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Creating growth

Measuring cultural
and creative markets in the EU
December 2014
Study supporters
With the initiative to set up a project aimed at analyzing the cultural and creative markets in the EU, GESAC,
the European Grouping of Societies of Authors and Composers, commissioned EY to conduct this study.
effort to rally a large segment of the representative organizations in the cultural and creative sectors for this
unprecedented study.

GESACs partners for the study Supportive organizations

European Federation of Joint Management Societies of Architects Council of Europe
Producers for Private Audiovisual Copying AEC
EVA European Association of Conservatoires
European Visual Artists AER
Association of European Radios
International Federation of Film Producers Associations
European Association of Communications Agencies
International Federation of the Phonographic Industry European Composer and Songwriter Alliance
Independent Music Companies Association European Games Developer Federation

International Video Federation European Publishers Council
Federation of European Publishers
Society of Audiovisual Authors
Federation of European Film Directors
Federation of Screenwriters in Europe
Independent Music Publishers Forum
Foreword 5
Table of contents

C]q^Y[lkYf\_mj]k )(

01 Creative force: markets and jobs 14

in the cultural and creative industries in Europe

02 Creating Growth: future drivers of the creative economy in Europe 22

03 Creative diversity: understanding the 11 market segments 28

that make up the cultural and creative economy

Books 30

Newspapers and magazines 36

Music 40
Performing arts 48
TV 54

Film 62

Radio 68

Video games 74
Visual arts 80

Architecture 86

Advertising 90

Methodology 96

EY | December 2014 3
4 Creating growth | Measuring cultural and creative markets in the EU
Europe has a shared history and a Then there is the digital revolution.
richly diverse cultural heritage. This While it gives much cause for hope,
heritage is cherished by the people as it also disrupts the cultural scene.
a common value that gives our Union Works are no longer distributed in
its identity and binds us together. That the same way as before. Copyright
is why Europe must do everything in and equitable compensation for
its power to preserve that heritage creative works no longer seem to be
in a political and economic climate accepted as a matter of course by the
that is subject to major upheavals. public. Yet new digital uses are to go
To begin with, the economic crisis had together with cultural development;
a huge impact on the world of culture, therefore, in consideration and
particularly in the form of budget cuts. good comprehension of all.
Martin Schulz
President of the European Parliament Result: theaters, museums, cinemas, In order to support the industry,
orchestras and bookshops have been European cultural undertakings
forced to close down. Behind the need help to ensure access to
scenes, these closures mean that funding. It is in this spirit that the
European people many of them in Union has established a guarantee
the younger age group have lost scheme to enable all the cultural
their jobs. This is heartbreaking for all and creative sectors to develop.
of us in Europe, and for myself, both as
The industry also needs support for
a father and as a former bookseller.
its access to technology; it needs
Yet, culture is one of Europes protection against big groups that
greatest assets. To say nothing of sell off culture at a discount, against
their immense nonmaterial value, networks which deprive creative
the creative and cultural industries artists of funding. The European
account for 4.2% of the GDP of Unions powers are limited, but it
the Union, nearly 7 million jobs, must accept the challenge and tackle
primarily in small businesses. These it alongside the Member States.
It is only on this condition that
Culture is therefore one of Europes we shall be able to preserve our
great hopes. The jobs that it generates cultural assets. What we need to do
cannot, as a rule, be relocated they is preserve and promote our culture
require a range of rare talents, and so that it impacts beyond European
it is often our young people who borders, and not blindly defend
display them; they are at home in al^jgeYdd^gj]a_fafm]f[]k&
the digital world, which holds out
the promise of fresh potential for
study demonstrate this perfectly.

EY | December 2014 5
Interestingly, the highest revenue At the time, the roles of these sectors
is generated by a purely cultural o]j]afkm^[a]fldq`a_`da_`l]\$Yf\
sector: visual arts much more l`]ajhgl]flaYddYj_]dqmf\]j%]phdgal]\&
I am happy to see that in the past
according to the study. Economists
few years, an increasing number of
and politicians have long overlooked
EU countries have been developing
the importance and potential of the
strategies to fully tap the potential of
cultural and creative sectors. Their
these sectors. So have a large number
apparent heterogeneity ranging
of European regions and cities, from
Wallonia to Catalonia and from Berlin
to tiny SMEs, and from architecture
to Tallinn and Turin. I am sure that
to video games, as well as performing
Xavier Prats Monn the compelling evidence in this new
arts and publishing, has slowed their
Director General for Education, Culture,
study will be a further inspiration
recognition as an economic sector.
Youth and Citizenship to decisionmakers at all levels.
Yet, they are bounded and fueled by
The study also arrives at a useful time
Few people would doubt that one common factor: creativity, a free
for the EU: in 2015, the Europe 2020
culture and creativity are essential and renewable source of energy
strategy for growth and jobs will be
elements of the European identity. a resource which is abundantly
This study shows brilliantly present in countries of the European
contribution of the cultural and creative
so that they are just as essential Union. Creativity feeds on culture
sectors at the EU level are important
for the European economy. in its widest possible sense: the
and timely. So is the demonstration
This is the relevance of this study ]pljYgj\afYjq\]hl`Yf\Zj]Y\l`g^
that the creative economy has shown
because not enough citizens and European culture is a tremendous
resilience during the economic crisis
decision-makers know that culture asset, a common good which must
and that it is a dynamic and fast-
and creative industries employ 7 be protected and promoted.
growing sector which contributes
million people, that they generate Since the adoption of the European ka_fa[Yfldqlgqgml`]ehdgqe]fl&
4.2% of EU GDP, and that they are Agenda for Culture in 2007, a key
None of this would be possible without
such powerful sources of jobs and objective of the European Commission
creators and creation. The competitive
growth that they provide jobs for has been to promote a European
advantage of our cultural and creative
nearly 2.5 times more Europeans cultural space to foster smart,
sectors depends on maintaining a
than the automotive industry. inclusive and sustainable growth,
virtuous cycle of creative talent,
The cultural and creative sectors while safeguarding and promoting
Ydkg[gfljaZml]ka_fa[Yfldqlg our European cultural diversity.
and investment, as well as proper
youth employment, employing, on In a 2012 policy communication, reward and remuneration for
average, more young people than the Commission invited EU creators. Enhancing this cycle by
any other sector. When it comes countries, regions and major fostering the right environment for
to sectors, visual arts, performing cities to promote their cultural cultural diversity and creativity in a
arts and music account for about and creative sectors for creating digital world will surely be a key task
half of all employment in the opportunities and enhancing growth. for the European Commission.
cultural and creative sectors.

6 Creating growth | Measuring cultural and creative markets in the EU

Cultural and creative industries in Europe unlock their full potential

and realities, developing their own L`]kYe]_g]k^gjl`]deaf\mkljqYf\

particular business models. Each CCI the other cultural and creative sectors.
is unique and its future depends on a
Creators are at the source of the
complete understanding of its needs
creative economy value chain. They
and how it works. However, all CCIs
are also the most vulnerable part of it,
spring from an artistic and creative
They create works that often bring
property. In this regard, raising
European citizens understanding and
awareness of the value of copyright
and related rights as enablers, and
are, in effect, delayed payments of an
encouraging all stakeholders to play
Christophe Depreter ]plj]e]dqmf[]jlYaffYlmj]$\m]lgl`]
their role in developing a thriving
CEO of SABAM and President of GESAC
uncertainty of creative success itself.
legal market for European content
should be high on the agendas of Thanks to its long history and a
A growing body of evidence shows that [gehd]peapg^hgda[qkmhhgjlYf\
national and European authorities.
the cultural and creative Industries private investment, Europe has a
(CCIs) are sources of growth and jobs, CCIs have impacts that go far
tradition of creativity that fosters
Z]f]laf_dg[Yd[geemfala]k$j]_agfk beyond leisure, entertainment,
market growth. Michelangelo,
and states. This study aims to point jobs or economic growth. They also
Rousseau, Damien Hirst or Adele
gmlo`]j]l`]k]af\mklja]klaflg provide invaluable social cement;
each, in their own manner, embodies
the economy and society in Europe. they contribute to the feeling of
the creativity hotspot that Europe
Policymakers really need a reliable tool belonging to a society; in short,
has always been. Moreover,
to assess the true value of a sector they help forge a European identity.
Europe is globally renowned for its
that is still woefully under-promoted. The rich tapestry of European
Greater awareness should result in culture based on shared values is
springing from its diversity of
the development of a more supportive YZmdoYjcY_Yafkl]plj]eakeYf\Y
languages and local, regional,
environment and appropriate tools means of overcoming the European
interregional and national cultures.
for fully tapping the potentials of Mfagfk[mjj]flY__af__jgol`&
With this in mind, GESAC (the European
the CCIs in the decades ahead. The most striking fact about the
Grouping of Societies of Authors),
Europe is weathering a serious creative economy is that creators
which links together 34 European
economic, social and identity crisis are the nucleus of the economy.
authors societies and consequently
with stubbornly high unemployment. Their ideas, creativity, talent and
speaks for some 800,000 individual
But the CCIs are a dynamic sector entrepreneurship are what make it
authors, is especially proud of having
with a bright future and a key role to possible for producers, publishers,
been able to contribute to this study.
play: they are part of the solution. distributors and retailers to generate
value. Obvious though it may seem, the
CCIs embrace a wide range of sectors
and activities content creation,
songwriters, composers and musicians.
publishing, production, distribution
and conservation of goods and

EY | December 2014 7

Marc Lhermitte Bruno Perrin

Partner, EY Partner, EY

L`akjkl][gfgea[gn]jna]og^ Yet, despite the prominence of For the way we buy, distribute and
cultural and creative industries their output in our daily lives, the consume cultural products
within the EU stems from our creative industries have long played is changing fast. So, rather than
intuitive sense that culture and the role of the last-minute winner in producing another white paper, EY
creativity can become a powerhouse an economy where manufacturing, and GESAC set out to provide an
of economic growth in Europe. business services and the public overview of the cultural and creative
With an annual revenue of 535.9 sector capture the limelight. economy and the trends that should be
billion and more than 7 million workers, Until now, reliable information on the taken into account when considering
the creative and cultural industries are k[Yd]Yf\ka_fa[Yf[]g^l`][j]Ylan] policy options affecting the sector.
today central to Europes economy and and cultural sectors as a whole has To tell the stories of these industries
competitiveness. Their importance been scarce. It was only in 2009 and their actors, their performance
and potential to create jobs and fuel that a working group coordinated by Yf\\a^[mdla]k$o]dggc]\Yl))
economic growth are recognized Dmp]eZgmj_kEafakljqg^;mdlmj] consumer markets for the creative
by the European Commission1. the European Statistical System and cultural goods and services
As this report shows, their Network on Culture was set up to that people and companies
development is reinforcing Europes promote statistical cooperation and consume in 28 EU countries.
position as a global hub of creativity harmonization with a view to producing
We cross-checked these eleven
Yf\lYd]flk&AlYdkgY_kf]ooYqk reliable cultural statistics.
vertical pillars against the wide
in which Europe can enhance L`akj]hgjlj]Y^jekl`]
spectrum of creative activities which
its attractiveness in a globalized methodological challenge that still
generate economic value and jobs in
economy where countries compete lies ahead in measuring the economic
not only on costs but also on ideas, importance of the creative and cultural
production, distribution, performance,
innovation, entrepreneurship and sectors, and focuses on an urgent need
broadcasting and management, and
creativity. The creative sector will for further statistical consolidation
with activities relating to education
play a key role in Europes economic and harmonization at an EU level.
and tourism, where applicable.
recovery, especially within the 1. European Commission (2010), Europe 2020, a Strategy for Smart, Sustainable and Inclusive Growth and European
Commission Green Paper (2010), Unlocking the Potential of Cultural and Creative Industries.
framework of the Lisbon strategy.

