be produced for the US and based on the more, 2014 saw the studio signifi cantly shown in 300 global cities within a year of British novel by Nick Hornby. being of founded88, and has recently raised increase the number of services it offers. $5.9m in further investment89. In the UK, Pinewood now has eight of its own active Neal Street Productions Picturehouse’s ‘Our Screen’ service has led to Film Production Companies, compared 94 the rapid cultivation of an audience for British to just three the year before . The Founded in 1999 by director Sam fi lm. The recent British fi lm, Northern Soul, £200m Pinewood Studios Development Mendes who was joined by Pippa Harris had only been scheduled for release in a few Framework will see the studio’s production and Caro Newling in 2003, Neal Street 95 cinemas across the country, but demand infrastructure continue to increase , and Productions is one of the fastest growing from ‘Our Screen’ led Picturehouse to release allow it to compete to offer an even greater independent production companies in the it across all of their cinemas, with the fi lm range of services. UK. Neal Street is unique in the number of eventually entering the UK Top Ten 90. successes it has had across fi lm, television and theatre, with a hit musical such as Shrek opening in the same year as a blockbuster fi lm such as Revolutionary Road. Founder, Sam Mendes, has

12 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

explained that it is this versatility that – all of whom are keen to offer it to their permits Neal Street Productions to produce customers. Curzon is thus perfectly placed THE NEXT 12 MONTHS innovative content across all of the to respond to changing consumer tastes, 98 formats . It has also allowed Neal Street and its online platform will allow Curzon to 2015 is widely expected to be another to respond to the global entertainment become increasingly central to the UK fi lm record-breaking year for the British fi lm industry, with the company’s highly industry. industry, with global blockbusters such as successful Call the Midwife and Hollow The Avengers: Age of Ultron (April 2015), Crown series of Shakespeare adaptations Fly Film James Bond 24 (November 2015) and being aired on the BBC in the UK, before a Fly Film is one of the UK’s newest Star Wars: Episode VII (December 2015) cinematic release of the latter in America99. and most innovative fi lm production to be released over the course of the year. With the production of the fi fth series of companies, providing a platform for some 2015 will also see huge developments Call the Midwife, The Hollow Crown due of Britain’s most experienced fi lm makers. to the infrastructure of the fi lm industry, to return for a second run plus Neal Street Founded in 2009, its work includes with work set to begin on the expansion of already commissioned to produce several Terence Davies’ critically acclaimed The Pinewood Studios, and the independent new TV series in the US, the company only Deep Blue Sea, which was received highly cinema chain Curzon due to open several looks set to increase its versatility.100 on both sides of the Atlantic, as well as new properties. August will see the release documentary fi lms including Swandown of Crouching Tiger Hidden Dragon 2 the Curzon Cinemas and The Spirit of ’45. Fly Film’s ability fi rst fi lm to be released at cinemas and Once seen as a small, independent to identify independent projects with a on Netfl ix simultaneously, and with SVOD chain of cinemas dying out in the face of broad reach will see it release new fi lms predicted to grow by more than 40%, more multiplexes, the Curzon cinema group is by Samantha Morton and BAFTA-winning viewers than ever before are expected to be now experiencing huge growth, opening director Marc Isaacs in the coming year105. streaming movies through the internet over a raft of new cinemas whilst expanding Fly Film was also selected to receive a the course of the year. its innovative Curzon Home Cinema Vision Award from the BFI Film Fund in service101. Having opened a fl agship 2013, as well as business mentoring by development in London’s Victoria, Curzon the Nesta Creative Business Mentoring are due to open new cinemas in Sheffi eld, Network106. With so much support, and Oxford and Colchester102. Given the an already acclaimed repertoire, Fly Film trend for smaller, better-quality cinemas, is one of the UK’s fastest growing fi lm Curzon’s expansion looks set to continue, production companies. and will allow it to better compete for new releases. At the same time, however, Curzon has launched its ‘Home Cinema’ service, allowing users to watch independent movies at home, on the day of their release. The service is extensive, and backed by a $50m investment103, as well as support from Samsung104, Sony and BT

13 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Animation The animation industry is undergoing a boom that is continuing to exceed expectations. In 2014, for the fi rst time ever, animation was the UK’s most popular genre at the cinema and was responsible for 21% of all box offi ce receipts, despite only making up 5% of releases107. At the same time, television networks and online video services signifi cantly increased the amount of animation they commissioned.108/09 This global trend will continue in 2015, with more animated fi lm releases expected than ever before110, and a combination of tax relief and new digital opportunities ensuring that the UK animation industry continues to grow.

KEY FACTS & FIGURES 21% 60 300 In 2014, for the fi rst time, animation In 2014, the British animation industry In 2014, Netfl ix commissioned 300 hours was the UK’s most popular genre and celebrated 60 years of success, with its of new content from Dreamworks, leading was responsible for 21% of box offi ce earliest fi lms including Animal Farm and the Head of Global Consumer Products to receipts.111 the iconic Watership Down.114 speculate that by 2019 over 80% of its $222BN 4,600 content would be driven by Netfl ix.116 Globally, the animation industry is worth The number of people employed in the UK 30,000 $222bn.112 animation industry has increased by 7% A new animation training scheme, since 2009, rising to 4,600.115 supported by Lupus Films and Cloth Cat Animation, will offer 30,000 hours of 7% training to 50 students across the UK.117 The animation market is growing at 7% year-on-year, across markets from the UK to Japan.113

14 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

whilst Formula Fun Entertainment, which HIT Entertainment, the animation studio KEY TRENDS received tax relief for a new pre-school responsible for the world’s most popular animated series130, earns the majority pre-school format, Thomas and Friends, as of its income from animating brands for well as Barney, Pingu and Fireman Sam.141 Tax Breaks: Laying the industries such as motor sports to the The studio’s value had fallen by $200m Foundations for a Diversifying 131 since 2005142, however, and Mattel too Industry medical sector . With animation tax relief widely acknowledged as a successful has seen its sales fall year-on-year, despite Less than four years ago, the animation scheme, and the recent announcement of the fact that overall toy sales increased by industry in the UK warned that it was “in new animation training programmes, the 14% in 2014.143 Mattel’s diffi culty, which crisis”118 after more than 50% of its jobs UK animation industry is perfectly poised has seen sales of Barbie dolls drop by more went abroad as a result of falling broadcast to continue to take advantage of these than 40%144, has been blamed on its failure revenue and tax incentives from foreign diversifying revenue streams. to focus on storytelling, with numerous governments.119 However, the global licensing agreements leading to an animation industry was continuing to grow, Frozen - Putting Animators increasingly confusing character identity. By going from comprising 4.5% of all fi lm In Charge of Children’s contrast, Frozen merchandise has generated and TV in 2008 to 10% in 2012120. By Entertainment over $1billion in sales145, and continually offering a discretionary 17.5% tax credit to exceeds retailer’s expectations, leading The unexpected success of Disney’s 2013 animators, Canada was able to win 80% stores in the UK to limit purchases of dolls animated fantasy-fi lm Frozen, now the fi fth of all animation commissions from the to one per person146. Mattel’s response best-selling fi lm of all time132, has led the US121. Likewise, French animation exports has been to empower the animators at children’s entertainment industry to realise managed to grow by 24.3% from 2011- HIT Entertainment, rather than its own the importance of high-quality animation in 2, to be worth $61.1m122. By introducing managers, to control the content for its core driving revenue. Indeed, Frozen continued tax relief for animation in 2013, the brands and to offer “consumers a seamless to break records in 2014. As well as industry in the UK has generated over and immersive brand experience”. By winning two Oscars, it became Amazon’s £42m of investment, and led the BBC to empowering its animation team, and putting commission fi ve new animated series in best-selling fi lm of all time based on pre- them in charge of distribution, Mattel will be 133 2014.123 Indeed, it was so successful that orders alone , and went on to sell over hoping that they can generate compelling 134 in 2014 the UK Government announced 3 million copies. Even the soundtrack stories, such as those behind the success that it would extend tax relief to children’s went on to become the biggest selling of Frozen and the LEGO movie, which gave programming, providing a further boost to album of the year, moving 800,000 the brand an 11% boost, helping it to also 135 the industry.124 copies. By the end of the year Frozen surpass Mattel’s toy sales.147 With HIT had become Walt Disney Pictures’ most Entertainment having already announced an Moreover, as well as allowing UK studios successful ever release, bringing in over all-new Bob The Builder series for 2015148, 136 to compete for TV and fi lm contracts, tax $1bn in fi lm revenue alone, contributing and Disney set to continue its “animation relief is providing the stability to allow the over a third of Walt Disney Studios’ revival”149, 2015 will see animation 137 industry to grow to support the increasing operating income for the year. increasingly at the heart of the growing number of digital commissions that are global children’s entertainment market. expected in the coming years. What is most interesting about Frozen, however, is how unexpected its success Control Over Content Thus, as well as producing ‘children’s cross has been. In 2010, Disney announced that media’ - the term it uses for cartoons that it was abandoning its focus on fairy-tales, Another huge trend for the animation are produced for digital devices as well as in favour of video-game style titles such industry is the fact that children are children’s television - Nexus Productions as Wreck It Ralph. In doing so, it lost its increasingly in control of their own viewing. Ltd is also responsible for website and focus on the traditional storylines most In the UK, one in three children now own app development, online advertising associated with high-end animation.138 their own tablet, and more than 60% and installations for museums and live This meant that in the year of the fi lm’s regularly use one at home.150 That number events125. With the digital sector growing release, Disney struggled to ship enough is expected to increase signifi cantly in at more than three times the rate of the UK merchandise for the fi lm, leading to 2015, as new features are introduced economy126, Nexus Ltd can expect to see international stock shortages139. The to ensure that children are safe when its revenue from these areas increase in the movie’s popularity has led the industry browsing online.151 A number of apps coming years. Similarly, Blue Zoo, which to realise that it is Intellectual Property that give access to YouTube content whilst received over £800,000 towards the that drives the subsequent merchandising allowing parents to impose strict content 152 production of children’s animation Digby opportunities, and thus to place animators restrictions are now available , and 2015 127 Dragon , has more recently released its and storytellers at the heart of story-telling will see the release of children’s games 128 fi rst app, Alphablocks . Sliced Bread, once again. that use in-app purchasing responsibly, the animation company responsible for ensuring that parents will feel far more children’s cartoon The Green Marine, This has also been the case at toy- comfortable leaving their child to use earns most of its income from corporate manufacturer Mattel, whose Barbie a tablet unsupervised. What’s more, commissions, including a web series for doll lost out to Disney’s Frozen children’s tablet manufacturer Leapfrog has Sony and a Facebook App for Coca-Cola129, merchandise.140 In 2011, Mattel acquired announced new models, aimed at 3-9 year

