The Creative Media industry is made up of 9 different sectors; publishing, TV, photo imaging, interactive media, film, radio, advertising and marketing, games and animation.
Film
In the UK alone, the film industry employs 27,800 people; 62% of which are employed in exhibition, 34% in production and the final 4% in distribution.
There is a large quantity of flourishing and outstanding independent film makers and film making companies, however they are often foreshadowed in popularity and the generating of income by the six 'Majors'.
These six companies, also referred to as 'The Hollywood Studios', consist of: Warner Bros., Walt Disney, Sony Pictures, Paramount, 20th Century Fox and Universal. Collectively, these companies are responsible for producing and distributing a massive proportion of films in the US and hold similarly strong positions in Europe. This success could be due to these major film studios emerging right at the beginning of the film industry during the 1920s. As film grew and progressed so did these companies, resulting in them establishing a well built production and distribution infrastructure. As well as this, over the years each Major has individually developed an insanely large library of feature films free to use and exploit through the many different methods of distribution such as theatrical, home video/DVD and television channels.
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The production and distribution of film is a massively risky business. All money derived from this depends wholly on the public and what they think of the film. One bad review could put thousands of potential viewers off watching the film, losing the production company massive amounts of profit.
The Major Studios are all in comfortable financial situations where this risk is worth making, so a lot of the time they will produce feature films completely on their own. However, they also may work with third parties to jointly finance some films. These agreements are called co-financing arrangements.
Independent films are not always viewed as inferior to bigger budget films created by large film companies. Pulp Fiction, directed by Quentin Tarantino and released in 1994, is an independent film yet still holds an excellent rating of 9 out of 10 on www.imdb.com. The box office gross in the UK was £10,734,320 as of 24th February 1995, however since then it has become a somewhat cult movie and is often spoken of as one of the best films from the past few years.
For example, Warner Bros. entered into co-financing arrangements with other companies relevant to certain films. This reduced the financial risk involved in producing films and in a lot of cases, Warner Bros. retained all worldwide distribution rights.
In August 2005, Walt Disney agreed to a similar film financing arrangement whereby a collection of investors agreed to fund up to $500 million to go towards 40% of the marketing and/or production costs of up to 32 live action films. In return, these investors asked for an approximate figure of 40% of any future net cash flows created by those films. Through this transaction, Walt Disney is able to lessen the risk behind a possible bad performance of said live action films; however alongside this advantage is the disadvantage of having to share the rewards reaped from these films.
The highest box-office grossing film worldwide was Avatar, taking in about $2.8 billion. This, however only refers to theatrical revenues and does not take home video and television income into account. Titanic is the contender and earned $1.2 billion from video and DVD sales and rentals and also grossed $2.2 billion in theatres. Complete and accurate data for Avatars blue-ray and DVD sales is not available, however both films have earned over $3 billion.
Although film makes a lot of money through theatrical and video and DVD sales, there are more ways for income to be received. The Lion King is great example of this; despite earning over $2 billion in home video and box office sales, another $6 billion was earned worldwide at box offices from the stage adaptation of the film and a further $3 billion from merchandise. Film merchandise can be a big source of revenue, even if the film wasn't as popular as expected. This happened with Pixar's Cars, earning $462 million worldwide in theatrical revenues, which is quite a low amount when compared to other Pixar films (Finding Nemo earned over $936 million), however in the 5 years after it's release in 2006 over $8 billion was generated through global merchandise sales.
Another source of income within the media sector of film is exhibition. Founded in 1995, Cineworld is the second largest Cinema business in Europe. It was a privately owned up until May of 2006 before consequently being listed on the London Stock Exchange in May of the following year. Picturehouse, a chain of 21 cinemas was acquired by Cineworld in late 2012 and a further agreement with Cinema City leaves Cineworld today with 202 sites; which is a total of 1,858 screens which are all fully digital. This could be an example of public ownership helping a business thrive. In 2013, 51.5 million people went and saw a film at a Cineworld cinema and revenues were had of £406.1 million.