8 Creating growth | Measuring cultural and creative markets in the EU

Subsectors of CCIs

Authors, specialized book stores, public
and academic libraries, book publishing,

Newspapers and magazines

Newspaper industry, journals and
periodical publishing industry, news
agencies, etc.

The study summarizes and builds This work, carried out under the Music
upon available information on the guidance of EY teams, has been a Sound recording and music publishing
activities, music composers and lyricists,
economic scale of the cultural and collective project, embracing the
music radio stations, TV music channels,
creative sectors at both national and thoughts and contributions of GESAC etc.
European levels. Though there have and its partners for this study with the
Performing arts
been many studies on the creative common aim of understanding and Performing arts, supporting activities
][gfgeq$Y[geegf\]falagf`Yk developing our cultural and creative and venues, etc.
only very recently been agreed. industries. We would like to thank TV
Our report includes: GESAC and its partners (IMPALA, Television programming, production,
IFPI, SAA, Eurocopya, IVF, FIAPF and post-production and distribution
Comparative, qualitative and creators working in the TV industry, etc.
EVA) and its prime supporters (FEP,
quantitative analyses aimed at
understanding the economic role of the Motion picture production, post-
EPC, FERA, FSE and IMPF) for their
creative and cultural sectors in Europe production and distribution; creators
technical and methodological insights. working in the movie industry, etc.
Key factors that will affect the
global evolution of creative and We hope that this report serves as a Radio
cultural sectors and players starting point for a better and wider Radio broadcasting activities, etc.

Ways by which creative and cultural understanding of the central role Video games
activities can help encourage growth, played by creators and creation. Developers, publishers, retailers and
distributors, etc.
youth employment and innovation and
strengthen Europes position globally. Visual arts
Creators of visual arts, such as
photography, design, art and crafts and
museums, etc.


Advertising agencies, etc.

EY | December 2014 9
With revenues of 535.9b, the creative and cultural industries (CCIs) contribute to 4.2% of Europes GDP.
The sector is its third-largest employer, after construction and food and beverage service activities, such as bars and

Turnover (b) - 2012


93 90
Source: EY analysis


36.3 36.2 31.9

17.3 16 10.4

Visual Advertising TV Newspapers Books Architecture Performing Music Film Gaming Radio
arts & magazines arts

More than 7m Europeans are directly or indirectly employed in creative and cultural activities 3.3% of the EUs active
population. Performing arts (1,234,500), visual arts (1,231,500) and music (1,168,000) employ more than 1m people
]Y[`$^gddgo]\ZqY\n]jlakaf_ 0)0$(((!$Zggck .,.$(((!Yf\de .,)$(((!&

Employment (in thousands) - 2012

1,234,5 1,231,5

Source: EY analysis

646 641 603,5


108 97

Performing Visual Music Advertising Books Film TV Architecture Newspapers Gaming Radio
arts arts & magazines

--,&/Z$]p[]]\kl`][gfkgda\Yl]\lglYd$-+-&1Z jgmf\]\_mj]!&>gjafklYf[]$dan]emka[ak[gmfl]\afZgl`H]j^gjeaf_
arts and Music sectors (see Methodology).

10 Creating growth | Measuring cultural and creative markets in the EU

The 11 cultural and creative markets in the EU28

Markets Sales (b) Jobs

36.3 646,000

Newspapers & magazines

70.8 483,500
Facing and embracing the challenges of the digital age

25.3 1,168,000
Innovating to lead creative diversity in Europe

Performing arts
31.9 1,234,500
Audiences love live concerts and festivals

90 603,500
The most popular medium is thriving

17.3 641,000
Resilience fueled by the digital transformation

10.4 97,000
Still the most trusted medium and available in many new ways

Video games
16 108,000

Visual arts
127.6 1,231,500
Brightening Europes appeal for tourists and art investors

36.2 493,000
Coping with the aftermath of the construction sector slump

93 818,000

Total CCIs (after removal of double-counting) 535.9 7,060, 000

EY | December 2014 11
12 Creating growth | Measuring cultural and creative markets in the EU
Benchmarking the cultural and creative industries
In terms of jobs, CCIs in the EU employ as many people as the food and beverage service industry does. They provide work
for nearly 2.5 times more people than automotive manufacturers and 5 times more than the chemical industry.

Employment (in thousands) - 2012

Source: Eurostat


Food and beverage service activities 7,274

CCIs 7,060

Metal and steel industries 4,972

Food products (including beverages) 4,753

Automotive industry 3,014

Chemical industry 1,346

Telecommunications 1,204

Leaders and leadership

Europe has had many international leaders, thriving mid-sized companies and successful start-ups, for instance.

Pearson, Reed Elsevier, Wolters Kluwer, Random House, Hachette Livre, Grupo Planeta, Holtzbrinck

Newspapers & magazines

news agencies Thomson-Reuters and AFP

Universal, Deezer, Spotify

Performing arts
Donauinselfest Music Festival, Sziget Music Festival, Avignon Festival, Edinburgh International Festival, La Scala, Opra de Paris

Endemol, BSkyB, TF1, RTL Group, BBC, France Tlvisions

Gaumont, Nordisk Film, Path, Wild Bunch, Zentropa, Kinepolis

BBC, Radio France Internationale

Video games
Ubisoft, Kingn Rovio Entertainment

Visual arts
Christies, Dorotheum, Van Ham

Aedas, Foster and Partners, Sweco

WPP Group, Publicis

EY | December 2014 13
Creative force:
markets and jobs in the cultural
and creative industries in Europe

In this section:
11 markets at a glance
Untapped potential for youth employment
Europes leaders
Reshoring creative activities
in Europes regional clusters
11 markets at a glance:
more than the sum of their parts
Revenues of the 11 creative and cultural industry sectors total 535.9b
The three biggest activity areas in 2012 were the visual Overlaps occur at the creation level among authors,
arts (127b), advertising (93b) and TV (90b), which composers, visual artists, designers, directors, screenwriters
together accounted for more than half of the CCIs. and writers; at the production level, between TV and
Publishing of newspapers, magazines and books in dek$nakmYdYjlkYf\na\]g_Ye]k3Yko]ddYkYll`]
the meantime generated a combined revenue of 107b. distribution level, with the emergence of various platforms
The 11 sectors analyzed are distinct, yet many ^gjeap]\%e]\aY\akljaZmlagf&9f\l`]Y\n]jlakaf_k][lgj
[gff][lagfk]paklZ]lo]]fl`]eYlf]YjdqYddd]n]dk has close business links with most of these market
of the value chain. A novel written as a book may be segments: advertising income is an important revenue
Y\Yhl]\aflgYdegjYna\]g_Ye]$gjYemka[YdeYq stream for the radio, TV and newspaper industries.
lYc]l`]^gjeg^Yde$h]j^gjeYf[]gjj][gj\af_& Digital technologies have reinforced these connections
and accelerated collaboration across sectors.

Turnover (b)

Source: EY analysis, 2012

93 90


36.3 36.2
17.3 16

Visual Advertising TV Newspapers Books Architecture Performing Music Film Gaming Radio
arts & magazines arts

A dynamic and fast-growing industry, even in tough economic times

The resilience of the creative economy was evident during the economic crisis: job creation in CCIs grew on average by 3.5%
a year from 2000 to 2007, and continued to grow at 0.7% annually between 2008 and 2012, even as the number of jobs in
the rest of the economy fell 0.7%1.

A fast growing sector... ... that withstood the economic crisis

Source: EY

2000-2007 2008-2012 CCI

per year

+1% +0.7% -0.7%

per year per year per year

16 Creating growth | Measuring cultural and creative markets in the EU

01 | Creative force: markets and jobs in the cultural and creative industries

Untapped potential
for youth employment
The biggest employers among Europes CCIs were visual arts, performing arts and the music industry.

They accounted for about half of the 7m CCI jobs in the EU in 2012.

Number of jobs

1,234,500 1,231,500
Source: EY analysis, 2012


646,000 641,000 603,500

108,000 97,000

Performing Visual Music Advertising Books Film TV Architecture Newspapers Gaming Radio
arts arts & magazines

In 2013, the creative and cultural sectors employed, People under 35 accounted for 41.4% of creative
on average, more 15-29-yearolds than any other employment in this world-class metropolitan region,
sector (19.1% of total employment in CCIs versus but just 36.7% of jobs in the wider economy3.
18.6% in the rest of the economy2).In Eastern and These estimates underline two convergent trends:
Central Europe, the trend is even more pronounced: on
The cultural and creative sectors are highly attractive
average, young people account for 1.3% more jobs in
for young people
the creative economy than in the rest of the economy.
National estimates in the UK and France show that the
and absorb them easily.
proportion of young people employed in the creative
][gfgeqafl`]k][gmflja]kakka_fa[Yfldq`a_`]jl`Yf For both these reasons, the cultural and creative
in the Western European economy overall. In the UK, industries have a strategic role to play in the economic
2029-year-olds hold 22.6% of jobs in the creative sector, recovery and growth of Europe, especially in providing
above their 22.3% average in the economy as a whole. jobs and career opportunities to young Europeans,
who are hard-hit by unemployment in the EU.
The Paris region was Europes second hotspot
for creative jobs after Greater London in 2010,
according to the European Cluster Observatory.