15 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

olds, with even greater capability, meaning ability to control the story’s events. British by the studio itself.163 By fi nding such that even the youngest children will be children’s publisher Nosy Cow has revealed ways to control and maximise the value of able to choose from an even greater variety that its latest e-books use more animation its IP, so that it turns a profi t even in the of content, and in doing to so, shape the and are more interactive than previous years in which it doesn’t release a major future of the entertainment industry.153 titles159. With children now able to choose fi lm, Aardman is increasingly attractive to content for themselves, 2015 will see the consumers and investors alike. Already, this trend is driving signifi cant animation industry continuing to run to investment in animation. Netfl ix recently catch up to their demands. MacKinnon Saunders commissioned 300 hours of animation from Dreamworks Studios that will include Whilst computer-generated animation spin-off series from some of its most has transformed the industry, constituting popular brands, including Shrek and ONES TO WATCH 72% of animation services offered 164 Madagascar.154 Online Video on Demand in the UK , its success has led to increased interest in alternative styles of is expected to be so popular for children’s Aardman Animation content that Dreamworks Head of Global animation. These technologies are also Consumer Products, Michael Connolly, has Aardman is Britain’s best known animation still developing, and 3D printing now revealed that, whilst 95% of its current studio. Founded in 1972, it is responsible allows animators to print out new parts revenue comes from fi lms, “fi ve years for Wallace & Gromit, a property that for their puppets. MacKinnon Saunders is from now, probably around 20% will be has generated television series, feature a puppet and animation studio that also movie-based. The other 80% will all be fi lms and video games, as well as several acts as a consultant on the use of these [derived from] Netfl ix-driven content.155” spin-off productions. Aardman also owes different animation technologies. It has At the same time, new apps by traditional its success to a shrewd ability to adapt experienced incredible success in recent broadcasters are driving the need for its content to the changing fi nancial years, as interest in stop-motion fi lm has animated content. The BBC recently realities of the animation industry. In been reignited. The studio worked on launched its ‘GO CBBC’ App. Described as 1999, it announced a 12-year deal with two of Hollywood’s biggest animations, a modern day equivalent to Willy Wonka’s Dreamworks worth $250 million that saw Tim Burton’s Corpse Bride, which made 165 everlasting gobstopper by CBBC controller the release of internationally successful £53m at the box offi ce , and Wes Cheryl Taylor, the app features a range of fi lms such as Chicken Run and Flushed Anderson’s Fantastic Mr Fox, which made new animated content, from cartoons to Away.160 More recently, Aardman has $46m. Mackinnon Saunders has further games.156 Likewise, the recent launch of begun to pursue several new revenue diversifi ed its revenue by partnering with the YOU Kids App, a Chinese video on streams, in order to stabilise its accounts the Komixx Media Group to form its own demand service, led to lucrative deals to and turn an operating loss in 2012 into production company, and has received bring new material, including Thomas a £2.1m profi t in 2014.161 In 2012 it over £600,000 in tax relief for a children’s and Friends and Bob The Builder to the launched the AnimateIt App for iOS, which animation, Calamity Island, commissioned 166/67 Chinese market.157 allows users to direct its iconic Morph by CBBC . Its next production, Wanda character and create their own animations. and the Alien, will air in the UK on The increasing infl uence of children In 2015, a second version of this app Channel 5, and has already been sold over what they consume is also leading will be released, allowing users to share to Nickelodeon to be broadcast in 70 168 animation to become more prevalent in their creations across social media, and countries. new areas. A recent Scholastic survey thus dramatically increase the visibility of of British children revealed that 91% Aardman’s IP.162 Indeed, whilst 2015 will of children prefer books they choose see the release of Shaun The Sheep, a themselves to ones chosen for them, and feature fi lm fi nanced by Studio Canal that when they do choose for themselves, is expected to be Aardman’s biggest release the majority want more control over the since the $106m-grossing Chicken Run in 158 story . It is exactly this that is offered by 2000, it will also see 15 new episodes of the next generation of interactive e-books, Morph, created by Aardman and funded which use animation to give readers the through a Kickstarter campaign started

16 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Locksmith Animation Sliced Bread and now provides animation for the highly infl uential Ted Talks, which have had Launched in April 2014169, and with its Formed in 2002 by Christina Vilics, also over a billion views between them181, website still offl ine170, Locksmith Animation from Aardman, and advertising designer as well as charities such as the Bill and is one of the UK’s newest animation Jamie Denham, Sliced Bread has led Melinda Gates Foundation.182 What’s studios. However, with investment from the way in exploring the commercial more, Cognitive Media is also at the Shine TV’s Elizabeth Murdoch and possibilities of animation. The studio forefront of the animated e-book category. Double Negative, Europe’s largest fi lm creates games, apps, infographics and It recently partnered with publisher Profi le visual effects studio, Locksmith is also educational materials, as well as more Books to animate its Ideas in Profi le set to become one of its biggest. Indeed, traditional fi lms and advertisements. series of e-books. Profi le Books’ previous Locksmith will become the fi rst UK The 24-part series it designed for Sony partnership with developer Inkle Studios animation studio to focus exclusively on Europe was watched by 200,000 weekly led to Time Magazine’s Game of the Year high-end computer generated animation viewers and was so successful that Sony 2014183 , an animated and interactive for fi lm.171 This category is not only most extended it to 20 further markets.175 The re-telling of Jules Verne’s Around The likely to qualify for tax relief, the industry- series’ success is revealed by the fact that World In 80 Days. With sales of 80 Days changing success of Frozen suggests that each viewer watched it for an average of far exceeding those of an ordinary e-book, it is also likely to be highly lucrative. To 6 minutes176 - engaging them with Sony’s Cognitive Media’s partnership with Profi le create this success, Locksmith Animation product range for far longer than they Books might be an important step to has world-leading staff. Double Negative might otherwise have spent on the website. seriously expanding its revenue. has appointed Tom Jacomb, former What’s more, the fl ash game they designed Associate Producer at Dreamworks172, to for Coca-Cola reached 479,000 viewers in the Feature Animation division it set up to its opening weeks, whilst 1066, a game work with Locksmith, whilst Locksmith’s they created for Channel 4, has been THE YEAR AHEAD founder, Sarah Smith, was formerly played 18 million times by over 762,000 173 177 an executive at Aardman . As Smith individual visitors. By creating new 2015 is expected to be the biggest ever explains, “We have tax credits. We’ve got forms of animated content, Sliced Bread is year for blockbuster animation. For the the talent and we’ve got the children’s able to generate high levels of engagement. fi rst time, Pixar is releasing two fi lms in stories. We have the whole set”, and, Having developed strong relationships a single year: the surreal comedy Inside although just formed, she argues that with some of the world’s biggest brands, Out in June and prehistoric adventure The Locksmith has the ability to lead a new the animation studio is expanding the size Good Dinosaur in November. It will be a 174 178 wave of high-end British fi lm animation. of its team , so that it can continue to strong year for British animation too, with offer new animated products, from moving Aardman Films due to release Shaun The infographics to e-cards that help brands to Sheep: The Movie in February, followed engage customers in entirely new ways. by a shorter fi lm in December. The year will also see the release of more British Cognitive Media animated IP for television, including a Formed in 2014 by artist and illustrator remake of Thunderbirds for ITV in spring Andrew Parks, Cognitive Media provides and a new series of Bob The Builder in simple hand-drawn animations for the autumn. As well as the release of new 21% cutting-edge digital projects. Cognitive content, 2015 will also be an important In 2014, for the fi rst time, animation Media began by producing the animations year for the growth of the industry, as HIT was the UK’s most popular genre for the Royal Society of the Arts’ RSA Entertainment rethinks the strategy for its and was responsible for 21% Animate series, the most popular non- core brands, and Locksmith Animation of box offi ce receipts. profi t channel on Youtube179, with over continues to establish itself. 64 million views.180 Cognitive Media has since played an important role in a number of digital educational platforms

17 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Video Games 2015 is expected to be the year in which mobile phones overtake games consoles as the most popular gaming platform184, and with the majority of UK developers already designing games for mobile operating systems, the UK is perfectly placed to take advantage of this trend. Indeed, 2015 will see new opportunities for developers to increase revenue from their existing content, from releasing merchandise to introducing real-money gameplay, as their audience grows and video games become mass-market.