TV
The television industry in the UK employs 55,800 people. A full list of TV production companies in the United Kingdom can be found here.
In the UK, a licence fee is necessary if you own a TV. Annually, the cost of a licence for a colour TV is £145.50 and £49 for black and white. This money however, goes only towards the BBC and is therefore only paying for their services. This is the BBC's only source of income and allows all their services to be free of advertising; these services are TV, radio and online services. Each month, per TV owning household, the BBC receives £7.96 for TV, £2.11 for radio, £0.66 for online services and £1.40 for 'other' costs. The license fee of £145.50 was frozen by the Government up until three months after the end of the current BBC charter period on 31 March 2017. As well as keeping all BBC channels free of adverts, the licence fee also allows the BBC to stay free of shareholders and political interest.
Below are all the Television channels the BBC provide:
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As a result of the public's lack of choice as to whether they want to pay the licence fee or not, the BBC strives to provide a wide and diverse range of channels and programs, as seen above. The programs available ranges from children's cartoons such as Arthur the Aardvark, family favourites like Doctor Who (which began way back in 1963) to deep and thought provoking documentaries such as Brian Cox's Wonders of the Universe. Speaking about the licence fee, the BBC's Director of Policy James Heath said "Our services are actively chosen 140 million times a day, despite the array of media choice and very low switching costs. This probably makes the BBC the most used public service in Britain" showing that despite a survey of over 2000 people found that over half of them wanted rid of the licence fee, the public are still using the services they are paying for.The dominating broadcasters in the UK are:
- Channel 4 which is a Private Company that is funded by advertising. Its most watched programmes are reality TV hit Big Brother (10.01 million viewers at its highest), now aired on Channel 5, and American sitcom Friends (9.64 million viewers). Stipulated as part of it's licence, Channel 4 is a "publisher-broadcaster", which means it commissions or buys all of its programming from other companies. Despite not producing the programs itself, Channel 4 do own the copyright and distribution rights to many of the programmes aired by itself, a trend not to dissimilar to the way major Hollywood studios' will own films and programmes without directly producing them; and therefore being seen as owning them.
- ITV which is the oldest commercial network in the UK. It is a private company also funded by advertising, owned by ITV PLC, STV Group PLC and UTV. ITV is made up of a network of channels operating regional services alongside sharing television programmes between one another to be shown across the network in its entirety. However, recently the majority of these companies have merged leaving the original fifteen franchises controlled by 3 companies. ITV stands for Independent Television, so staying true to its name the majority of it's programmes are independently produced by ITV. This includes ITV's flagships Coronation Street and Emmerdale, both long running and highly successful.
- Channel 5, which launched in 1997. Channel 5 was the final channel to part of the national terrestrial analogue network following in the footsteps of BBC1, BBC2, ITV and channel 4. Originally owned by the RTL Group, Channel 5 was purchased by Richard Desmond on 23rd July 2010 who announced big plans involving the investment of more money into programming. However, on the 1st May 2014 the channel was bought by Viacom for £450 million. Viacom International Media Networks Europe consists of MTV, Comedy Central and Nickelodeon to name a few. At the time of Viacom's takeover deal, they promised to increase Channel 5's annual programming budget of £200 million through joint programme commissions. Philippe Dauman, Viacom chief executive said "Our ownership of Channel 5 will significantly increase Viacom's investment in British creativity in content. We are committed to strengthening the Channel 5's status as one of UK broadcasting's premier brands, and we will continue to grow the network's pipeline of original programming with more quality commissions as well as acquisitions". This shows that not only Channel 5 will heavily benefit from this new ownership through the addition of many new programmes to it's schedule, US owned Viacom will also flourish with the opportunity to add their own style and flare to a UK based broadcasting service.
Publishing
In the UK, the publishing industry employs 148,000 people. The publishing sectors main aim is to deliver news to the general public. This is the highest employment figure of the whole Media sector within the uk, and covers many things such as books, magazines, leaflets and newspapers. Whether companies are privately or publicly owned is very important here as a newspaper which is publicly owned, and therefore has some government control, will feature very different things to an independent newspaper.