EY | December 2014 17
Europes leaders
Thanks to a dense population, a strong market for culture, its world-class cultural heritage and a
highly talented creative class, Europe has long been a source of corporate leaders in the creative
industries. Be it renowned international corporations, mid-sized companies or successful start-ups,
many European businesses are in the global vanguard.

In the music industry, Universal leads, as does Endemol in But there is no room for complacency. Many governments
TV. Hachette Book Group claims the top position in book around the world have awoken to the high economic and
publishing, Ubisoft and Supercell in video games, and ]ehdgqe]flhgl]flaYdg^[j]Ylan]jekYf\k]]clg\]n]dgh
Publicis and WPP in advertising. Europe is also an innovation their cultural industries through targeted policies. Though a
hotspot, creating, developing and testing new business `glkhgllg\Yq$=mjgh]^Y[]kaf[j]Ykaf_dq]j[][geh]lalagf
models like those of Swedens Spotify and Frances Deezer in from both developed and developing countries. Policy tools
online music streaming services. These are typical success jYf_af_^jgelYpZj]YcklghmZda[afn]kle]flYj]\]hdgq]\
stories born in the minds of European entrepreneurs. by governments everywhere to attract these highvalue
Kge]g^=mjgh]kd]Y\]jk`Yn]_jgofZq]phYf\af_l`]aj Y\\af_Y[lanala]k&Afgf]fglYZd]]pYehd]$l`]?gn]jfe]fl
activities across several market segments. Vivendi Group g^Im]Z][$af;YfY\Y$g^^]j]\Y+/&-lYpZj]Yc^gjna\]g
is at the forefront of music production and publishing, as game developers. Video game employment there rose by
is Bertelsmann in media and books. The European cinema 33% during 200810. Meantime, many jobs were lost in
af\mkljqjYfckl`aj\$ZqfmeZ]jg^dekhjg\m[]\$Z]`af\ the UK video games industry: the largest transnational
l`gk]g^Af\aYYf\l`]MKYf\k][gf\Zq]phgjlk$Y^l]j companies relocated a share of their activities to Quebec1.
l`Ylg^l`]MK&=mjgh]Ydkg`YkYka_fa[YflhghmdYlagf Policymakers within the EU must, therefore, respond
of mid-sized companies in TV, music, video games and to global competition and adopt strategies to ensure
Yj[`al][lmj]^gj]pYehd]l`YleYq]e]j_]Yk^mlmj]ogjd\ Europe remains a world leader in the creative economy.
leaders. With aggressive commercial strategies and thriving
creativity, they draw highquality employees, discover
creative talent and seek new opportunities in global markets.

Reshoring creative activities in Europes regional

Though a handful of sectors, including video games, The regions that showed the highest concentrations
are at risk of offshoring, most jobs in the cultural and of creative activities were those that proved to be
creative sectors depend on workers and creators most resilient during the post-2008 economic turmoil:
who are located within European borders and are London and Paris enjoying the highest concentrations
working in professions closely related to the local of creative employment3 held up well, as did Rome,
economy, such as museum staff, visual artists, script Stockholm, Madrid, Munich and Budapest, while
writers, DJs, show hosts, journalists or architects. mid-sized cities and rural areas suffered more.

In a 2010 study, the European Cluster Observatory Partially thanks to this resilience, CCIs are increasingly
demonstrated a very close relationship between viewed as a key component of local economic development.
the development of creative and cultural At the crossroads of art, business and technology,
economic activities and regional prosperity2. they act as a catalyst and an innovation engine, with

18 Creating growth | Measuring cultural and creative markets in the EU

01 | Creative force: markets and jobs in the cultural and creative industries

2. Priority Sector Report: Creative and Cultural Industries,
The European Cluster Observatory, 2011.
3. The European Cluster Observatory only uses databases
its main sources of data on creative and cultural
employment. Its methodology slightly differs from the
methodology adopted in this report insofar as it covers
more NACE codes.

EY | December 2014 19
Creating Growth: future drivers
of the creative economy in Europe

In this section:
Everything digital: a revolution
in the creative ecosystem
Disruptive business models: paving the way
for new forms of consumption
Valuing and protecting creativity:
more than paying lip service to creators
Supporting businesses: the vital yet
diminishing role of government
Helping small business: weaving
a strong fabric of dynamic SMEs
Fueling growth: the indirect power
of the creative engine
Everything digital:
a revolution in the creative ecosystem
The future of Europe will be shaped by the digital transformation now underway in our economy and
society. Just as creation itself is now often digitized, the creative industries have also invented new
business models that integrate high-value content and communication technologies, both within
their business and the services they provide. Once seen as largely a matter of technology, innovation
has evolved to embrace aesthetics, functionality and content. The creative industries have become

In this new ecosystem, the way in which Europeans consume Internet penetration rates in Europe
media and interact with brands has changed. Thanks to a

Source: IAB Europe MediaScope 2012

rapid upsurge in time spent online, the average European
now spends more than 30 hours a week watching TV or 87%
using the internet. Cross-media engagement is growing
in importance: consumers use several media, sometimes Europe
while watching TV leading to new ways of interacting
Over the past decade, digital revenues have driven growth Eastern
of the creative sector, adding 30b to its revenues between Western Europe

2001 and 20111.This trend is set to continue, further Europe

transforming many of the sectors business models.

for new digital sources of revenue, even as the technological Southern
revolution devours their traditional markets. Creative
activities, and especially media companies, increasingly
resemble tech companies that use and transform data
and online content into high-value services to consumers. More than 50m Europeans now go online on tablets and
European consumers are some of the most digitally savvy 68% own an internet-enabled mobile phone up 46% since
in the world. Western Europe has 197m smartphone users2, 2010. That is facilitating a change in the way people read,
the second-highest concentration in the world, and 73.1% watch and listen to media, culture and much else. This new
of Europeans use the internet, leaving the Americas (61.8% ecosystem is driven by cultural content: games top charts
in 2013)3ljYadaf_&@go]n]j$hjgda[gfdaf]k`ghhaf_Yf\ g^l`]egklhjglYZd]YhhkafegZad]\gofdgY\klgj]k4.
high levels of data consumption in Northern and Western Two of the top seven categories of goods and services
Europe should not overshadow much lower usage levels purchased online are cultural. Books are the items most-
in Southern, Central and Eastern Europe, where some EU purchased online: 35% of shoppers have already bought
books in this way. Concert, festival and theater tickets rank
newcomers have much lower levels of internet uptake.
seventh, and 25% of online shoppers visit venue websites
As mobile devices become more capable and easy to
and other ticket retailers. But online technologies make
use, Europeans are changing the way they consume,
several cultural works unlawfully accessible. This is a critical
including the way they access media and culture.
issue that threatens the economic viability of many cultural
market players, and is forcing them to seek new ways of
ensuring that they are paid for their creative efforts.

22 Creating growth | Measuring cultural and creative markets in the EU

02 | Creating Growth: future drivers of the creative economy in Europe

Disruptive business models:

paving the way for new forms of consumption
New services and technologies that enable people to access and enjoy creative works appear every
day. On one hand, intermediaries such as search engines and platforms for user-generated content
owe their success mostly to the access they provide to creative works, but do not share the value they
create fairly with creators and creative industries. On the other hand, creative industries are often the
early adopters of these new service models and technologies, and thus forerunners of our emerging
digital society.

More than any other sector, the CCIs have undergone Community: Social networks and the digitization of
massive structural transformation to adapt to the
community-based economy, in which friends may be more
omnipresence of the internet and its impact on business
models, consumption patterns and content creation
They contribute to the production, diffusion and marketing
and highlight how new business models have been
of cultural and creative works.
able to combine the vitality of creative activities and
entrepreneurs with innovation in information technology: Illegal content: Digital technologies and the internet have
enabled the emergence of many unauthorized services
Abundance: The abundance and immense diversity of and usages. Unlawful dissemination deprives creators and
content is now taken for granted by todays consumers. entrepreneurs of revenues, in some cases making it hard
Personalization: The creative industries embody our lgj][gmhafn]kle]flYf\j]\m[af_l`]fYf[aYdaf[]flan]k
appetite for more and more personalized content and to create.
Aggregation: The emergence of time and content
consumption crossroads, such as Google and Facebook,
has fueled market segmentation enabled by big data and
the renewed search for relevance.

Source: EY analysis

:ggckYnYadYZd] F]lap ?gg_d]k]Yj[`]k FmeZ]jg^>Y[]Zggc e[gdd][l]\Zq]flj]hj]f]mjk

gf9eYrgf kmZk[jaZ]jk h]jq]Yj users gfCa[cklYjl]j
x9 +690% x1.9 +750% x12

2005 2012 2005 2012 2005 2012 2005 2012 2005 2012

1. Media & Entertainment Knowledge Center EY International.

2. eMarketer calculations, June 2014.
3. Key 20052014 data for the world by geographic regions International Telecommunication Union.
4. European Games Developer Federation.
5. Sept ans: lge de raison ? 2005/2012: les raisons desprer lre du numrique, Forum dAvignon, 2012.

EY | December 2014 23
Valuing and protecting creativity:
more than paying lip service to creators
Activities that rely heavily on intellectual property drive European growth1,and deliver 38.6% of EU
for 4.2% of EU GDP in 2012.

The protection afforded by intellectual property law is This is undermining the economic viability of many
critical to sustaining creativity and ensuring a return on cultural and creative operators.While a tiny minority of
investment for creators and their business partners. The star creators make a decent living, the majority struggle
EU has created a consistent legal framework to provide with short-term and multi-employer contracts and
intellectual property protection through directives poor returns on their intellectual property. Often, they
implementing international treaties and rules, such as the must combine several occupations to make ends meet.
TRIPS Agreement and the Berne and Rome Conventions. Undervalued products and increasing pressures on
One result is that royalty collection from collective rights hjg\m[lagf[gklkjYak]ka_fa[YflZYjja]jklgafn]kle]fl
management organizations in Europe accounts for and value generation. These problems are especially
60% of the worldwide total2,80% of which is collected ka_fa[YflZ][Ymk]l`];;Akaf[dm\]nYklfmeZ]jkg^
in the music industry. But, value transfers along the keYddZmkaf]kk]kl`YlYj]gfdqeYj_afYddq%hjglYZd]&Afalk
chain of the creative economy are reshaping long- *()+klm\qg^Y[[]kklgfYf[]^gj[mdlmjYdYf\[j]Ylan]
established business relations: today, internet players services3,the European Commission showed that half of
all enterprises in the CCI sectors employ just 13 people.
and technical intermediaries are taking more and

1. Intellectual property rights intensive industries: contribution to economic performance and employment in the European Union, L`]G^[]^gj
Harmonization in the Internal Market 2013.
3.  Kmjn]qgfY[[]kklgfYf[]^gj[mdlmjYdYf\[j]Ylan]k]jna[]k%=nYdmYl]l`]fYf[aYd_Yhg^\a^^]j]fl[mdlmjYdYf\[j]Ylan]k][lgjklgkmhhgjll`]aehY[l
assessment of the Creative Europe Program, European Commission, 2013.