KEY FACTS & FIGURES $93BN £25BN 7.5% Globally, the video games industry is worth Deloitte predicts that Video Games Tax Relief UK consumers spent over £2.5bn on $93bn, more than the fi lm and music will be worth £25bn a year to the industry.188 video games in 2014, a 7.5% increase industries combined.185 from 2013, securing the UK’s place as the 58% biggest video games market in Europe.192 £1.72BN 58% of UK developers have already A recent report by Nesta suggests that the made a claim for Video Games Tax Relief, 1.5BN UK video games industry is worth £1.72bn and those that did were able to claim an In 2014, 1.5bn people played video – almost double the 2012 estimate of the average of 7.5% of their total costs.189 games on a mobile device globally.193 Department of Media, Culture and Sport.186 23 46% £3BN The UK is home to 23 of the world’s top 46% of mobile gamers in the US and A report by PWC predicts that video 100 video games development studios.190 Western Europe spent money on in-app games will be the fastest growing sector purchases.194 of the UK entertainment industry, and will almost double in value, to be worth £3bn by 2016.187 1,902 There are 1,902 video games companies based in the UK, of which 64% create content exclusively for mobile.191

18 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

platforms. Players of Minecraft, which has As well as spending more on in-app KEY TRENDS sold over 18m copies for PC and Mac203, purchases, female gamers offer greater can extend their gaming by downloading merchandising opportunities. UK developer the mobile app for a further £4.99204, King Digital Entertainment, who describe ‘Mass Geeks’ and the End the typical player of their $4bn grossing of the Console whilst players of Assassin’s Creed who download the mobile Companion App are Candy Crush Saga as a woman aged The biggest trend in the video games also given additional chances to purchase 25-45215, has recently announced that it industry has been the increasing popularity access to new levels. With so many will launch clothing lines in India and the of mobile gaming, and 2015 is expected opportunities to generate revenue, mobile US, where it is partnering with New York- to be the year in which mobile games gaming promises to be profi table as well as based designer and e-retailer Zara Terez. sales fi nally eclipse those of games for popular in 2015. In India, the brand’s plans are even more consoles.195 This trend is moving so fast extensive, and its licensing partner, Dream that, by the end of 2014, market research A New Gaming Market Theatre, will launch confectionery and company Newzoo was forced to increase home furnishings, alongside a full clothing A report in September 2014 identifi ed that the growth estimates it gave in Q1 by over collection. With 45% of Candy Crush- 52% of the UK gaming audience were $5bn, to suggest that the global mobile rival Angry Birds’ revenue coming from female, a 3% increase from 2011205, and games market will be worth $40.9bn by merchandise, King Digital Entertainment the industry is rapidly innovating to adapt 2017.196 The UK is perfectly placed to has the potential to nearly double its to this increasing demographic. Female fl ourish in this rapidly changing market. earnings. As developers create more gamers have also been the most receptive to The Newzoo report acknowledges that content for female gamers, merchandising technological developments. They constitute the growth of mobile gaming can partly opportunities will continue to expand, 57% of mobile gamers in the US206, play be attributed to the cannibalisation of further pushing the growth of the gaming for 35% longer than men and spend 31% the console market, the value of which market, expected to reach $102.9bn by 207 has fallen from $28.9bn in 2008 to more on in-app purchases. Furthermore, 2017.216 $18.3bn in 2014.197 With 64% of its they play a wide variety of games; a study games developers publishing exclusively of 1.1 million gaming devices found that Real-Money Gameplay to mobile198, the UK can be expected to they outnumber men in a number of genres, As technological developments increasingly benefi t from this change to the industry. from bingo and poker to platform and 208 lead the digital and real world to overlap, The UK games industry has grown so fast management simulation games. video games now enable players to use that in September 2014 it was revealed Indeed, the gaming habits of this their own money within the game, in what that it was worth £1.72bn, double the demographic are behind some of 2014’s is known as ‘real money gameplay’.217 estimate of the government’s own growth biggest video games success stories. Kim Whilst games have long had their own forecast, making it the UK’s strongest Kardashian: Hollywood, a mobile game currencies or allowed users to pay to performing entertainment category.199 aimed at the star’s young female fans, unlock new levels, the prominence of Although mobile games are often cheaper earned over $43.4m from in-app purchases e-wallets and mobile data connectivity to purchase than console titles, they offer in its fi rst quarter209, quadrupling the means that it is now possible for gamers greater revenue potential. 40% of console revenue of its developer, Glu Mobile.210 to have instant access to their real bank owners only purchase one full-price What’s more, the loyalty of its predominantly accounts as they play. This has led market release a year200, whereas mobile games female users, who are 42% more likely analysts H2 to predict that real-money constantly offer players opportunities than male gamers to still be playing a title gaming will grow by 25% in just three to purchase new content. What’s a week after they purchase it211, led Glu to years, from being worth $30bn in 2012 to more, publishing to smartphones gives sign a further three-year licensing contract $40bn by 2015.218 The UK is one of the developers access to a greater number with Kim Kardashian.212 In an industry most developed markets for such gaming. of more affl uent consumers. A recent frequently beset with long-term insecurity, 4.5m Britons use their mobile phones to Deloitte survey revealed that the 49% of the loyalty of female gamers thus promises gamble219, whilst a KPMG report notes that UK households which owned at least one to offer greater stability. What’s more, the the UK is by far the largest, most mature smartphone were 12x more likely to own subsequent success of Lindsay Lohan: Price and most competitive online bingo market six or more other computing devices201. of Fame, a similar product aimed at an older globally.220 With France having unravelled More importantly, three quarters of those demographic, suggests that there is the its state monopoly on gambling, and the households fell into the ABC1 category, potential for more celebrity-based games to USA increasingly legislating in favour of and so have the highest expendable enter the market. With celebrity endorsement real-money gameplay, the opportunities for income.202 Mobile gaming thus allows already having created a spin-off perfume experienced British developers are strong. developers to reach wealthier consumers industry worth $1.2bn213, it has the potential Indeed, this has led to the takeover of with more opportunities to purchase to earn the games industry a lot more than bingo-game developer Bejig by Gaming more content. Indeed, the desire to play the $200m thought to have been made by Realms, a new group of gambling and for longer is the most popular reason for Kim Kardashian: Hollywood in the year of its gaming companies that aims to lead this purchasing mobile games, and it is clear release.214 global trend, and the acquisition of mobile that mobile games developers have the bingo provider Chelbis by Contagious opportunity to earn revenue across several Gaming for $3.5m221.

19 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Developers are only just beginning to Releasing games directly to mobile, UsTwo realise the potential of integrating real- ONES TO WATCH is one of a new generation of developers money gameplay. In November 2014, Atari that uses its expertise to create new kinds announced the launch of Atari Casino, of digital content. Furthermore, as well as King Digital Entertainment which will see monetised adaptations of the game Monument Valley, which earned classic games such as Star Raiders and London-based King Digital Entertainment over £1.2 million in its fi rst month, UsTwo Pong. As CEO Fred Chesnais declared, (KDE) is one of the world’s biggest games is responsible for the operating system of ”The real-money gaming industry is developers. With revenues of $2.31bn227, Tesco’s Hudl tablet and the interface of growing at a rapid rate and we have in 2014 its games were played over 834 Barclays’ PingIt app. Even the music in the opportunity to capture a piece of million times a day by an average of 348 the UsTwo offi ce is controlled by an app the market at an early stage”.222 Real- million unique users each month.228 King’s of their own design.234 UsTwo thus has money gaming also promises greater games, such as Candy Crush Saga, are a wealth of useful resources, and it puts opportunities for new developers, giving available on platforms from Apple iOS and these to use, along with investment capital, them access to an additional revenue Facebook to Chinese web browser Tencent. in a venture programme that is responsible stream and increased exposure. Revered By pursuing compatibility across platforms, for a third of its revenue.235 As founder game developer American McGee recently at the very time that tech manufacturers are John Sinclair explains, with the same announced the launch of a mobile trying to lock users into their ecosystems, skills increasingly in demand by everyone spin-off of the 3D-action title Akaneiro: King Digital Entertainment has been able to from games developers to online banking Demon Hunters, that would allow users amass a digital network of users larger than designers, “It’s all about talent - everyone’s to use real money in a slot-machine style Amazon, Twitter or Linkedin.229 It is this fi ghting for talent.” With an expanding game.223 McGee explained that playing network that allows it to make a profi t from staff of over 200, and industry infl uence with real money would increase the thrill its free-to-play games, through advertising through its venture programme, UsTwo is for his adult gamers, whilst supporting the revenue and in-game purchases. In Q3 leading this international competition for development of new titles, and encouraged 2014 alone it made over $500m from in- talent.236 other developers to do so.224 BeTable, a game purchases, 77% of which was from British company that helps developers to mobile phones, suggesting that King Digital Media Molecule convert their titles to casino-style games, Entertainment, and the mobile-focussed UK The news that women now represent the raised $18.5m in a second round of games industry, will continue to succeed majority of video game players will not venture capital funding225, and is credited 230 as mobile gaming expands. Indeed, with have come as a surprise to developer with introducing real-money gameplay KDE already outspending both Xbox and Media Molecule (MM). MM was co- to the US.226 With new markets yet to 231 PlayStation on TV advertising in the US , founded in 2006 by one of the industry’s develop, and games developers only just the company’s incredible growth looks set to leading female voices, Siobhan Reddy, who realising the potential for growth, H2’s continue. remembers deciding that, “‘I never want prediction of rapid expansion for real- to make another game where we don’t money games seems a safe bet. UsTwo address our female audience.”237 Its fi rst UsTwo is the company behind Apple’s Ipad major game Little Big Planet achieved Game of the Year 2014232, Monument this and revolutionised the industry by Valley, and is one of the largest tech inviting co-operation between players developers in the UK, with annual and allowing them to design their own revenues of over £20 million.233 With game environment. The game won 2 offi ces in London, New York and Sweden, BAFTAs238, sold 5.74m units239, and led UsTwo will continue to expand with a to Media Molecule becoming a part of new offi ce in San Francisco in 2015, at the PlayStation Worldwide Studios. MM’s the heart of the American games industry. subsequent game, Tearaway, based on a

