Friday, January 4, 2013

Give UK animation a break

November 11. 2011
For an informed view on connected entertainment in the UK & Ireland, visit Cue Entertainment 


Voices from all round the audio-visual sector ask the government to recognise the contribution that video entertainment makes to the health and wealth of UK plc. Perhaps it’s time to have a little more regard for their appeal for a little more tender loving care in the face of foreign competition.

The UK animation industry, for example, generates no more than £300 million each year but it seeds downstream revenues of around £3 billion in the form of visual effects and content for the gaming, post-production and video home entertainment industries.

Despite international success, the subsidy that UK animation companies receive is significantly lower than in countries such as Canada and South Korea. Film production can benefit from between 16%-20% rebate in the form of a tax credit, whereas animated TV series produced in the UK receive nothing in the way of tax breaks or incentives.

Aardman Animation is the biggest animation producer in Britain, known best for “Wallace and Gromit” but with many other properties including the first feature film in a new deal with Sony Pictures, “Arthur Christmas 3D” (pictured), released in the UK today.

Aardman TV Head Miles Bullough spoke recently to BBC Radio 4 about the challenges that face a successful UK entertainment industry business. He said that “Shaun The Sheep” is a hugely successful British-made animation product with 5 million DVDs sold in180 countries around the world. Germany is the biggest market, and the title has just launched in China. Yet despite a firm commitment to its hometown of Bristol, Aardman has to place some production work offshore in order to take advantage of foreign government support enjoyed by the company’s competitors.

Bullough spoke to the BBC in the wake of a study that makes the case for the British government to support a sector confronted with a crisis that threatens even the most successful companies. Titled “Securing the future of UK animation”, the report was funded by Animation UK, an organisation set up in 2010 to represent the interests of the animation industry.

The study says that subsidies and government support for the animation industries of Ireland, Canada, France, Benelux, much of South-East Europe, Australia, Germany and Singapore have distorted the market, “which puts the UK at a huge disadvantage”.

Although British animation has been a consistent source of revenue over many years, this would be no more than special pleading were it not for the fact that the market share of UK companies has declined in the face of the artificial competitive pressure arising from substantial subsidies and government support elsewhere in the world.

There is also the matter of the national cultural identity. Bullough described how difficult it is to explain the subtleties of school cricket to Ukrainian animators. “We sent them a video of a test match for reference and they animated the little kids bowling like Bob Willis and John Snow,” he said.

Other entertainment sectors face similar problems, both cultural and financial. Risk Capital Partners Chairman Luke Johnson reminded the BVA AGM in early November that the video industry is an important part of the economics of film and television production and a key part of the economic infrastructure of the UK. “But it is not just about money, it is about the UK’s impact on the world. Culturally, the strength and vibrancy of our creative and media industries punch well above our weight and add to our influence in the world. To just give all that away would be a tragedy,” the former Borders UK owner and Channel 4 Chairman said.

Eidos Interactive President Ian Livingstone, sometimes referred to as the father of video game character “Lara Croft”, also makes the case for the games industry in the UK. He told BBC Radio 4 that the UK has slipped from third to sixth place in the international league in an industry that is worth $50 billion a year in software sales alone and expected to rise to $90 billion by 2015.

“With the economy flat and financial services in disarray; surely we should support the creative industries. Montréal offers 37.5% tax credits to lure talent to Canada and they have established an ecosystem of highly skilled labour, matched with the incentives to set up shop. They have achieved in 10 years what took the UK 25,” Livingstone said.

“ The UK has to support itself without any help whatsoever. The film industry gets a 20% production tax credit but the games industry has never had any anything.”

Montréal’s success as a centre of excellence in audio-visual services is based not simply on tax credits and government subsidies. It dates back over 10 years to the creation of Multimedia City from the semi-derelict post-industrial area of Faubourg des Récollets, not far from the city centre. The government of Québec offered tax credits of 40% to encourage entrepreneurial businesses to move to the area in 1999 and despite the economic and political difficulties of the past decade, the city continues to benefit from the vision of former Deputy Prime Minister Bernard Landry.

Crucially, investment in education and training went hand-in-hand with redevelopment. The National Animation and Design Centre (Centre NAD) is one of the world’s best-equipped colleges of digital imaging and 3D animation with more than 1,200 graduates who work in film, television and computer games companies around the world.

A UK government-sponsored report on Multimedia in Canada in 1999 recommended closer industry links with Centre NAD and other universities in Canada in order to share best practice in multimedia training and education but the resources to make that possible did not materialise. Since then, Montréal has prospered and the equivalent higher educational establishments in Britain have struggled to find adequate funding.

British animation and computer game companies seemed to be heading for international success in the first years of this century but the early promise has not produced the success that should have followed. A degree of arrogance hindered their progress fostered by short-term financiers who assumed the good times could continue without re-investment in the people and ideas on which creative industries thrive.

Since then, there has been a retrenchment in the UK multimedia landscape, which has seen the closure of once-great animation companies such as the ITV-owned Cosgrove Hall. Perhaps best known for “The Wind in the Willows” and “Dangermouse”, it was formed at the same time as Aardman but closed in 2009 after a scandalous lack of TLC from its backers.

“Raise the game”, a 2008 study from the National Endowment for Science, Technology and the Arts (Nesta), reported, “The UK suffers from a severe skills shortage in the computer games sector coupled with a poor development record and a funding crisis.” Livingstone responded then, “Despite the creative and technical talent that exists in the UK, half of the independent development studios have closed or been sold to foreign companies that see greater value in our studios and intellectual property than we do ourselves.”

Now the situation has worsened, he calls for what he called the “Five P” solution to the industry’s problems. “First, there is ‘Perception’ the need to raise the profile of computer games so that they are seen as wonderful things: socially, culturally and economically. Then there are the People we need a skilled workforce that can create content and distribute it internationally, he says.

“We need ‘Pounds’ access not only to production tax credits but also to financial institutions, venture capitalists and banks that realise the value of digital content and will invest in the talent to take it forward. We need the Pipes high-speed broadband connections in order to upload and download content and finally, we need to create and retain the Intellectual Property in the UK.

Livingstone says the educational system must put the right tools into the hands of people with the talent to create content, make sure it’s copyrighted and then create wealth, “You can only do that through computer science that enables people to create rather than simply use computer technology. Computers touch everything we do and we can’t build a digital economy in a nation of digital illiterates,” he says.

Aardman says it has no plans to move any of the current TV production overseas restated that it is always the firm’s very last preference and one that would be rendered unnecessary if it had help similar to that received by international rivals.

“What we want is to make British shows here in Bristol. We just need a tax credit to level the playing field with our overseas competitors to help us to do so. We are a British, Bristol-based company and proud to be so.”

Cracking views, Gromit!

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