24 Creating growth | Measuring cultural and creative markets in the EU

02 | Creating Growth: future drivers of the creative economy in Europe

Supporting businesses:
the vital yet diminishing role of government
Parts of the creative economy and its sectors are underpinned by public support through purchases,
Eurostat, governments in the EU28 devoted 62b of spending to cultural services.

However, many governments have been under severe Though modest, government support has a vital pump-
pressure in recent years to cut public spending priming effect, leveraging private investment or support and
and reduce support for cultural services, especially anchoring the economic vitality that the creative economy
in Southern, Central and Eastern Europe. `Ykk`gofl`jgm_`gmlkapq]Yjkg^][gfgea[lmjegad&
Before the 2008 crisis, public spending on cultural Egj]gn]j$[mdlmj]Zjaf_keYfqhgkalan]$fgffYf[aYd
services was growing by 5% a year: since then returns to peoples lives, which are largely unmeasured.
it has fallen on average by 1% annually.
yet accounts for only 1% of government outgoings in the
EU28 a share unchanged during the decade to 2012
and far behind defense (2.9%) and education (10.7%).

Total government expenditures on cultural services (m)

63,409 62,047
61,062 61,085 61,305 61,323
49,154 50,869

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: Eurostat - General government expenditure by function (COFOG)

EY | December 2014 25
Helping small business:
weaving a strong fabric of dynamic SMEs
The diversity of business models within the CCIs, ranging from self-employed creators to giant global
companies and public interest organizations, contributes to their resilience. But small or very small
enterprises and organizations are the norm.

<a_alYd\akljaZmlagf[Yfka_fa[Yfldqdgo]jZYjja]jklg The Commission also noted that lack of good market

entering global markets, as developments in the games afl]dda_]f[]$hj]kkmj]gf]paklaf_Zmkaf]kkeg\]dkYf\
industry show. Rural European SMEs are successfully `a_`]j\]h]f\]f[]gf]ph]fkan]\a_alYdkgdmlagfk\]l]j
competing against companies in the worlds megacities. capital owners from responding to capital seekers.
The profound economic crisis which has plagued Europe Moreover, Europe suffers from a lack of mid-sized
since 2008 has deeply affected SMEs. Now, amid hesitant companies in its creative sectors. The smallest companies
j][gn]jq$l`]qkljm__d]lgY[[]kkfYf[]lg^m]dl`]aj `Yn]\a^[mdlq]phYf\af_$`]d\ZY[cZqfYf[af_\a^[mdla]k&
development. L`]=mjgh]Yf;geeakkagf]klaeYl]\l`]fYf[af__Yh^gj
As the European Commission showed in its 2013 study, European CCI businesses at 8b13.3b, and called for new
creative and cultural SMEs and organizations suffer all the fYf[aYdafkljme]flklgkmhhgjll`]af\mkljqk_jgol`Yf\
\a^[mdla]kg^h]]jkafgl`]jk][lgjk$Yf\f\al]n]f`Yj\]j leverage the development of its small businesses.
to raise capital and funds. In particular, the report said, they The emergence of new technologies and their use in CCIs
depend heavily on intangible assets and IP, serve uncertain (through cuttingedge customer platforms, datacrunching
markets (leading to higher risks) and suffer from a wide capabilities and internet-based services) as well as rising
perception that cultural organizations and entrepreneurs marketing costs of the new digital platforms have made
lack business skills and depend upon public investment many of these businesses more capital-intensive, so
schemes (though in reality these amount to only 1% of EU28 that shortages of capital can severely hold back their
government spending). development more than ever.

26 Creating growth | Measuring cultural and creative markets in the EU

02 | Creating Growth: future drivers of the creative economy in Europe

Fueling growth:
the indirect power of the creative engine
Creative and cultural sectors are also powerful catalysts for other vital industries.
Across the EU, the holiday plans of one out of every three tourists is heavily shaped by available
cultural attractions.

In France alone, culture-oriented tourism generated On tablets, they spend, on an average, 70% of their time
18b of revenues in 2011, and accounted for 35% consuming creative works. And, they spend 50% of their
of tourists consumption decisions. Culture is also a smartphonetime not making calls, but playing games,
cornerstone of digital innovation: many digital companies watching videos, listening to music or browsing the internet.
and apps are created around cultural works and their Accelerated innovation in the creative sectors has fostered
distribution, recognition and curation. This in turn faster innovation in electronic devices: creative works have
fuels innovation in the creative and cultural sectors. encouraged the take-up of smartphones and tablets. The
The availability of digitized cultural and creative works creative sectors are frontrunners in introducing consumers
has accelerated the diffusion of electronic devices among to the new business models of the digital era, paving the
consumers. EU consumers have become accustomed way for other sectors that are shifting services online.
to listening to music, catching up with a TV or radio
program and playing games on mobile devices.

What are the most important considerations when deciding What are the economic impacts of cultural and creative
on holiday destination or accomodation? content on sales of smart connected devices?
Source: Gfk - EY estimation
Source: Eurobarometere 2009

Value for money 44% 13.92b

Cultural attractions 31%

Place 27%

24% 43.99b
Other Smartphones
Quality of service 23%

Safety 12%
Social considerations 10% PCs

Ecofriendly 10%

Don't know 3%
Europe retail sales (2013)
Estimated indirect impact of cultural and creative contents
Several answers possible
(videos, games, music, etc.)

EY | December 2014 27
Creative diversity: understanding
the 11 market segments that make up
the cultural and creative economy

In this section:
Books Film
Newspapers Radio
and magazines
Video games
Visual arts
Performing arts

New user experiences are reinventing the book industry

646,000 36.3b
Employment (2012) Turnover (2012)2 m

Book publishing activities 135,000 Book sales in Europe3 33,621

Book specialized stores 32,000 =pljY=M*0]phgjl 2,637

Public and academic libraries 266,292 Total turnover4 36,258

Authors 1

Employment in non-specialized stores 51,598

Book selling induced employment 11,235

Total employment 646,125

1. The estimate does not take into account indirect employment (printers, graphic designers, etc.).
2. Main sources used for this section are: A report on market trends and developments, 2013 / IDATE News on E-book, IDATE, 2011 / European book Publishing Statistics, Federation of
European Publishers, 2013 / Cultural Access and Participation, 2013, European Commission / Statistical, Ecosystems and Competitiveness Analysis of the Media and Content Industries:
the Book Publishing Industries, 2012, European Commission.
3. L`]ZggceYjc]laf[dm\]k[lagfYf\fgf%[lagfogjck$km[`YkY[Y\]ea[$[`ad\j]fkYf\[gea[Zggck$Yko]ddYkkh][aYdlqZggck%e]\a[Ydgjd]_Yd&
4. Sources: The Global eBook Market, 2013. Rdiger Wischenbart / Market Access Database, 2014, DG Trade.

30 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Books remain a pillar of the creative and cultural economy
With sales of more than 36.3b, the book market There are an estimated 150,000 authors
is a big contributor to the European creative af=mjgh]$Ydl`gm_`l`]ljm]_mj]eYqZ]
][gfgeq$jYfcaf_Ykl`]^l`%dYj_]kleYjc]l$ higher since there is no single database of book
Y`]Y\g^l`]deaf\mkljqYf\h]j^gjeaf_Yjlk& writers and for many writing is a sideline.
It employs almost 650,000 people across Europe,

According to the Federation of European Language barriers tend to make books a
Publishers (FEP), book sales revenue fell 5% domestic product, mainly sold within
between 2008 and 2012. The economic crisis homogeneous linguistic areas. An estimated
has had an effect, but the drop may be partly *(g^kYd]kYj]]phgjlk$g^o`a[`)*Yj]
]phdYaf]\Zq\a_alYdkYd]kkmZklalmlaf_^gjhjafl ]phgjl]\oal`afl`]=MYf\0Z]qgf\l`]
sales at lower prices, eroding publishers turnover. Union. Book distribution remains focused on
Though digital platforms may increase sales bookstores and general stores. In France there
overall, often aided by aggressive pricing, they are still 25,000 bricks-and-mortar booksellers,
may also affect cultural diversity, contributing af[dm\af_)-$(((oal`ka_fa[YflYf\j]_mdYj
to a focus on best-sellers while simultaneously sales activity5.The resilience of physical
improving availability of the little-read titles. klgj]kj]da]kgfl`]]ph]jlak]g^j]lYad]jko`g
Reading books remain popular it is the second advise readers and act as trusted critics.
most common cultural activity among EU citizens.
One-click purchases on online platforms may
be the norm, but the autumn publishing season
remains a key moment in the cultural calendar.