20 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

series of paper cuts, was similarly design Size Does Matter focussed and offers users the chance to YEAR AHEAD Size Does Matter is a mobile phone game follow all of its events through a female created for Channel 4 by Dos Studios. character. With Sony’s continued support, Despite being the studio’s fi rst ever game, it 2015 is expected to be an incredibly and a highly anticipated new game for has received a Pocket Gamer Silver Award strong year for the UK games industry, release in 2015, Media Molecule will and the BAFTA One To Watch Award in from established developers to start-ups. continue to ride the wave of female 2014.244 The game was released to promote The year will see new releases from Media engagement. the 4Music television channel, and is centred Molecule and Microsoft-owned Dare for the PS4 and Xbox, as games consoles Jagex around a series of challenges set to music by leading electronic artists. Size Does fi ght to keep their audience by pioneering 247 Founded in 2001, Cambridge-based Jagex Matter shows how games can be used to new eSports accessories. June 2015 is one of the UK’s best-established online promote other media. One of Channel 4’s will also see the release of London-based game developers, with over 500+ staff core ambitions for the past year was to, “look Rocksteady studios’ Batman: Arkham and offi ces in London and California.240 for opportunities in digital brand extensions Knight, the sequel its 5-million selling 248 Jagex is responsible for Runescape, an including mobile games”, following the Arkham City title . With 2015 predicted online fantasy game with over 200m success of products such as the Made In to be the year in which mobile games accounts241, and which retains the Chelsea Game, which left 95% of users overtake consoles, it is also expected to Guinness World Record for the Most more likely to watch the television series.245 be a strong year for the next generation of Popular Free Online Multiplayer Game. Size Does Matter promotes 4Music as well developers. This community will receive Though it made its name with a traditional as the individual artists featured within the a boost from the London Mobile Games fantasy game, Jagex is dedicated to game, making the content more desirable Week in January 2015. The BBC will innovation. Based in Cambridge, it has by introducing an interactive element. be attending the event, seeking games close links to the university, and a number Channel 4’s 2014 report explains that games partners for its biggest IP, such as Top of its staff are drawn from there, including have been so successful that they have, Gear, Doctor Who and The Great British founder Andrew Gower.242 Having already “integrated online and TV commissioning Bake Off. 2015 will also see highly developed an enormous and dedicated teams to ensure a cross-platform approach anticipated new games from UsTwo and community of players with Runescape, across the whole organisation.”246 Space Ape, whose last title, Samurai Jagex is expected to achieve comparable Siege, has earned more than $21m since success with its new title, Block N Load. its release in 2013.249 With mobile games As Vice President David Solari explains, the becoming progressively mainstream, fi rst developmental rule of this game was mobile developers will be an increasingly that it should be fun, and features such as powerful position as they lobby the the cartoonish characters and a constantly- government to give video games the same changing game world will see the game cultural recognition as music and fi lm.250 appeal to an even broader audience243. $93BN Globally, the video games industry is worth $93bn, more than the fi lm and music industries combined.

21 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Theatre Thanks to the increasing popularity of experiences over products251, and the development of new technology that allows these experiences to be shared with more people than ever, the theatre industry has been fl ourishing for several years252. This is most true of London’s West End, which, despite government cuts to arts funding, earned £618.5m in 2014 and was 20% busier than Broadway253. However, whilst the industry’s success is not new, 2014 saw the development of a number of new initiatives that have improved its profi tability, from the expansion of live broadcasting to the development of new experiential experiences and the introduction of theatre tax relief. As the industry continues to adapt to these trends in 2015, audiences can expect an increasingly international, immersive and accessible experience. KEY FACTS & FIGURES 76% £618.5M 55% 76% of the UK population have been In the same period, London theatres 55% of theatregoers would happily see the to at least one theatre performance in earned £618.5m in revenue, more than same show more than once, suggesting the past four years, far higher than the the cities cinemas.258 there is enormous potential for returning number that attended sporting (47%) or productions as well as video on demand music events (53%).254 6,500 services such as Digital Theatre.260 The London theatres employ more than 58% 6,500 full-time non-performing staff, in 200% 58% of theatre attendees attend more than addition to the 3,000 performers appearing The UK National Theatre’s NT Live service, two performances a year.255 on the stage at any one time. through which it broadcasts its performances to cinemas around the world, grew by over 241 1M 200% in 2013-14 alone.261 London has more than 241 professional Between 2012-3, more than 1 million theatres, and together they are able to seat people visited Stratford-Upon-Avon, British 38% more than 11,000 audience members.256 theatre’s second city, to see productions by A recent poll revealed that theatre is a the Royal Shakespeare Company including social experience, with the majority of Matilda The Musical and Richard II.259 attendees (38%) visiting in groups of 22M three of more.262 In 2012-3, more than 22 million people visited a London theatre, making it the most popular city for theatrical performances in the world.257

22 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

accessible forms of performance. On the expand globally.278 Whilst the growth of its KEY TRENDS day of the UK parliamentary elections portfolio of venues is restricted by the lack in 2015, Channel 4 will broadcast of available theatre space in London, the a production live from the Donmar Live Theatre Broadcasting : market for the group’s intellectual property Warehouse theatre in London that depicts A Growing Source of Revenue is growing worldwide. The Really Useful responses to the events taking place on Though live theatre broadcasting is not that date. In doing so, it promises to Group has already had great success in new (New York’s Metropolitan Opera reach many more millions of viewers than China; after several successful tours of organised the fi rst live stream in 2006263) the 250-seat auditorium can hold. More China, Cats was chosen by the Shanghai it is only now beginning to represent an importantly, this production establishes Grand Theater to receive a Mandarin important revenue stream for many arts a new framework for producing theatre translation in 2012, allowing it to reach a institutions. Indeed, it has become an for television. The play will only complete far greater audience.279 Likewise, Phantom industry in itself, and it is currently the a short-run at the theatre before it airs, of the Opera, which has made $5.6bn fastest growing technology within the UK reducing costs and allowing the producers worldwide, sold 5,000 tickets in fi ve arts today.264 to hire, “some of the UK’s most admired actors”.271 What’s more, it will be fi lmed by hours when a production in Shanghai was When live broadcasting was fi rst TV production company TwoFour, which announced.280 introduced, theatres were understandably has suggested that the camera rig it uses to cautious in their expectations of the new fi lm fl y-on-the-wall documentaries can be Thanks to new tax incentives technology. The National Theatre chose easily adapted for the theatre.272 TwoFour British theatre is benefi ting from a not to sell future rights to broadcast was recently named the UK’s ‘Best Indie unique combination of commercial performances, in an attempt to avoid Production Company 2014’, and its competitiveness and cultural exchange complex negotiations and royalty support for this project suggests that there 265 that allows it to succeed internationally. disputes . Now that its popularity has is more commercial interest in broadcasting This is best shown by the recent success been proven however, theatres are fi nding from the theatre. Indeed, in 2013 Google of the Royal Shakespeare Company (RSC), new ways to make it profi table. The New worked with the Royal Shakespeare York Metropolitan Opera, which made just Company to devise and broadcast an which has found international success in $5million from the technology when it interactive production of A Midsummer both New York and Beijing. The higher introduced it in 2006, made $34.5million Night’s Dream273, whilst in 2014 The cost of producing and installing a show in 266 from it in 2013. Likewise, in just one Guardian partnered with London’s Royal New York, which is often four times that year, NT Live has grown from making Court Theatre to create short plays in of London, means that many more shows £2.4million and constituting just 3% of 274 response to topical events. With the transfer from the West End to Broadway the National Theatre’s annual income, to audience for live broadcasts growing 267 than vice versa. The Royal Shakespeare making £6.7million, 7% of its income. rapidly, and producers keen to explore the NT Live broke records by broadcasting technology further, live broadcasting is Company’s Matilda musical, which the theatre’s production of Warhorse to set to become an increasingly important transferred in 2013, has made over $16 over 1.4 million people worldwide, and aspect of the theatre industry. million in just 19 months on Broadway, its success can be expected to continue making it one of New York’s most as the theatre places it at the heart of its The Future of International successful shows.282 It has more recently growth plans268. Plans for the structural Productions been joined by the RSC’s production of redevelopment of the theatre have been specifi cally designed to accommodate the Whilst London theatre might be more Wolf Hall, which is expected to be one expansion of NT Live, and will allow the successful than ever, investors recognise of its most successful plays of 2015.283 theatre to house its own digital production that the export of British theatrical content The RSC is also at the forefront of China’s 269 presents even greater opportunities for facilities. The commercial value of developing theatre industry. In September growth. The Ambassador’s Theatre Group, theatre broadcasting has been recognised 2014, it received a £1.5m government by Digital Theatre, a video on demand the largest theatre owner in the world, was grant to translate Shakespeare’s plays into service which allows users to watch bought by Providence Equity in 2013 for 275 Mandarin, and fourteen Chinese plays productions by some of London’s biggest £350m , and subsequently announced 276 284 theatres at home. With global access extensive expansion plans . It will build into English. Moreover, it is also seeking rights, and apps available for computer, and run a new theatre in Seoul, the commercial partners for a forthcoming SmartTV and mobile phone,270 Digital world’s fi fth largest musical theatre city, as tour of China. Having increased its trading well as opening two theatres in Sydney, Theatre has the potential to bring the income by 45% in 2014285, whilst winning the city which currently provides most London stage to a much larger audience new government grants and increasing than the 2,700,000 who have already of the international products that tour in 277 its profi le abroad, the Royal Shakespeare watched an NT Live production. South-East Asia. In 2014, it was also announced that Andrew Lloyd Webber’s Company is thus creating new commercial As well as providing theatres with much Really Useful Group was to split its theatre- opportunities as it opens up new markets. needed revenue, live broadcasting is also owning arm from its copyright-owning leading them to develop new and more division, in order to allow the latter to