The Guardian newspaper is viewed as more 'quality' and 'liberal' than other newspapers, such as The Sun. The Guardian is ran by Guardian Media Group (who also own The Observer) and that company is wholly owned by Scott Trust Limited. The Guardian Media Group is a Public Limited Company, which means shares may be sold or traded to the public. However, Scott Trust Limited secure the newspaper financially and also ensure editorial independence of The Guardian.
Newspapers and magazines will make their money from the sales of themselves and also advertising featured within.
Photo Imaging
The photo imaging sector employs 44,000 people in the UK. This sector is larger than one would initially think and not only entails photography but also the digital editing, creation and enhancement of images. This sector is quite largely made up of independent companies, such as a wedding photographer, a hired photographer for events such as proms, or freelance photographers taking photo's to sell on of pretty much anything. One of the reasons this sector is so large is due to the daily need for photographers, particularly to take the photos of which most newpapers and magazines are made up of.A professional photographer will also often need a full team, such as makeup artists, lighting assistants, set makers, models etc.
Money is mainly made within the photo imaging sector through the hiring of photographers and the selling and distribution of photographs.
The highest grossing photographer worldwide is Andreas Gurksy, selling his piece Rhein II (created in 1999) for $4,338,500 on the 8th November 2011.
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Interactive Media
Interactive media is a very broad entailing a lot of different things. It's hard to know how many are employed within this sector as it shares an open association with the likes of Film and TV, however roughly 50,000 people across the UK are employed by the interactive media sector. Officially, the term Interactive media is referring to different products and services used on a computer or computer based system (a smartphone with internet access, for example) that respond to the user's actions and commands through presenting content on screen such as text, animation, graphics, video, audio etc. The Interactive Media sector is made up of interactive websites of which the users create the content, such as social networking sites like Facebook, Twitter and Tumblr, and video uploading and viewing site YouTube and the world famous search engine Google. More and more everyday people are using interactive media to communicate with one another, and it can be argued it is becoming and alternative to real life face to face communication.
Facebook and Twitter are two of the most popular sites within the Interactive Media sector, and although they are free to use by anyone with access to the internet, they are still making an incredible amount of money. Facebook went public in May 2012, and a report issued on the 9th September claims Facebook is now worth $200 billion. The site even had a film made about itself taking in revenues of £2,486,454 on its opening weekend in the UK alone. Facebook earns more than $1 billion per quarter in advertising revenue. Companies will buy advertising space on the site, Facebook will then target ads at users based on the personal information they share, such as what each user 'likes' which helps ensure each advert reaches it's target audience. Companies such as Nike have even been known to reveal marketing campaigns on Facebook before they have appeared on TV. Not only is Facebook used for advertising and marketing, this month many users received a message at the top of their 'news feed' urging them to donate money towards charities helping people affected by the Ebola crisis. In November of 2013, Twitter began its first days of trading after listing on the New York Stock Exchange. About 85% of Twitter's revenue comes from the advertising it features on it's site. This advertising can be done in three different ways:
- promoting a tweet that will appear on people's timelines
- promoting an entire account
- promoting a thread
Twitter often charge companies/ people wanting to advertise on their site depending on the amount of interacting generated by their content. An initial budget will be set, and then pay will continue from the advertisers per 'click' or 'retweet'. Also in place is a bidding system where advertisers will compete against others to get their content to appear in a particular spot on the site.
Lara O'Reilly from Marketing Week said about Twitter, "They have worked really hard to make sure that advertising on Twitter is not interruptive". Any form of advertising that can disrupt the experience of whoever is using it will often put someone off from responding to it, so this form of advertising on Twitter blends in well and can work almost subliminally to the user. Twitter and Facebook alike are mainly used on mobile devices, and last year more than 75% of Twitter users accessed the site from their mobile phone. From this, over 65% of the advertising revenue Twitter generated was from mobile devices.