Reading a book is the second most common cultural activity declared by the EU citizens - 2013
Source: Cultural Access and Participation (Eurobarometer 399). Sample of about 1,000

Have you at least once

Watched or listened to a cultural programme 72%

on TV or on the radio

Read a book 68%

Been to the cinema 52%

Visited a historical monument or site 52%

Visited a museum or gallery 37%

Been to a concert 35%

Visited a public library 31%

Been to the theatre 28%

Seen a ballet, a dance performance or an opera 18%

5. France Cultural and Creative Industries Panorama, EY, 2013.

EY | December 2014 31

EU consumers are slow adopters of e-books
Distribution channels for books, as for other New e-book distribution services and devices
cultural works, are increasingly digitized, as have recently been launched in national markets
shown by the growing popularity of reading on across the EU, such as Libreka in Germany and
tablets and e-readers. Yet, the e-book market is Elib in Scandinavia. With its many linguistic
still emerging in Europe, where it only accounts zones, cultural diversity and growing familiarity
for 3% of sales. Meantime, says the Global oal`=f_dak`$=mjgh]akdac]dqlghjgn]Y[gehd]p
eBook Market 2013 report, US consumers market in which e-books have considerable
have proved to be early-adopters: e-books hgl]flaYd&L`Ylogmd\loal`l`]lj]f\g^kgda\
accounted for almost 20% of total US book sales global growth: e-book sales worldwide are
by late 2012. One in four Americans now reads forecast to grow 30% a year during 201015.
e-books and the switchover from print to digital
is continuing, albeit at a much slower pace.
the book industry, triggering reorganization of
The UK e-book market has also been developing production and distribution. Digital publishing
apace. Sales almost doubled in 2012, and one and retailing have the potential to reduce costs
estimate puts sales at 310m380m a share in the mid-to-long term if scale economies
of 12.9%1. The global spread of English, both as are realized. Yet the opportunity should not
YjkldYf_mY_]Yf\lingua franca has combined Z]]pY__]jYl]\&Lg\Yq$hjaflaf_$klgjY_]Yf\
with electronic distribution to offer UK publishers distribution account for only 15%20% of the
`m_]]phgjleYjc]lk$l`gm_`alkaemdlYf]gmkdq cost of a book, according to the FEP. Other costs,
gives foreign publishers access to UK readers. af[dm\af_]\algjaYd]ph]fk]kYf\eYjc]laf_$Yj]
In the digital era, language barriers are the main equally high in digital and print, so cost savings
obstacle to cross-border circulation of books; will emerge only as markets develop. And digital
yet, also make it easier for linguistic minority publishing can require large initial investments.
communities to access books from overseas.

1. Global eBook - A report on market trends and developments, Rdiger Wischenbart, 2013.

32 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

European national markets continue to adapt to an increasingly global

book market, with risks for the creators
European national book markets are being The emergence of national distributors suggests
disrupted by global distribution companies l`YlZqY\Yhlaf_$fYlagfYdhdYq]jk[Yf[g]pakl
that now dominate digital distribution and with globalized distribution companies.
Digitization and the ongoing transformation
In their contest with global companies, national g^l`]nYdm][`YafYdkg[`Ydd]f_]l`]fYf[af_
=mjgh]Yfgh]jYlgjk ]p[]hl^gjl`]MChdYq]jk! of creation. For instance, Amazon offers
are handicapped by linguistic fragmentation a publishing service targeting writers and
that limits market size, and by ending of authors that would allow them to bypass
retail price maintenance or its undermining traditional publishers. It also offers unlimited
by online vendors. Long-standing business access to its e-book catalog for a monthly
models underpinned by legal frameworks subscription. Though most authors prefer to
peculiar to the industry are being challenged by Z]ZY[c]\ZqYd]_Y[qhmZdak`]j$fYf[af_Yf\
technology and new business models that test redistribution-to-author models are changing.
both law and competition rules. But, European
businesses remain at the forefront of efforts
to satisfy the demands of national consumers
for choice of books and editorial diversity.

Leaders and leadership

European groups dominate the global book industry
Oal`*,g^[aYdkhgc]fdYf_mY_]kafl`] on retailers and, in some cases, capturing large
EU and more than 60 indigenous regional parts of the retail market, internet and tech
1. Europeans and languages2, Europes book market has companies, such as Amazon and Apple, are
their languages, EC,
Eurobarometer 386 historically been fragmented. Nevertheless, now broadening the scope of their activities,
the European publishing sector is the worlds and competing with book publishers. Publishing
2. FEP analysis.
3. Pearson, Reed Elsevier, biggest3, and seven of the top ten book houses are adapting to this new technological
Wolters Kluwer,
Random House, publishers in the world are European4. Yf\[geh]lalan]]fnajgfe]flZq]ph]jae]flaf_
Hachette Livre, Grupo
Planeta and Holtzbrinck The past few years have seen the emergence with new business models, consolidating
- Publishers weekly,
2013. of new players in the book sector: after taking and offering ever-more digital content.

EY | December 2014 33

Inside track
How do you see the publishing Of course, we love it when the
industry in Portugal and cinema takes one of our books and
across Europe? decides to make it into a movie.
After several years of crisis, It attracts new readers and puts
publishing is stable and seems to be the author in the spotlight.
slowly improving though Portugal
With new ways to interact with readers,
has relatively few book readers.
especially through the internet,
we are increasing and developing

countries where readership is more

new services and new values for
developed tend to be more resilient.
readers and for our authors.
One shared feature, though, is our
Henrique Mota (left) faith in innovation to improve book What is the future of employment
CEO of Principia Editora and newly elected Vice publishing and distribution, whether in the book industry?
President of the Federation of European Publishers
gfdaf]gjg^af]&L][`fgdg_qak[]fljYd Our President Pierre Dutilleul, Director
Pierre Dutilleul (right) to many processes. We also believe g^=pl]jfYdYf\Afl]jhjg^]kkagfYd

President of FEP
that books are absolutely essential Relations at Editis, the second-largest
for the cohesion of our societies, French publishing group, said, We
since they enable citizens to better shouldnt forget that publishing is a
understand society and themselves. service industry and hence a creation
industry, and as the people in charge,
What trends do you see and how we have to locate, ease, attract and
are publishers responding? develop the loyalty of those talents
Publishing is diverse and each book which makes the book, even in times
genre is unique. We need to work of crisis, a priority good. He is right.
on encouraging everybody in the
Publishing is both local and
population to read. Studies have shown
international. Seven out of the
that citizens who read books are better
ten largest publishing groups are
equipped socially and professionally.
European and many of us have
On the retail front, we need a international ties. Publishers and
competitive and fair environment, all of the staff of publishing houses
where all retailers obey the laws of need to know the local market,
]Y[`[gmfljqYf\^mdddl`]ajk[Yd and in some cases, international
obligations, equally. As publishers, ones. Our publishing houses have
we need a varied network of moved into the digital world (even if
booksellers to encourage cultural people still very much enjoy printed
diversity. Booksellers ensure books) so we hire more and more
hjgpaealqlgj]Y\]jk$o`a[`aknalYd& young, technically-savvy people.
They also play the essential role of
stockholding and marketing books,
so we need to ensure their survival.

34 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

EY | December 2014 35
Newspapers and magazines

Facing and embracing the challenges of the digital age

483,500 70.8b
Employment (2012) 1 Turnover (2013) m

Newspaper industry 190,969 Newspaper 39,307

Journals and periodical publishing industry 289,850 Advertisement revenues 19,260

Others 2,860 Direct sales and online revenues 20,047

Total employment 483,679 Consumer magazines (B2C) 24,358

Advertisement revenues 8,642

Direct sales and online revenues 15,715

B2B magazines
(direct sales, ad spend and direct revenues)
Others 525

Total turnover 70,790

1. Sources: Annual report, European Newspaper Publishers Association (2012) ; European Commission: Statistical, Ecosystems and Competitiveness Analysis of the Media and Content
Industries: The Newspaper Publishing Industry ; World Magazine Trends, FIPP (2014).

36 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A huge business that is part of our everyday lives
Though employing fewer than 500,000 people, Magazines, including consumer and B2B
the newspapers and magazines industry has a titles, account for about 40% of total sales.
total revenue of more than 70b, making it the But magazine publishing is less dependent
fourth-largest creative business. Newspapers on advertising revenues. Magazines sell
bought at the kiosk or corner shop or delivered for higher prices, and advertising provides
on subscription account for 60% of total only around a third of revenues.
sales. Half of publishers revenues come from
advertising, and advertising has been a critical
element of their historic business model.

Revenues of newspapers and magazines (sales and advertising) in Europe (b) - 2012
Source: WAN IFRA, FIPP, EY analysis

100,000 Newspapers
-5.7% Magazines





2008 2009 2010 2011 2012

A growing consumer appetite, thanks to the combination of print and digital

Newspaper and magazine markets in Europe have Despite this, newspaper and magazine publishing
Z]]f]ph]ja]f[af_eYbgj][gfgea[\a^[mdla]k^gj remains a key sector, employing almost half a
years and total sales have fallen, on an average, million people and producing according to WAN
by 5.7% a year since 2008. This downtrend has IFRA an estimated 100m national, regional and
been accelerated by the emergence of digital local newspapers, sold and distributed in Europe
platforms and content, including websites offering every day. Digital publication is growing in Europe.
free news, blogs and user-generated content. Digital technologies have enabled information
The circulation decline threatens the publishers Yf\imYdalqf]okgol`jgm_`eYfqegj]
two main sources of revenue: sales receipts and channels, including print and digital platforms,
advertising. Newspapers share of the advertising with interactive websites, dedicated newspaper
market has fallen from 35% in 1997 to less than apps and social media. But as in the US and
20% in 2012. Meantime, the shift to advertising other developed countries, digital publication
online offers only limited recompense, since is yet to compensate for the fall in revenues
the largest share is taken by search engines. from physical sales and the ongoing migration
of advertising away from the printed page.

EY | December 2014 37
Newspapers and magazines

New consumer preferences stemming from the proliferation
of devices and low-cost communication channels
The spread of smartphones and tablets has driven Publishers are therefore developing
change in the way news is consumed. People freemium strategies under which core
want to access media and news with any device, content is free online but users are encouraged
anytime, anywhere. In response, the industry to subscribe to their digital services to
has shifted from a paper-only business model to a access additional, premium material.
Newspapers and magazines can leverage their
generated content, especially social networks
and blogs, reinforces this trend. Consumers
services that have strong connections with
have become news providers and makers,
readers. Some major European press groups,
creating their own channels of information,
such as Norways Schibsted Media Group or
stories, pictures and analysis, though variable
quality still gives trusted sources an edge.
reinventing their business models, anticipating
Digital publishing enables publishers who l`]gfdaf]k`a^lg^[dYkka]\Y\n]jlakaf_
succeed in involving readers to enrich their and adding business to business (B2B) and
value proposition and learn from their behavior, business to consumer (B2C) services to
who, in some cases, are also becoming viewers monetize their online audience thus building
and listeners. Those who can combine data ^gmf\Ylagfk^gjafl]jfYlagfYd]phYfkagf&
analytics on both print subscribers and their
The consumer magazine market is also in
online audience may uncover a valuable asset.
transition as publishing houses build strong
Newcomers in this market using different magazine brands and offer quality content on
(typically digital-only) business models have digital platforms and devices. Though markets
changed the traditional purchasing behavior remain challenging, the multimedia approach,
and made readers less inclined to pay for combined with a strong focus on content, has
content. Newspaper publishers need to continue strengthened their appeal: EU magazine readers
to develop new products, business models now spend 3% longer each week with their
and organizational structures, following the magazines than in 2010. Magazine audiences
lead of innovative digital platforms already still attract advertisers. The development
available for consumers, such as apps and of lifestyle magazine supplements, heavily
digital kiosks. supported by advertising, underpins this appeal.