23 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

Immersive Theatre Turns A Profi t pd3, which more frequently produces Likewise, the Ambassador’s Theatre (to experiential advertisements for brands such be renamed the Sondheim Theatre) will Immersive theatre, in which the as O2 and Nike, supported this theatrical be completely remodelled to remove audience is free to roam whilst actors production, suggests that it may herald a the proscenium stage, and to give an perform around them, is no longer new. new, more profi table, era for immersive auditorium that is similar to newer theatres Punchdrunk, the British company which theatre. As well as seeing the return of elsewhere. This will not only better pioneered this style of theatre, was formed You Me Bum Bum Train, one of the fi rst equip the theatre to accept transferring in 2000, and has since created more companies to experiment with this style, productions, encouraged under the UK’s than twenty different productions286. In 2015 will also see a new, immersive tax relief scheme, but will also allow it to 2014, however, the commercial potential production of Alice in Wonderland by offer directors used to working elsewhere of immersive theatre became apparent. theatre company Les Enfants Terribles and even greater fl exibility295. With trends Punchdrunk’s newest show, The Drowned producer Emma Brunjes. What’s more such as immersive theatre and increased Man, was supported by the National Punchdrunk, which has used its skills international touring rapidly transforming Theatre and sold more than 157,000 to create experiences for brands such as the industry, Cameron Mackintosh’s tickets.287 In doing so, it reached more than Playstation and Stella Artois, will launch decision to renovate these theatres from double the number of audience members an educational experience at the National the inside out should prove to be a wise as The Shed, the space the National Maritime Museum, revealing the versatility investment. 288 Theatre dedicates to new plays. Whilst with which immersive theatre is able to Punchdrunk’s productions are supported create new value for existing organisations. Secret Cinema by arts funding in the UK, in New York Thus, despite often being more expensive Secret Cinema was founded in 2007 they have been produced by Emursive, to produce, immersive theatre is able to by Fabien Riggall, who had formed a production company established to create new revenue streams for the sector, Punchdrunk only seven years before.296 realise the potential of interactive theatre. and will become increasingly important as The company began by using live There, although Punchdrunk’s Sleep the industry continues to develop. No More was the most expensive Off- performance to create immersive Broadway production of all time, costing screenings of classic fi lms, staging Blade just under $10m, it has been consistently Runner in the set of a future city and sold-out for 3 years and now returns an ONES TO WATCH Ghostbusters in a tropical garden. As well annual profi t.289 Moreover, Emursive has as increasing the length of its runs, to make £3.37m in 2014297, Secret Cinema added new ventures to the site of the Cameron Mackintosh show, including a 140-seat restaurant, a also offers theatrical solutions for a number rooftop bar and a music venue, that have Cameron Mackintosh Limited is one of of other entertainment industries. Recently, become popular entertainment venues in the largest theatre production companies fi lm producers have realised the value of their own right.290 As venues such as the in the world, and in the fi fty years since Secret Cinema productions in generating National Theatre look to form sustainable it was founded it has been responsible publicity, and it was given the exclusive relationships with the businesses around for some of the world’s most successful right to show preview performances of The them, Punchdrunk’s decision to extend shows, including Cats, Les Miserables Grand Budapest Hotel and Prometheus, its intellectual property across these and Phantom of the Opera. It also owns with the former making over £1.1m in 298 commercial enterprises provides a useful seven of London’s West End theatres, a very short run. Secret Cinema also example. and has consistently invested in them to partnered with Virgin Records to organise ensure that they remain competitive in the a series of concerts for singer Laura Indeed, 2014 also saw the success of changing theatre industry. In 2014, the Marling that were as theatrical as they several more commercial immersive company purchased the Victoria Palace were musical. With concert sales having productions. Secret Cinema, which screens and Ambassador’s Theatres.293 Plans tripled within a decade and continuing fi lms in theatrical settings, staged a for the former will allow the stage to be to grow, Secret Music offers artists the performance based on Back To The Future extended so that it can accommodate opportunity to expand their offering, and to an audience of 80,000291. Moreover, large-scale productions, particularly those reach an even bigger audience. Likewise, London-based ‘creative agency’ pd3 that transfer from cities whose theatres with the global restaurant industry also helped to produce an immersive theatre aren’t constrained by the largely Victorian booming, Secret Cinema is focussing on production entitled Grimm’s Tales292. That architecture of London’s West End.294 its Secret Restaurant venture, which will

24 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

allow restaurants to offer a more theatrical company’s commercial viability was London and Paris. With the show having experience. With Punchdrunk’s ‘The Heath’ recognised from the start, and it received already toured to Taiwan, it is scheduled to restaurant already fi lling 140-seats, there a £750,000 investment from one of the tour internationally throughout 2015-16311. is clearly the potential for Secret Restaurant UK’s largest media funds, run by The 1927’s use of cutting-edge technology has to make a similar impact in the UK, adding Ingenious Group.304 In addition, Ingenious’ thus allowed it to devise a form of theatre another revenue stream to the company’s Chief Executive Patrick McKenna invested that will remain especially viable as the bow. £250,000 of his own money.305 By industry becomes increasingly reliant on securing the international rights for its the revenue from international tours, and Neal Street Productions productions, Digital Theatre has access to the UK government continues to uphold a vast audience, and its archive already its tax relief for touring productions. Neal Street Productions was originally includes numerous productions from set up in 1999 but in 2003 producers London’s Globe Theatre, as well as sell-out Pippa Harris and Caro Newling joined productions such as The Young Vic’s A Sam Mendes, who is best known as the Doll’s House. Since then, Digital Theatre THE YEAR AHEAD director of Skyfall and the forthcoming has added several new revenue streams, James Bond movie, Spectre.299 Neal including an educational subscription 2015 promises to be an incredibly busy Street is unique in producing for fi lm, TV service that is offered to schools and year for British theatre. The spring will see and theatre, and revenue from international reaches more than 2 million students.306 a number of immersive performances from sources has been at the heart of its Moreover, Digital Theatre has partnered Secret Cinema, Punchdrunk, Les Enfants commercial success. Whilst the recently with Qatar Ministry of Culture to fi lm Terribles and You Me Bum Bum Train, introduced 25% tax relief on touring theatrical productions from the United Arab as the companies compete to satisfy the theatre productions can be expected Emirates and make them available to an city’s well-established taste for immersive to generate an increase in the number international audience.307 2015 will see theatre. Experimentation with even newer of shows that transfer to the UK from Digital Theatre continue to grow, as it adds forms will continue when Channel 4 America, such as The Scottsboro Boys, a the Old Vic Theatre to its list of partner broadcasts The Vote live from the Donmar musical which qualifi ed for a £120,000 organisations, and continues to expand the Warehouse on 7th May, potentially rebate300, Neal Street Productions has Digital Theatre Plus programme in schools inaugurating a new style of television play, already developed expertise in this area. through a partnership with academic as well as a new government.312 In 2009 it launched The Bridge Project, publisher Routledge.308 Arts Council funding is predicted to stay which led to the co-production of plays constant after the election and large grants between The Old Vic in London and BAM 1927 such as the £1.5m given to the RSC will in New York.301 Moreover, Neal Street produce results in 2015. Records will be has facilitated the transfer of a number Founded in 2005, by animator and broken in August, however, when Benedict of London’s most successful productions illustrator Paul Barratt, and writer and Cumberbatch stars in an already sold-out to New York, including Enron, Red and performer Suzanne Andrade, 1927 bring production of Hamlet at the Barbican Merrily We Roll Along, and vice versa animation to life in a unique form of theatre Theatre that has become the fastest- with the transfer of the $24m Shrek: that fuses projection with live animation.310 selling ticket in London theatre history.313 The Musical to London.302 With new UK As well as being celebrated for this With the producers in talks to broadcast tax legislation expected to increase the ground-breaking aesthetic, 1927 have the performance in cinemas, it has the number of touring productions, Neal Street also been praised for its cost-effi ciency potential to beat Warhorse’s cinematic Productions can be expected to continue to and ability to raise funds. Although the audience of 1.45m and become the generate excellent value once it is sold in company was denied funding as one of production that defi nes London theatre 2015, for a guide price of £40m.303 Arts Council England’s National Portfolio for another fi ve years.314 Organisations , the much lower production Digital Theatre and transportation costs that result from its use of projection has allowed it to tour Digital Theatre was launched in 2009 its productions much more extensively. as an online video on demand service Thus, despite being small in scale, its that allows users to view productions 2014 show, Golem, was produced in from a number of London theatres. The collaboration with theatres in Salzburg,