Another way Twitter generates it's revenue is through Data licensing. This is where the site sells something known as the "firehose". The "firehose" is basically it's public data, which can often consist of up to 500 million tweets per day. With this information, 2 different companies are offered an invaluable insight into what the public are talking about and what is trending which they can analyse and sell the data they gather on to other companies and brands. This data can be used in many ways to benefit companies; this could be something as simple as a company checking what users have said about their brand or products, to something as bizarre as supermarkets seeing when people are planning to hold barbecues so they can stock up on the necessary equipment to sell.
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Radio
Despite being one of the oldest forms of mass media, the radio industry employs 22,000 people in the UK. Radio is most used now in cars yet is still found used on standalone radio devices, however since becoming digital radio can also be played on TVs. Radio can be split into three sections:
- Radio that is funded publicly which is the BBC channels. James Heath, the Policy Director for the BBC said, "The schedules of our radio services are far more diverse than those of commercial stations. As an example, in a typical week, Radio 1 plays 325 different songs in daytime, compared to 140 on Capital FM. Across a month (all hours), Radio 1 plays over 3,200 different tracks – compared to around 200 a month on Capital." Through the money taken from the licence fee, the BBC feel this allows them the ability to provide a greater service to the public; in this case they feel they play a larger amount and a better variety of songs than radio stations that are funded by adverts. The BBC provide all these radio stations through the payment of the licence fee:
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- Commercial Radio, which is funded by adverts, such as Capital. The majority of commercial stations serve as local/regional and are owned by one of the 3 dominating companies in the sector; Global (Heart, Galaxy, Gold, Xfm, Smooth Radio and Real Radio), Bauer (Absolute Radio, Kiss and Magic) and UTV (talkSPORT). There are over 300 Commercial Radio stations in the UK, which mostly use FM and DAB frequencies. As well as regional channels, there is also 3 National Commercial Radio stations which are broadcast throughout the UK on either FM or AM, DAB, DTV and online; Classic FM playing only classical music, Absolute Radio featuring rock and pop and talkSPORT which is made up of live sport and debate.
- Voluntary Radio which is often a great way to get some training in broadcasting. Community Radio stations are small and provide training and opportunities for people of all ages wanting to be involved with radio and broadcasting locally. Community stations are often limited to an area within a 5 kilometre radius in which they can broadcast. They are not allowed to raise over 50% of their operating costs from any single source (this includes advertising) and the rest of the costs needed to run the station must me found from other sources. Hospital Radio is broadcast specifically for the patients of hospitals, it is delivered through bedside units or over the internet. Patients in the hospitals will benefit from this as volunteers trained by the station will often go out into the hospital wards to discuss what music the patient would most like to hear and sometimes even interview them. A lot of now professional radio presenters will of volunteered for hospital radio early on in their career as it works as a training ground for budding broadcasters. Famous and successful broadcasters who began in hospital radio include: Chris Moyles, Scott Mills and Karl Pilkington. Student Radio will broadcast from any place of education, this could be a college or university. Often, programming will be exclusively carried out by the students but can also include individuals from the wider community. These stations will offer a variety of programming, this includes local news, campus sports news, spoken word programmes and music. These stations will also provide airplay and promotion to up and coming local artists.
A full list of all radio stations available in the UK can be found here.
Advertising and Marketing
Advertising and Marketing employs 17,000 people in the UK. Its sole purpose as an entire sector is to try and raise either money or awareness of other companies. Companies will pay a lot to advertisers and marketers as they can gain them a lot of money if the advertising is done well. There is a lot of different methods of advertising available, such as through Social Media (see the above section entitled 'Interactive Media). Social Media is a great way to advertise as it reaches a massive range of people without them even having to leave their home, and adverts, particularly on Facebook, can be tailored to appear to people which the data gathered by Facebook finds will be most interested in. Another more old-school method of advertising is through the designing and exhibition of Posters/Billboards. Though simple, these are effective as they can be made as bright and colourful as necessary making them incredibly eye-catching, if that's what the client wants. They can be very precisely geared towards a particular audience through techniques as simple as photographs, font colour and size etc.