38 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Leaders and leadership

Europe is the worlds leading newspapers and magazine market
The EU28 long afforded the largest world Some of the most successful new business
market: in 2012, almost a third of the models are also European: weekly newsmagazine
worlds magazines were sold there, ahead Der Spiegel has effectively managed the
of the US (24%) and Japan (11%). transition toward new platforms and digital
But Asia now accounts for a third of global content. The web edition, employing 60
circulation after a 16% surge over 5 years, journalists, is read by 5.6m unique visitors
while circulations in Western Europe and North every month and, unlike the print edition, Der
America declined 17% during the same period. Spiegelko]Zkal]`YkZ]]fhjglYZd]kaf[]*((-&
Meantime, digital offerings from The Guardian,
Nevertheless, two of the largest global press
a London-based newspaper, and its cross-town
agencies, AFP and Reuters, are of European
rival MailOnline have become global hits.

EY | December 2014 39

Innovating to lead creative diversity in Europe

1,168,000 25.3b
Employment (2012) Turnover (2012) m

Sound recording and music publishing activities 44,660 Physical sales 3,693

Musicians, song writers 650,000 Digital sales 1,686

=fl]jlYafe]flogjc]jk hjglk][lgj! 375,239 =phgjlkg^j][gj\]\emka[ 439

=fl]jlYafe]flogjc]jk fgfhjglk][lgj! 81,466 Dan]emka[h]j^gjeYf[]j]n]fm] hjglk][lgj! 7,793

Employment in non-specialized stores 9,133 Live music performance

Employment in music radios 5,714
Synchronization 93
Employment in music TV channels 1,884
Music radio stations 3,175
Total employment 1,168,096
Music TV channels 1,722
Copyright/authors right
(background music, other radio and TV)
Total turnover 25,341

1. L`]dan]emka[k][lgj`YkZgl`YhjanYl]$^gjhjgl$[gehgf]flYf\YhmZda[dq^gmf\]\

40 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

The third biggest employer in the European creative economy
Activities accompanying the music industrys calculated that there are 650,000 registered
recorded and live value chains are numerous musicians, composers and songwriters.
and diverse. Employees include composers,
Collective rights organizations are key players
songwriters, lyricists, performers, backing
in the musical economy. They redistribute more
musicians, producers, publishers, sound
than 4.3b every year to their members, the
engineers, recording studio staff, technical
creators and publishers who constitute the
workers, managers and workers at music
radio stations and TV music channels. In
alkZjgY\]kl\]falagfj][gj\]\hdmkdan] Thousands of European music companies, both
performance revenues the music industry majors and SMEs, invest heavily in new artists,
generates revenues of more than 25b. and produce thousands of new releases every
year. The contribution of SMEs in particular,
Composing and performing musical works
in terms of releases and jobs, helps make the
occupies most of almost 1.2m people
sector a key employer and is a source of great
working in the music industry. Based on
diversity in new music. Europe is home to four
data from national rights management
of the ten biggest music markets worldwide
organizations and entertainment workers, we
(Germany, UK, France and Italy) and some
of the most important music companies.

A market made of recorded and live music

The live and recorded music markets function in It also generates cultural capital and a strong
symbiosis. Performance of live music (venues, territorial anchoring, through national and
festivals and concerts) has been growing in regional opera houses, such as the Paris
the past few years. The slight (0.6%)20 increase Opera, La Scala of Milan, and the Royal Opera
in overall recorded music trade revenues in House in London, as well as national and
2013 suggests that European direct sales regional orchestras which play a major role for
retain the ability to grow in the future. contemporary creation and the life of musical
Both the recorded music and live music sectors repertoires (see Performing Arts section).
are important providers of jobs that cannot
be relocated. Live music in Europe also has a
produces great economic value and employment.

2. IFPI.

EY | December 2014 41

The European recorded music market is driven by growing digital markets1

Digital recorded music sales grew by Globally, downloads are a crucial source of
109% in Europe between 2009 and 2013. income. In 2013, they accounted for 67% of
Overall, physical and digital sales were digital revenues, while streaming, whether
ZjgY\dqYlaf*()+ Yf]l\][daf]g^ fYf[]\ZqkmZk[jahlagfkgjY\n]jlak]e]flk$
just 0.3%) compared to 2012, helped by provided 27% of digital revenues.
solid digital growth (+12%) in 2013.
In Europe, streaming has grown robustly to
Europeans remain among the worlds deliver 38% of digital revenues in 2013.
largest consumers of recorded music,
Ad-supported and subscription streaming
with 4 EU countries among the 10
revenues are growing strongly and are
biggest markets worldwide in 2013.
According to IFPI, an industry body, digital sales digital market over the coming years2.
accounted for 39% of global recorded music trade
revenues in 2013 and 32% of those in Europe.

Total music sales (retail prices) in the EU 28 (b) Music subscription vs music downloads in Europe, 2012
Source: IFPI EY analysis

Source: Ipsos MediaCT - IFPI


5.49 4.79 4.30 3.69 3.47 12%



+109% 23%
0.91 1.08 1.38 1.69 1.90

2009 2010 2011 2012 2013 Internet users paying music subscriptions in the past six months
Internet users downloading music in the past six months
Digital sales revenues
Physical sales revenues

1. Calculations based on IFPI data and recalculated to estimate retail prices.

2. Source : SACEM.

42 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

The music sector leads creative industries in testing and inventing new
business models
The music industry continues its transformation through ad-funded parts of the service (when
into a global digital business. Recording such a choice is offered), are a growing part
companies are successfully delivering music of the revenue stream. Revenue from music
through digital channels, broadening the world of subscription streaming services surged 51.3% in
licensed music, and innovating to bring artists to *()+$]p[]]\af_MK)Z_dgZYddq YhhjgpaeYl]dq
a global audience. In terms of monetizing its core /-(e!^gjl`]jkllae]&Alak_jgoaf_kl]Y\adq
product for the digital world, the music sector across all major markets. Within Europe,
still leads the way for other creative industries, consumer behavior varies. Sweden, France
af[dm\af_ZggckYf\dek&=eZjY[af_Yf\ and Italy are streaming subscription-friendly,
creating digital business models have been crucial while Germans prefer downloads. In Sweden,
to the success of the European music industry. home of Spotify, half of all internet users pay a
The shift to online music sales is taking place subscription to access millions of music tracks
across Europe, but consumer preferences vary. through streaming services. German music
Music streaming services, for which consumers lovers prefer to download tracks from platforms
]al`]jhYqYp]\%Yegmfl^gjmfdaeal]\ such as iTunes. In the US, a country often seen
Y[[]kklgYf]plj]e]dq]pl]fkan][YlYdg_g^ as a bellwether, consumers are also moving
music (most streaming services offer more to the access model offered by streaming
than 20m tracks, and some have about 40m subscriptions, although Europe is leading the way.
tracks available) or which they can use for free

According to Nielsen, an information and measurement company, interactive music and video
streaming was up by 35% in 2013, with 34.28b streams. This music and video streaming boom
raises the fundamental question of how to better redistribute advertising revenues captured
by video platforms to content creators and their partners. Video platforms facilitate the
largest scale consumption of music, with YouTube, a video platform, being the worlds biggest
music streaming platform.

EY | December 2014 43

Supporting employment
Musicians, songwriters, lyricists and Many hold second jobs, combining multiple
composers are at the heart of the music roles into a portfolio career. This needs to
industry. Though statistics are limited due be understood and enabled by laws and
lgl`][gehd]palqg^Ykk]kke]fl$klm\a]k social security rules that grant protection
in France and the UK highlight a lack of similar to that enjoyed by employees
job security for music professionals. in other sectors of the economy.

A sector founded on cultural diversity

The European music market is made up of a In Denmark, France and the Netherlands, 80%
diverse group of dynamic national markets of the top ten albums in 2013 were by locally-
dominated by their national repertoire. Classical signed artists. The proportion in Spain was 80%,
and contemporary music crosses national and almost 90% in Italy and Sweden.
boundaries seamlessly, and classical artists In terms of overall album sales, national
and recordings follow suit. Popular music, on repertoire accounts for 70% of the Finnish market
the other hand, is generally more successful in and 65% of the French market1&L`][g]pakl]f[]
countries where the language spoken is the one in of original and diverse musical cultures
which the song is performed. Many markets show contributes to the cultural richness of Europe.
a clear preference for their national music.

Music services are key innovators in monetizing creative content

Users have taken up listening to music on-the- This shift toward targeted recommendations
go via wireless electronic devices in addition and a more personalized music offer is based
to listening at home and on their computers. on rapid innovation by streaming platforms,
Music services have led this rapidly changing which are diversifying their subscription
market. Consumers have grown accustomed offers to meet consumer demand.
to the unparalleled breadth of catalog
There is still much to do to tackle piracy,
available across digital services. Competition
which has damaged the industry and artists
among service providers also occurs on
and hampered the take-up of legitimate
the basis of curation and personalization,
services for years. Music companies support
offering tailored recommendations
new distribution and marketing channels for
and helping with music discovery.
music through individual or collective deals
with online music providers, but it remains

1. The evolution of music in Europe, IFPI, 2014.

44 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

\a^[mdllg[geh]l]oal`^j]]mfda[]fk]\ including several digital and European-born

services that do not remunerate artists. international leaders like Deezer (France) and

Major and independent labels have proved Spotify (Sweden), underpinned by copyright, has
lgZ]affgnYlan]Ylf\af_f]ooYqklg_jgo$ helped transform the industry. The availability
\]n]dghaf_Zmkaf]kkeg\]dk]p]ehda]\Zq of music at different price points and in diverse
global rights agencies, including Merlin for the packages appeals to consumers, contributing to
independents. The emergence of a wide range of an increasing willingness to pay for music online.
legal music streaming and downloading services,

Leaders and leadership

A leader in sales and innovation
Europe is home to the worlds leading such as YouTube, GooglePlay and Rdio. Europe
record company Universal Music Group is also home to thousands of independent
and two leading music streaming service music companies, which are also key
providers Swedish-based Spotify and Deezer employers and investors in new creative works,
from France which are global leaders, something crucial to musical diversity.
competing with leading US players