25 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

78. Film Industry Survey 2014, Stephen Follows 79. Crowd Fund Insider REFERENCE 80. ‘Crowdfunding is Opening Investment Doors’ Th e Wall Street Journal (November 2014) 81. ‘Your Guide to Crowdfunding’, KFTV (February 2014) 82. Salty, Syndicate Room 1. ‘Creative Industries Worth To UK Economy Reaches Record High’, Music Week (January 2015) 83. Salty, Syndicate Room 2. ‘UK Entertainment Outlook 2014-18’, PWC (August 2014) 84. ‘Th e Next Step in Film Crowd-Funding’ Forbes (November 2014) 3. Th e Communications Market 2014, Ofcom 85. Deloitte Media Consumer Survey 2014 4. TV Export Bible: Th e Guide to Global TV, Pact 86. Cineworld PLC Annual Report and Accounts 2012 5. A New Age of TV Content Creation and a New Role for the BBC, Oliver & Ohlbaum Associates Ltd 87. Cineworld PLC Annual Report and Accounts 2012 6. Th ird Biennial Review of the Window of Creative Competition, BBC 88. ‘Tugg Celebrates First Year’ Screen Daily (March 2013) 7. TV Export Bible: Th e Guide to Global TV, Pact 89. ‘Movie Platform Provider Tugg Raises $5.9m from Investors’ Austin Business Journal (November 2014) 8. Th e Communications Market 2014, Ofcom 90. ‘Northern Soul is a surprise top 10 hit at the UK box offi ce as the Turtles roll in’ Th e Guardian (October 9. Th e Communications Market 2014, Ofcom 2014) 10. Th e Communications Market 2014, Ofcom 91. Pinewood Shepperton PLC Annual Report and Accounts 2014 11. Th e Communications Market 2014, Ofcom 92. Pinewood Studio 12. Commissioning TV: Th e WoCC, BBC 93. Pinewood Studios Owner Acquires Aviva JV Stake, Insider Media Ltd 13. BBC Drama to Cut Back Production Team, Broadcast (October 2014) 94. Pinewood Shepperton PLC Annual Report and Accounts 2014 14. TV Industry Hails BBC Proposals for ‘Competition Revolution’, Financial Times (July 2014) 95. Pinewood Shepperton PLC Annual Report and Accounts 2014 15. £400m Commissions up for Grabs as BBC Plans to Remove Production Quotas, Prolifi c North (July 2014) 96. Universal 16. BBC Drama to Cut Back Production Team, Broadcast (October 2014) 97. BFI Statistical Yearbook 2014 17. Th e Manifesto For Growth September 2014, Pact (September 2014) 98. ‘Sam Mendes production company up for sale for £40m’ Th e Guardian (November 2014) 18. A New Age of TV Content Creation and a New Role for the BBC, Oliver & Ohlbaum Associates Ltd 99. Sam Mendes production company up for sale for £40m’ Th e Guardian (November 2014) 19. All3Media Boss Urges BBC to Tender Flagship Shows, Broadcast (November 2014) 100. Neal Street Productions, IMDB 20. Th e Manifesto For Growth September 2014, Pact (September 2014) 101. Curzon Home Cinema 21. Media Consumer 2014: Th e Digital Divide, Deloitte (November 2014) 102. Curzon Cinemas: Coming Soon 22. Netfl ix Declares Binge Watching is the New Normal, Netfl ix (December 2013) 103. City AM 23. Media Consumer 2014: Th e Digital Divide, Deloitte (November 2014) 104. ‘Samsung unveils new and improved Curzon Home Cinema App to its Smart TV App store’, Hexus 24. Media Consumer 2014: Th e Digital Divide, Deloitte (November 2014) (November 2014) 25. Th e Communications Market 2014, Ofcom 105. Fly Film 26. Content Consumption, GfK (August 2014) 106. NESTA: Fly Film 27. European Online TV & Video Forecasts, Digital TV Research (August 2014) 107. BFI Statistical Yearbook 2014 28. A Year on from Th e Killing that Reinvented Noir, Th e Copenhagen Post (October 2013) 108. ‘Netfl ix Adds reeTh More Original Kids’ Shows from Dreamworks Animation’, Tech Crunch (March 2014) 29. UK and Denmark deepen economic ties thanks in part to ‘Th e Killing’ and ‘Borgen’, Danish-UK Chamber 109. CBBC Announces In-House Commissions for 2015, Kidscreen (December 2014) of Commerce (July 2013) 110. ‘What to Expect From Cinema Advertising in 2015’ Th e Drum (January 2015) 30. Premiere of Downton Abbey Series 4 Reaches 15.5 Million People, PBS (January 2014) 111. BFI Statistical Yearbook 2014 31. Chinese Viewers in their Millions are Captivated by Western Hits, Th e Guardian (November 2014) 112. Accelerate Animation Report 2014 32. Sky Atlantic Set to Almost Double Spend on UK Content by 2014, Th e Guardian (May 2012) 113. ‘Global Animation Industry Report 2014’, Research and Markets (January 2014) 33. Why British Producers are Going Global, Th e Guardian (May 2013) 114. ‘Th e UK’s Animation Industry Celebrates 60 Years of Success’, BBC (October 2014) 34. Sky to Off er Th e Tunnel and Moone Boy Episodes Free on Youtube, Th e Guardian (January 2014) 115. Skillset 2012 Employment Census, Skillset (December 2012) 35. Th e Tunnel Second Series Aims to Reunite Stephen Dillane and Clemence Poesy, Th e Guardian (March 116. Netfl ix Adds reeTh More Original Kids’ Shows from Dreamworks Animation’, Tech Crunch (March 2014) 2014) 117. ‘Viewpoint: How Funding Scheme’s Are Driving UK Animation’, TBI Vision (July 2014) 36. Sky Atlantic Crime Drama ‘Th e Last Panthers’ Boasts All-Star Cast, USwitch (September 2014) 118. ‘UK Animation Industry in ‘Crisis’’, Deutsche Welle (March 2012) 37. All3Media’s Queen Has A Th ree-Year Strategy to Build Its Wealth, Th e Guardian(June 2013) 119. ‘Securing the Future of UK Animation’, Animation UK (September 2011) 38. Liberty Global and Discovery Agree £550m Takeover for UK’s All3Media, Financial Times (May 2014) 120. ‘Osborne’s Tax Credit is a Game Changer for the Animation Industry’, Tech City News (February 2014) 39. All3Media’s Queen Has A Th ree-Year Strategy to Build Its Wealth, Th e Guardian(June 2013) 121. ‘Osborne’s Tax Credit is a Game Changer for the Animation Industry’, Tech City News (February 2014) 40. All3Media’s Queen Has A Th ree-Year Strategy to Build Its Wealth, Th e Guardian(June 2013) 122. ‘French Kids TV At A Crossroads’, TBI Vision (June 2014) 41. Another Stellar Year for UK Television Exports with Exports up 5% to £1,284M, Pact (October 2014) 123. ‘CBBC Announces In-House Commissions for 2015’, Kidscreen (December 2014) 42. Th e Missing series two is happening, Radio Times (December 2014) 124. HM Revenue and Customs: Children’s Television Tax Relief 43. Question Time producer Tinopolis up for sale, Th e Guardian (October 2014) 125. Nexus Productions 44. Question Time producer Tinopolis buys Firecracker Films, Th e Telegraph (December 2012) 126. ‘Technology and Skills in the Digital Industries’, UK Commission for Employment and Skills (September 45. Tinopolis snaps up Firecracker Films, Financial Times (December 2012) 2013) 46. Tinopolis Buys US Indie Magical Elves, Broadcast Now (February 2014) 127. ‘Seven Animation Firms Land Tax Credits’ , Broadcast ( September 2013) 47. Shine Gains Kudos in £35m Buyout, Broadcast (January 2007) 128. Blue Zoo 48. Kudos Boss Says UK Shows Like Spooks are at Risk from Funding Gap, Th e Guardian (February 2010) 129. Sliced Bread 49. Broadchurch Triumph at Baftas Watched by 5 Million, Th e Guardian (May 2014) 130. ‘Seven Animation Firms Land Tax Credits’ , Broadcast ( September 2013) 50. UK Streaming Service Blinkbox Inks Deal With EFD, Variety (December 2014) 131. Formula Fun Entertainment 51. Tesco’s Blinkbox Sets Sights on Sky Go Movies with Offl ine Downloads, Huffi ngton Post (December 2014) 132. ‘Frozen Becomes Fifth Biggest Film in Box Offi ce History’, BBC (May 2014) 52. TV Nation Report 2014, Th inkbox (December 2014) 133. ‘Frozen Breaks DVD Sales Record on Amazon’ Wall Street Journal (March 2014) 53. Chalkboard TV Wins First Commission, Broadcast (November 2014) 134. ‘Frozen is 2014’s Best-Selling DVD’ Th e Telegraph (December 2014) 54. Sky Vision signs exclusive development and distribution partnership with Chalkboard TV, Sky Vision 135. ‘Frozen is 2014’s Best-Selling DVD’ Th e Telegraph (December 2014) (November 2014) 136. ‘Frozen is 2014’s Best-Selling DVD’ Th e Telegraph (December 2014) 55. Sky Vision signs exclusive development and distribution partnership with Chalkboard TV, Sky Vision 137. ‘Disney Profi t Tops Estimates as Hit Films Spark Studio’, Bloomberg (August 2014) (November 2014) 138. ‘Disney Animation is Closing the Book on Fairy Stories’, LA Times (September 2010) 56. Izen Targets UK Export Formats, C21 Media (March 2014) 139. ‘Th e Global Shortage of Frozen Merchandise is Making Little Girls Cry’, Vanity Fair (April 2014) 57. Cable & Wireless PLC, Financial Times (October 2012) 140. ‘Mattel Profi t Misses Estimate as Barbie Slump Endures’, Bloomberg (October 2014) 58. BFI Statistical Yearbook 2014 141. ‘Mattel Buys HIT Entertainment for $680’, Financial Times (October 2011) 59. BFI Statistical Yearbook 2014 142. ‘Mattel Buys HIT Entertainment for $680’, Financial Times (October 2011) 60. BFI Statistical Yearbook 2014 143. ‘Mattel Profi t Misses Estimate as Barbie Slump Endures’, Bloomberg (October 2014) 61. BFI Statistical Yearbook 2014 144. ‘Floundering Mattel Tries to Make Th ings Fun Again’, Wall Street Journal (December 2014) 62. BFI Statistical Yearbook 2014 145. ‘Frozen Dethrones Barbie as Top Toy for Girls this Holiday’, Fortune (November 2014) 63. BFI Statistical Yearbook 2014 146. ‘Toy Shop Owner Restricts Frozen Dolls to One Per Person’, BBC News (December 2014) 64. BFI Statistical Yearbook 2014 147. ‘Oh, Snap! Lego’s Sales Surpass Mattel’, Wall Street Journal (September 2014) 65. BFI Statistical Yearbook 2014 148. ‘HIT Entertainment Reveals All-New Look for Bob Th e Builder’, HIT Entertainment (October 2014) 66. BFI Statistical Yearbook 2014 149. ‘Disney Continues its Animation Revival with Big Hero 6’, Sydney Morning Herald (December 2014) 67. Skyfall ‘most successful’ James Bond fi lm tops $1bn at global box offi ce, Th e Telegraph (December 2012) 150. ‘Ofcom: One in Th ree Children Now Has Own Tablet, Supplanting TV’, Th e Guardian (October 2014) 68. Pinewood Studios Development Framework 151. ‘10 Children’s App Trends for 2015’, Th e Guardian (December 2014) 69. ‘Pinewood Shepperton Stars with 10% Rise in Profi ts’, Financial Times (November 2014) 152. ‘10 Children’s App Trends for 2015’, Th e Guardian (December 2014) 70. ‘UK’s Elstree Studios Begins Multi-Million Pound Expansion, Financial Times (April 2014) 153. ‘Leapfrog Unveils New LeapPad 3 and UltraXDi Tablets’, PC Advisor (June 2014) 71. ‘Belfast’s Titanic Studios to Expand’ Screen Daily (August 2014) 154. ‘Netfl ix Adds Th ree More Original Kids’ Shows from Dreamworks Animation’, Tech Crunch (March 2014) 72. Delivery Options for Production Space for Film and TV: Report for Scottish Enterprise March 2014 155. ‘Can Netfl ix Drive Consumer Product Sales?’ Kidscreen (November 2014) 73. ‘Home Entertainment Subscription Spend Exceeds Rental for First Time’ NScreen Media (November 2014) 156. ‘BBC Launches First CBBC Channel Focussed GO CBBC App’, BBC (December 2014) 74. BFI Statistical Yearbook 2014 157. ‘New Chinese SVOD Platform for Kids Launches’, Kidscreen (January 2015) 75. ‘Netfl ix takes on $400m in new debt to fund European expansion’ Venture Beat (February 2014) 158. ‘Reading Report’, Scholastic (January 2015) 76. ‘Netfl ix dominates TV streaming’ Slash Gear (August 2013) 159. ‘Nosy Cow Talks Fairytales, Reluctant Readers and Game-Like Apps for Kids’, Th e Guardian (January 77. Global Media and Entertainment Outlook 2014-18: Filmed Entertainment, PWC 2014)