Television adverts are arguably one of the most common and effective methods of advertising as almost every household in the UK owns a TV and uses it on a daily basis. Television adverts can be made interesting, through catchy songs or jingles and even interesting stories featured on them. It's getting harder and harder to find a television advert these days that actually has relevance to whatever it is trying to sell.
Newspaper/Magazine adverts can be a lot cheaper than other forms of advertising such as television adverts, however are effective as it is easy to know where to advertise what. For example, a new brand of nail polish will be advertised in a woman's magazine such as 'Ok!', where a new golf course opening would be featured in a regional newspaper.
Radio adverts are another way to advertise things. BBC Radio One will perhaps advertise a new show that will be featured on the BBC, where as a regional station could advertise a new shopping centre opening.
The highest ranking advertising agency in the UK is AMV BBDO, closely followed by McCann Erickson. In 2013, it was estimated that the total spend on advertising in UK was £14 billion. Digital advertising accounted for about 50% of this.
Games
The UK gaming industry employs about 10,000 people. The gaming industry is continually going from strength to strength, with new technology constantly making games more incredible. Originally, gaming was seen to be a small activity enjoyed and took seriously by an equally small proportion of the population. In the past few years gaming has got increasingly popular and is now seen as much more common and casual. Going on profits, the gaming industry is not bigger than the DVD industry.
The biggest top five video game making companies at the moment are:
- Activision
- Nintendo
- Electronic Arts
- Capcom
- Sony
The main businesses within the gaming industry are publishing, development, distribution and hardware manufacturers (this is the making of consoles, such as Nintendo making the Wii). There is a lot of interaction within these separate businesses, as they are all dependent on each other. The publishers will often own part of, if not all of either a development or a distribution company and the companies creating the consoles will all act as publishers for 1st party products relevant to themselves. This makes it difficult for an independent development company to break through and make it big with a game, as often they will seek to do business with a publisher who will end up being the owner of a possible competitor. It's really important to maintain global relationships when doing business within the sector, as where in one territory two publishers may be competing, in another they could be working together distributing each others games.
Companies like Electronic Arts, the makers of Fifa, and others such as technology giants Sony will fund the development process of games through paying developers an advance against any future royalties to cover the overall cost of development. Once the game is completed and sold by the publisher, all money received will go to the publisher until enough is raised to to go back to the developer. If the game is a success, the developer who initially invested will also earn additional payments as royalty.
Computer Game Developers is the collective term given to the programmers, artists, designers, sound engineers, musicians, producers, writers and others; basically anyone who is involved in the development of a game. Development companies are sometimes independent, or they can be part owned or even completely owned by a publisher, developer or hardware manufacturer. Some developers will raise funds themselves for development or seek capital funding funding, however funding from a publisher is still the main method of getting products to market.
Games will mainly gain revenue from product sales, however product placement can also be used as well as in game advertising.
Animation
In the UK, the animation industry is the smallest sector employing about 4,700 people. The dictionary definition of animation is "the technique of photographing successive drawings or positions of puppets or models to create an illusion of movement when the film is shown as a sequence". There is 4 different types of animation; stop motion, claymation, 2D and 3D animation. Animation is used right across the Creative Media sector in almost every field. There are animated films such as 'Finding Nemo', animated adverts such as the 'Wonga' dancing grandparents, television shows such as 'Aventure Time' and computer games such as 'Pokémon'. Animation is most apparent in Children's TV shows and Films, as the ability to create bizarre and interesting characters is a great power when trying to capture and hold the interest of a young child.
Many of the major companies involved in the creation of animation are based in America, these include the well known and much loved Disney Pixar and Dreamworks. The production of animated feature length films definitely takes in the largest revenue out of the whole animation sector,with Dreamworks making over $700 million last year.
Due to the 'DIY' nature of some techniques of animation, such as Claymation and stop motion, Independent animation companies have been known to become quite successful. A great example of this is Aardman Studios, a privately owned UK company which is based in Bristol using exclusively the technique of Claymation. They are most well known for the world famous series 'Wallace and Gromit'.
The animation sector can make money through many different ways, these include:
- product placement
- the selling of merchandise
- celebrity/guest appearances
- advertisement
- sponsorship
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