European creators and artists succeeding at unprecedented levels

Two European bands were among the 2013 authors rights via collective societies to their
top ten global recording artists, winning members: authors, composers and publishers.
success with a global audience. UK-based One
Even in a globalized music market, local
repertoire remains the cornerstone of almost
chart, while Frances Daft Punk also succeeded
every national market in the EU and around the
globally, alongside a host of other artists
such as Adele, Stromae and Xavier Naidoo.
and has been a global leader in music and culture
=mjgh]YffYlagfYdj]h]jlgaj]akYf]plj]e]dq since the earliest days of sound recordings.
Finally, Europe is also home to several of
the worlds most prominent music festivals
and opera houses (see Performing arts).
and the UK. European repertoire is supported
and nurtured through the redistribution of

EY | December 2014 45

Inside track
What future trends are emerging? with subscription services accounting
Today, music lovers have unlimited for 54% of digital revenues).
and immediate access to most of
Digital is a wonderful opportunity for
the music ever recorded, across all
the creative sectors, and, of course, the
genres and regions of the world, at a
creative sectors are a great opportunity
reasonable price and often even for
for the digital economy. Digital allows
free. They also have access to devices
new and more sophisticated ways of
delivering better audio quality than
communicating, reduces the distance
ever before. This could be a dream-
between creators and their public, and
come-true for musicians, composers,
enables the greatest diversity of works
music producers and fans if and only
to be published and distributed, as
if online services treat every piece
Michel Lambot long as the pipes are not choked by a
of music with equal respect and return
Co-founder and Co-president of [PIAS]
handful of powerful global gatekeepers.
equal value to creators. If not, online
services will be the new gatekeepers, What is happening to
What has been happening deciding what music can be published, employment in your sector?
in your industry? how much an artist can earn and what The process of making music involves a
L`]emka[k][lgjoYkgf]g^l`]jkl music genres the public can access. chain of skilled individuals: composers,
to be confronted with the advent of the This places a heavy responsibility on lyricists, music publishers, performers,
internet as a new distribution platform, those who will decide the outcome. backing musicians, sound engineers,
ZY[cafl`]dYl]1(k&9ljkl$l`ak record producers, recording studio
disruptive technology had a dramatic
How important is digital staff, artist managers, and graphic
impact on the music market in terms
technology in your sector? artists, as well as lawyers, accountants,
Online music services have developed
of jobs, growth and retailing. Seeing it IT and new media specialists.
enormously in Europe in the last few
as an opportunity rather than a threat,
years. By 2013, more than 230 music There are very few specialized schools
however, independent record labels
services were available in Europe, that offer training for a career in
decided to take a very forward-looking
offering more than 37m tracks in the music business. That is why our
approach to this new tool, seeing
every EU country. Digital made 32% of industry tends to educate its new
it as a real asset for music creators
European recorded music sales, while workers itself. Workers are, on average,
and authorizing new entrants to
physical sales accounted for 56% in younger than in most other industries.
develop systems and test the market.
2013. In certain countries, the share My company is being approached
This year, the European-recorded
g^\a_alYdak]n]f`a_`]j$^gj]pYehd]$ more by artists wanting to sign with
music market returned to growth
Sweden (70%, with subscription us and by young people wanting to
services accounting for 94% of digital work with us than ever before.
indicating that we are now at a tipping
revenues) and the Netherlands (35%,
point where the growth in digital is
helping drive the market back up.

46 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
How has your industry changed What future trends are emerging?
in the last few years? How has it We at Spotify are convinced that
adapted to digital technologies? streaming, rather than possessing, is
At Spotify, we are at the heart of the future of music, creating a new
the digital revolution in the music model of listening, based on instant and
industry. When Martin Lorentzon unlimited access to music. We believe
and Daniel Ek decided to create it is more adapted to our current digital
Spotify, their analysis was that in habits and connected environments.
the 2000s people were consuming
Streamings market share has
more and more music, thanks to the
been growing fast for the last few
internet, but at the same time the
music industry was falling apart.
Jonathan Forster gaining ground in the near future,
Managing Director, Spotify Nordics
When we started, online music was becoming one of the industrys leading
essentially piracy and download. But sources of revenue. In Sweden,
the advent of streaming has been one Spotify now generates nearly 70%
What is Spotify? of the biggest music industry shifts in of the industrys total revenues.
Spotify is the leading music streaming l`]hYkln]q]Yjk&L`]oYqo]k`Yj]
service in the world. The company and discover music have completely What does the future hold for
was founded in 2006 in Sweden and changed and we have really tried to employment in your sector?
the service was launched in 2008. integrate these changes into Spotify What we are seeing in Sweden is
Today, Spotify gives access to more by not only being a music player but amazing. Labels and majors are now
than 20m tracks on every device also a social network and a place where hiring more engineers, often from tech
with two versions: a free one paid by you discover the music you will like. companies rather than people with
Y\kYf\Yhj]eamegf]fYf[]\Zq ljY\alagfYdemka[af\mkljqhjgd]k&
We are still at the beginning of the
subscriptions. Spotify is now available I think that the music industry is
streaming era. Today, we are really
in 57 markets globally, up from 15 two turning into a world of digital natives!
proud to count 40m users with more
years ago, when we were limited largely
than 10m paying subscribers, but
to Europe and the US. Europe was
there is still plenty of room for us to
grow and to become the primary way
natural and easier for us as a European
of consuming music. We really believe
company. Now, we are in almost all
that Spotify and streaming in general
countries of the European Union
are the future, and we are working
and we have also launched in South
really hard to realize that vision!
America and Asia. Our goal is to be

EY | December 2014 47
Performing arts

Audiences love concerts and music festivals

1,234,500 31.9b
Employment (2011) Turnover (2011) m
Fgf%hjglk][lgj 271,554 Fgf%hjglk][lgj 14.726
Performing arts activities production and Performing arts activities 10.014
Venue revenues 4.712
Supporting activities to performing arts 40,247
Hjglk][lgj 17.153
Venue activities 18,185
Hjglk][lgj 962,783 Performing arts activities 11.664

Performing arts activities production and Venue revenues 5.489

Total turnover 31.879
Supporting activities to performing arts 142,694

Venue activities 64,476

Total employment (estimate) 1,234,338

48 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

The performing arts span four main A strong tradition and local presence of theaters
activities: modern and classical dance, and concert halls underpins this high level
theatre, live music and circus arts. The of employment. By its nature, the activity is
]d\ak\aklaf_mak`]\ZqYhgdYjarYlagf labor-intensive and a striking 78% of employees
between the public and private sectors. are creators and performers and another
Providing an estimated 1,234,338 jobs 15% technicians, while just 7% are involved
in Europe, the performing arts sector1 in venue management and organization of
is the largest employer among the ballet, music and stage performances.
continents cultural and creative industries,

Attendance in theaters and concert halls fell ]Yjda]j&L`]egkldac]dq]phdYfYlagf^gjl`]^Yddak
between 2007 and 2013, according to the the pressure on household budgets arising from
Eurobarometer, for cultural participation in a prolonged period of slow economic growth and
Europe. The number of Europeans saying they austerity. Attending live performances can be
had been to the theatre at least once during ]ph]fkan]$Yf\akZ][geaf_j]dYlan]dqegj]kg
2013 fell to 28%, down from 32% in 2007. The at a time when the internet offers free or cheap
proportion reporting they had been to a concert, access to many recorded performances. Live
meantime, slipped to 35%, from 37% 6 years h]j^gjeYf[]k`Yn]Z][ge]Ydmpmjq^gjeYfq&

A dynamic sector driven by live music and outdoor festivals

Concerts and music festivals generated more the performing arts arena are becoming more
than a third (37%) of global performing arts [gf\]flYZgmlalkhjgkh][lk$Y[[gj\af_lg
revenue in 2011. With revenues growing two business surveys. One study found that
regularly since 2010, festival and concert more than 45% of respondents described the
activities have now recovered to pre-crisis European festival market as healthy, and 40%
d]n]dk&L`akj][gn]jqj]][lkY\qfYea[_jgol` said the economic crisis had not affected their
lj]f\$Yf\^mjl`]jhjg_j]kkak]ph][l]\af investment and development plans very much.

Concert and music festivals revenues in Europe (m)



5,000 Other Western Europe

Eastern Europe
1. Performing arts include
all forms of artistic
]phj]kkagfaf^jgfl 3,000
of an audience. In
this sector we look at 2,000
dancing, opera, theatre
(classical, contemporary
and street art), opera
and live music (classical
and contemporary), 0
including festivals. 2008 2009 2010 2011 2012 2013
Source: EY International Multimedia and Entertainment Knowledge Center

EY | December 2014 49
Performing arts

Declining public support threatens local activities
The wave of state-spending cuts that swept With public subsidies shrinking and production
=mjgh]afl`]oYc]g^l`]fYf[aYd[jakak`Yk costs rising, promoters have tended to hike ticket
hit the creative industries hard. Amid rising hja[]klgeafaear]dgkk]kgjeYaflYafhjglYZadalq&
unemployment and upward pressure on
The belt-tightening especially affected local
social security budgets, many governments
and micro-theaters, which depend most heavily
on public subsidies. Theaters and concert
spending on support for the arts, resulting
halls with national and international visibility
in a squeeze on public subsidies to theaters,
opera houses and orchestras. Funding of
Indeed, during 2011 theatre audiences
in Barcelona, a favorite European leisure
of sponsorships (e.g., private donations and
destination, reached a record 2.8m1.
fundraising), ticket sales and public subsidies.

and higher quality
Competition for the budgets of festival goers Intensifying competition could also encourage
is increasing. On being questioned about organizers to innovate in the way they
the outlook, 21% of festival organizers said organize, market and run festivals. Use
[geh]lalagfogmd\Z]YeYbgjakkm]^gjl`]f]pl of digital technologies, including cashless
few years. This will put downward pressure on payments, and provision of high-speed wireless
entrance prices and push up production costs internet is likely to increase, and we should
as organizers hire big-name acts and strive to ]ph][legj]imYdalq%gja]fl]\g^^]jk$km[`Yk
improve facilities for those attending. This could premium hosting facilities. The strategy of
lead to more imaginative funding mechanisms: segmenting customers and offering a higher-
some festivals have sought to bolster income in quality product to those willing to pay more
recent years by developing branding, naming a practice known as premiumization can
and other advertising-based revenues. Z]k]]fafdeaf\mkljqYf\]dk]o`]j]&