26 CREATING GROWTH: THE FUTURE OF THE UK ENTERTAINMENT INDUSTRY

160. ‘Wallace and Gromit’s Hollywood Deal’, Th e Guardian (October 1999) 243. ‘Interview: Jagex Talks Block N Load, Ace of Spaces, and the Future of Th eir New Shooter’, Nerdable 161. ‘It’s a Cracking Year for Aardman After Success in its TV and Film Divisions, Th is is Money (October 2014) (December 2014) 162. ‘Aardman Updates AnimateIt for iOS to Version 2.0 With Design Refresh Plus New Features’, AppAdvice 244. Itunes Store: Size Does Matter (January 2015) 245. ‘Channel 4 Annual Report 2013’, Channel 4 (May 2014) 163. ‘Morph’s Crowdfunded Comeback Airs on Youtube Today’, Engadget UK (June 2014) 246. ‘Channel 4 Annual Report 2013’, Channel 4 (May 2014) 164. ‘Securing the Future of UK Animation’, Animation UK (September 2011) 247. ‘Media Molecule Teases Sony Exclusive ‘Game’ for 2015’, Design&Trend (January 2015) 165. ‘Tim Burton’s Corpse Bride’, Box Offi ce Mojo (January 2015) 248. VChartz 166. ‘Seven Animation Firms Land Tax Credits’ , Broadcast ( September 2013) 249. ‘Space Age: We Want to be the Blizzard of Mobile Gaming’, MCV UK (December 2014) 167. ‘Komixx Entertainment and Mackinnon & Saunders Form New Studio’, Animation Magazine (September 250. ‘Video Games Need Same Cultural Status as TV and Film’, BBC (December 2014) 2013) 251. ‘Why Millennials Don’t Want to Buy Stuff ’, Fast Company (July 2012) 168. ‘Channel 5 Lands Wanda and the Alien’, Kidscreen (August 2014) 252. ‘London Th eatre Report: 2014’ Society of London Th eatre (October 2014) 169. ‘Elizabeth Murdoch, Double Negative Back New UK Animation House, Locksmith’, Variety (April 2014) 253. ‘London Th eatre Report: 2014’ Society of London Th eatre (October 2014) 170. Locksmith Animation 254. ‘State of Play: Th eatre UK’, Ticketmaster (September 2013) 171. ‘Elizabeth Murdoch, Double Negative Back New UK Animation House, Locksmith’, Variety (April 2014) 255. ‘State of Play: Th eatre UK’, Ticketmaster (September 2013) 172. ‘Dneg Launch New Feature Animation Section’, Double Negative (April 2014) 256. ‘London Th eatre Report: 2014’ Society of London Th eatre (October 2014) 173. ‘Elizabeth Murdoch, Double Negative Back New UK Animation House, Locksmith’, Variety (April 2014) 257. ‘London Th eatre Report: 2014’ Society of London Th eatre (October 2014) 174. ‘ London Calling: How Sarah Smith Plans to Bring Animation Back to the UK’, Animation World Network 258. ‘London Th eatre Report: 2014’ Society of London Th eatre (October 2014) (August 2014) 259. ‘Annual Report: 2013-4’, RSC (June 2014) 175. Sliced Bread 260. ‘State of Play: Th eatre UK’, Ticketmaster (September 2013) 176. Sliced Bread 261. ‘Annual Report 2013-14’, National Th eatre (October 2014) 177. Channel 4 Television Corporation: Annual Report and Statements 2009 262. ‘State of Play: Th eatre UK’, Ticketmaster (September 2013) 178. Sliced Bread 263. ‘Digital Broadcast of Th eatre: Learning from the Pilot Season - NT Live’, NESTA (March 2011) 179. Cognitive Media 264. ‘Live Broadcasting from the Arts: Th en and Now’, NESTA (January 2014) 180. Youtube 265. ‘Digital Broadcast of Th eatre: Learning from the Pilot Season - NT Live’, NESTA (March 2011) 181. ‘Ted Reaches its Billionth Video View’, TED Blog (November 2012) 266. ‘Met Opera Budget Falls Short’, Wall Street Journal (January 2014) 182. Cognitive Media 267. ‘Annual Report 2013-14’, National Th eatre (October 2014) 183. ‘Time Magazine’s Game of the Year is 80 Days’, Gamezebo (November 2014) 268. ‘Annual Report 2013-14’, National Th eatre (October 2014) 184. ‘Mobile Game Revenue to Overtake Consoles in 2015, Says Analyst’, Guardian (October 2014) 269. National Th eatre: NT Future 185. ‘Gartner Says Video Games Industry to Total $93bn in 2013’, Gartner (October 2013) 270. Digital Th eatre 186. ‘Th e Games Industry in Numbers’ NESTA (December 2014) 271. ‘Channel 4 to Air Th eatrical Event Th e Vote on Election Night 2015’, Channel 4 (November 2014) 187. ‘Global Entertainment & Media Outlook 2014-8’ PWC (October 2014) 272. TwoFour: Th e Vote 188. ‘Media Consumer 2014: Th e Digital Divide’ Deloitte (October 2014) 273. ‘Annual Review: 2013-14’, Royal Shakespeare Company (November 2014) 189. ‘Sources of Funding: Th e Sinews of Business’ TIGA (November 2014) 274. ‘Royal Court Th eatre Meets Th e Guardian in Microplays Series’, Th e Guardian (November 2014) 190. ‘UK Market Opportunity’ Th e Creative Industries (September 2014) 275. ‘Providence Buys Ambassador Th eatre Group for £350m’, Financial Times (October 2013) 191. ‘Th e Games Industry in Numbers’, UKIE (December 2014) 276. ‘Ambassador Th eatre Group Plans Major Expansion’, Th e Telegraph (March 2014) 192. ‘UK Games Sales up 7.5% Th anks to Digital’, PC Gamer (January 2015) 277. ‘Ambassador Th eatre Group Plans Major Expansion’, Th e Telegraph (March 2014) 193. ‘UK Video Games Fact Sheet’, UKIE (December 2014) 278. ‘Lloyd Webber Splits Th eatre Group to Expand on a Global State’, Th e Telegraph (March 2014) 194. ‘UK Video Games Fact Sheet’, UKIE (December 2014) 279. ‘Chinese Version of Musical Cats Opens in Shanghai’, CCTV (August 2012) 195. ‘Mobile Game Revenue to Overtake Consoles in 2015, Says Analyst’, Guardian (October 2014) 280. ‘Musicals Sing all the Way to the Bank as Popularity Soars’, China Daily (July 2013) 196. ‘Global Mobile Games Revenue To Reach $25bn in 2014’, Newzoo (October 2014) 281. ‘Tax Relief Sets Stage for Investment Boom in UK Th eatre’, Th e Guardian (September 2014) 197. ‘Th e Future is Cloudy for Consoles as Video Games Move Online’, Th e New Economy (October 2014) 282. ‘Broadway Musical Matilda Turns A Profi t’, Variety (December 2014) 198. ‘Th e Games Industry in Numbers’, UKIE (December 2014) 283. ‘Wicked and Th e Lion King - Broadway Booms By Playing It Safe’, Th e Guardian (January 2015) 199. ‘Games Give £1.72bn Boost’, Th e Creative Industries (November 2014) 284. Royal Shakespeare Company: Taking Shakespeare to China 200. ‘Media Consumer 2014: Th e Digital Divide’ Deloitte (October 2014) 285. ‘Annual Review: 2013-14’, Royal Shakespeare Company (November 2014) 201. ‘Media Consumer 2014: Th e Digital Divide’ Deloitte (October 2014) 286. Punchdrunk 202. ‘Media Consumer 2014: Th e Digital Divide’ Deloitte (October 2014) 287. ‘Annual Report 2013-14’, National Th eatre (October 2014) 203. Minecraft 288. ‘Annual Report 2013-14’, National Th eatre (October 2014) 204. iTunes Store: Minecraft 289. ‘Sleep No More’, Forbes (March 2014) 205. ‘Gaming Revolution’, Internet Advertising Bureau (September 2014) 290. ‘How Punchdrunk Conquered Manhattan’, Th e Guardian (April 2013) 206. ‘Mobile Gamers: Who Th ey Are, How Th ey Shop and How To Reach Th em’, IAB Analysis (September 2014) 291. ‘Can Secret Cinema Sell 80,000 Back To Th e Future Tickets?’, Th e Independent (July 2014) 207. ‘Mobile Gaming: Females Beat Males on Money, Time and Loyalty’, Flurry (August 2014) 292. pd3: Grimm’s Tales 208. ‘Mobile Gaming: Females Beat Males on Money, Time and Loyalty’, Flurry (August 2014) 293. ‘Cameron Mackintosh Buys West End’s Victoria Palace and Ambassador’s Th eatres’, Th e Stage (May 2014) 209. ‘Kim Kardashian: Hollywood App Earns $43.4m in Q3’, Mobile Marketing Magazine (November 2014) 294. ‘Cameron Mackintosh Buys West End’s Victoria Palace and Ambassador’s Th eatres’, Th e Stage (May 2014) 210. ‘Kim Kardashian: Hollywood Game Quadruples Developer’s Revenue’, Guardian (November 2014) 295. ‘Cameron Mackintosh Buys West End’s Victoria Palace and Ambassador’s Th eatres’, Th e Stage (May 2014) 211. ‘Mobile Gaming: Females Beat Males on Money, Time and Loyalty’, Flurry (August 2014) 296. ‘Th e Screen Saver: Secret Cinema’s Mission to Save the Movies’, Wired (June 2013) 212. ‘Kim Kardashian: Hollywood Game Quadruples Developer’s Revenue’, Guardian (November 2014) 297. ‘Lucy Holds on to Top Stop at UK Box Offi ce with $3.3m’, Screen Daily (September 2014) 213. ‘Justin Bieber and Taylor Swift Put Stink on Arden’s Celebrity Perfumes’ Th e Independent (August 2014) 298. ‘Can Secret Cinema Sell 80,000 Back To Th e Future Tickets?’, Th e Independent (July 2014) 214. ‘Kim Kardashian: Hollywood App Projected to Earn $200m in Its First Year’, Newsday (August 2014) 299. Neal Street Productions 215. ‘What is the Appeal of Candy Crush Saga?’, BBC News (December 2013) 300. ‘Tax Relief Sets Stage for Investment Boom in UK Th eatre’, Th e Guardian (September 2014) 216. ‘Global Games Market Will Reach $102.9BN in 2017’, Newzoo (May 2014) 301. Neal Street Productions 217. ‘Online Gaming Trends to Expect in 2014’, Gizorama (December 2014) 302. ‘Th e $24m Musical - Shrek Opens on Sunday on Broadway’, Broadway World (September 2008) 218. ‘Th ere’s Nothing Virtual About the Opportunity in Real-Money Gambling’, Odobo (October 2014) 303. ‘Sam Mendes’ Neal Street Productions Up For Sale’, Th e Stage (December 2014) 219. ‘Th ere’s Nothing Virtual About the Opportunity in Real-Money Gambling’, Odobo (October 2014) 304. ‘Ingenious Media Launches £10m Fund’, Th e Telegraph (January 2013) 220. ‘Online Gaming: A Gamble or a Sure Bet’, KPMG (December 2010) 305. ‘Ingenious Media Launches £10m Fund’, Th e Telegraph (January 2013) 221. ‘Contagious Gaming Agrees to Acquire Chelbis’, SIMKA Consulting (December 2014) 306. Digital Th eatre Plus 222. ‘Atari CEO Fred Chesnais Q&A: Real Money Gaming and Oculus Rift’, HITC Tech (December 2014) 307. Digital Th eatre 223. ‘American McGee: More Devs Should Explore Real-Money Gaming’, Develop (December 2014) 308. Digital Th eatre 224. ‘American McGee: More Devs Should Explore Real-Money Gaming’, Develop (December 2014) 309. 19-27 225. ‘Real Money Gaming Platform BeTable Raises $18.5million’ AllTh ings (November 2013) 310. ‘Transforming Th e Funding Landscape’, What’s On Stage (July 2014) 226. ‘Business Profi le: King Digital Entertainment Plc’, Financial Times (January 2015) 311. 19-27 227. Business Profi le: King Digital Entertainment Plc’, Financial Times (January 2015) 312. ‘Channel 4 to Air Th eatrical Event Th e Vote on Election Night 2015’, Channel 4 (November 2014) 228. ‘Th e World’s Sweetest Game Candy Crush Saga Debuts on Windows Phone’, King (December 2014) 313. ‘Benedict Cumberbatch’s Hamlet Sells Out in Record Time’ Evening Standard (August 2014) 229. ‘King Digital Entertainment: September 2014 Investor Report, King (September 2014) 314. ‘Sherlock Takes His Hamlet to the Big Screen’, Daily Mail (August 2014) 230. ‘King Digital Entertainment: Q3 2014 Earning’s Presentation’, King (November 2014) 231. ‘Candy Crush Saga, not PS4 or Xbox One, dominates ads on the airwaves’, MyMeedia (November 2014) 232. ‘Monument Valley is Apple’s Ipad Game of the Year’, Monument Valley (December 2014) 233. ‘Ustwo in Profi le’, Designweek (December 2014) 234. ‘Ustwo in Profi le’, Designweek (December 2014) 235. ‘Ustwo in Profi le’, Designweek (December 2014) 236. ‘Ustwo in Profi le’, Designweek (December 2014) 237. ‘Th e Invisible Woman’, Kotaku (January 2014) 238. Media Molecule 239. VChartz 240. Jagex 241. Jagex 242. Wikipedia: Andrew Gower

27 For more information contact us on 020 7433 2400

LONDON OFFICE: REGINA HOUSE 124 FINCHLEY ROAD LONDON NW3 5JS PINEWOOD OFFICE: ROOM 107 PINEWOOD STUDIOS PINEWOOD ROAD IVER HEATH BUCKINGHAMSHIRE SL0 0NH

NNLP_white_paperLP_white_paper 5.indd5.indd 2 001/04/20151/04/2015 08:2508:25