1. L`]Ylj]Ym\a]f[]kaf=mjgh]g[clghdYq\]khal]l`]][gfgea[kim]]r]$L`]?mYj\aYf$*()*&

50 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A growth engine for cultural tourism

Culture is a powerful driver of tourism, motivating to the theatre, a musical, opera or ballet2. Local
national and cross-border visitors within performances, in parks, pubs, restaurants and
Europe and drawing many overseas visitors to even camp sites are an essential element of
the content. A rich built and cultural heritage Europes tourist appeal. Even when cultural
in many European countries and capitals is activities are not the primary reason for travel,
reinforced by the dynamism of contemporary performing arts may be an important part of
[mdlmj]$]phj]kk]\afeg\]jfYjl$ZYdd]lk$ l`]`gda\YqYf\ljYn]d]ph]ja]f[]$Yf\l`]j]
theater and music. The performing arts play is ample scope for further development of
an important role in attracting people: for these activities in cultural tourism strategies.
instance, 9.2% of tourists visiting the UK went

Leaders and leadership

Europe home of major music festivals
According to an MTV ranking, 5 of the 10 most-attended international festivals take place in Europe:
Donauinselfest, Austria Palo, Switzerland
(attendance: 3.2m in 2013) (attendance: 230,000 in 2013)
Przystanek Woodstock, Poland Exit, Serbia
(attendance: 550,000 in 2012 (attendance: 385,000 in 2012)
Sziget, Hungary
(attendance: 385,000 in 2012)

and a prime opera, theatre and ballet destination

With world-renowned venues, such as La Scala And Europes long history of performing arts
in Milan, the Royal Opera House in London, and and leading role in artistic creations is shared
Staatsoper in Vienna, Europe has many of the best- through institutions, such as the Comdie
known opera and ballet houses and companies in Franaise and Shakespearian theatres in
the world. Ancient venues in Italy or Greece have London and Stratford-upon-Avon3.
become highly sought-after tourist attractions.

2. The contribution of the arts and culture to the national economy, CEBR (2013).
3. 9kaY$^gj]pYehd]$Ydkg`YkYdgf_ljY\alagfg^Yjlakla[h]j^gjeYf[]afBYhYf]k]CYZmcao`a[`klYjl]\afl`])/l`[]flmjq3Yf\;`afY[j]Yl]\Yfaeh]jaYd
opera house during the 8th Century Tang dynasty.

EY | December 2014 51
Performing arts

Inside track
Famous for its quirkiness and What future trends are discernible?
multicultural atmosphere, youll It is not easy for a big festival to survive
meet almost every nationality, afl`]afl]fka]\[geh]lalan]kalmYlagf&
from Irish and Dutch to Turkish and The key lies in specialization. Until
French, bringing their own music, now, we have seen a huge quantitative
theatre groups, food and culture. development in this sector. Now
were shifting more to a qualitative
What changes have your sector development era. The big open-
undergone in recent years? air music events attract audiences

In the last, say, 10 years, the number from a wider, cross-border territory,
of both local and international open- so organizers must highlight what
air music events has quintupled, is unique very clearly. In a smaller
Kroly Gerendai and this has led to unprecedented country, such as Hungary, there is an
Managing Director of Sziget Cultural
competition among festivals. The 80%90% overlap in the performer
Management and Founder of Sziget Festival
good news is that the number of lineup of music festivals. To attract
attendees has also risen, though not more festival goers, events must offer
What is the European dimension as fast as the supply side I would unique attractions and features that
of the Sziget Festival? say that attendance has doubled. complement their musical offerings.
This massive eight-day music festival
brings together more than 65,000 How has your sector integrated What is the future of
attendees per day, and has been taking digital technologies? employment in your sector?
place annually since 1993 in Budapest. <a_alYdkgdmlagfk`YkafdljYl]\l`] At Sziget, some 50-plus employees
The event features international acts world of open-air festivals on all ogjcYddq]Yjdgf_gfgmj]pl]fkan]
in genres ranging from rock, pop fronts. Social media channels have event portfolio. However, this
and electronic music to blues and raised audience communication to tiny team grows incredibly in the
jazz to world music. Being one of the Yegj]\aj][lYf\]^[a]fld]n]d& ^]klanYdk]Ykgf&9lgmjY_k`ah
ogjd\kdYj_]klYf\egkl]pljYgj\afYjq Digital payment solutions have event, Sziget Festival, about 9,000
festivals, with about half of the total enhanced safety for customers and workers provide an unforgettable
visitors coming from outside Hungary, facilitated accounting for organizers. ]ph]ja]f[]lggmjYm\a]f[]&
the Sziget Festival won the very best Live streaming helps in bringing
European Major Festival award the shows to an unprecedentedly-
employers, hiring mainly local, well-
in 2011 and was ranked one of the wide audience around the world.
trained and educated manpower from
best festivals by British newspaper, Digital development has made both,
the younger generation. These jobs
The Independent, in the same year. reaching out to the audience and
can never be outsourced to distant
providing services to them, easier,
countries: this makes our role even
which is great for everyone involved.
more important at local level.

52 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
the Avignon, Barcelona, Athens and How has your festival integrated
Istanbul festivals, we work together digital technologies?
and collaborate to share the costs of We mainly developed a digital strategy
having European and international toward communication with our
companies perform in our festivals. audience to promote the festival
program. We are also working with
What is your economic situation schools and using digital technologies
and how has your festival changed? to make our festival and its venues on
Michel Cavalca

Weve suffered some budget cuts in archeological sites known to kids.

recent years but we have found new
resources, thanks to the Niarchos What are the main challenges
foundation and other sources of for the future?
Yorgos Loukos funding that help to balance the First, the festival season is a great
President of the Athens & Epidaurus Festivall
budget. But it is important to underline opportunity for local people: we go
that ticket revenues are important. from 12 to 350 people working for us,
What is the European dimension Gmjla[c]lhja[af_hgda[qj]][lk hiring many ticket vendors, ushers,
of the Athens & Epidaurus Festival? the local economy, with a range of and so on. And then, there are local

The Festival was born right after the tariffs (cheaper tickets for young and economic spinoffs which are huge in

Greek civil war, with a triple economic, unemployed people and introduction terms of tourism even boosting sales
artistic and touristic objective: g^\]dalq[Yj\k!Yf\akYj]Ydkm[[]kk$ of local honey, olive oil and orange
opening up to Western Europe, with an increasing number of tickets marmalade. That is why it is important
drawing back our great artists (like sold every year. We went from 40,000 for us to encourage closer European

Marias Callas, who was at La Scala to 180,000 spectators within 5 years collaboration in terms of tourism and

in Milan and Dimitris Mitropoulos, and 70% of them are under 30. We culture, which are interrelated, to
who was conductor of the New have also moved many of our venues \]]h]fl`]Z]f]lk^gjZgl`k][lgjk&
York Philharmonic Orchestra) and from archeological sites to more
promoting our great archeological diverse and modern sites, such as
sites in Athens and Epidaurus. abandoned factories. And casting
theater productions with big names
The festival aims at promoting
such as Kevin Spacey playing Richard
contemporary young Greek creators
alongside European creators to build
play attracts a wider audience.
international bridges. We want to bring
the new generation to the foreground Art is a great antidote to crisis, and
and provide a platform for the enables creators to think differently
]e]j_af_^gj[]kafYjlk&>gj]pYehd]$ while it gives people a real appetite
through the Kadmos project associating and enthusiasm for culture.

EY | December 2014 53

The most popular medium is thriving

603,500 90b
Employment (2013)1 Turnover (2012) m

Employment in television programming activities 288,288 Pay TV2 and public license fees 60,479

Employment in television production, Advertising revenue 27,934

post-production and distribution
Video on demand (VOD) 484
Creators working in the TV industry 72,000
=M*0]phgjlk 1,058
Total employment 603,628
Total turnover 89,955

1. Main sources used for this section are: World Television Market, IDATE, 2011 / European video: the industry overview, European Video Yearbook 2013, International Video Federation
2013 / Statistical, Ecosystems and Competitiveness Analysis of the Media and Content Industries: European Television in the New Media Landscape, Joint Research Centre European
Union, 2013.
2. Pay-TV is an umbrella term including subscription based services and , pay-per-view, which may be described separately.

54 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

New growth factors energize TV broadcasting activities
With the total reaching 90b and the total (for pay-TV, see graph) and general license
employee count reaching 600,000, the European fees. Advertising revenues accounted for
TV market the worlds second-largest after that more than 31% of total revenues of TV
of the US and ahead of Japans grew on average broadcasters. No details of online revenues
Zq)&0+Yq]Yj^gjl`]hYkln]q]Yjk&9\][daf] from broadcasters websites are available at
in advertising revenues (down by 3b from 2008 the European level, but recent estimates in the
to 2012) has been compensated by increased UK suggest that they are still very marginal.
income from TV license fees and subscriptions

EU markets have effectively embraced new technologies

The distribution channels of broadcast TV are This conversion is fueled by the emergence of
af[j]Ykaf_dq\an]jka]\&:q*((1$kYl]ddal] a new audience landscape: even though TV
broadcasting accounted for 31% of the EU TV remains a mass medium enabling advertisers
market, cable for 30%, digital terrestrial TV for to reach a massive range of audiences, growing
25% and Internet Protocol Television (IPTV) audience fragmentation allows television
for 5%. Western Europe is the largest IPTV channels to target their audience more precisely
market in the world, accounting for 40% of and helps broadcasters secure revenues from
global subscribers in 2010. France is the leading advertising designed for a particular audience.
country in the world for IPTV (23% of the global
total), followed by China (16%) and the US (16%)3.

Paying viewers have become the leading source of revenues

The growth of overall TV revenues is primarily Afl`][geaf_q]Yjk$l`aklj]f\ak]ph][l]\
\jan]fZqaf[j]Ykaf_gok^jgehYq%LN&Mflad to increase as digital advertising spend
2008, advertising was the biggest source of goes up and TV broadcasters secure more
funding for the industry, generating about revenue through subscription plans4.
47% of the sectors revenues, while 44% There is increasing pressure on national
came from pay-TV and 9.4% from public Zm\_]lk3Yf\Ydl`gm_`hmZda[fYf[af_jgk]
funding. The situation began to reverse in 6.9% in 2010, it still accounted for less than
2009, and in 2010 pay-TV accounted for 10% of total television revenues. Public service
48% compared with 43% for advertising. broadcasters in several European countries

TV market revenue, Europe (m)

100,000 is an essential source of funding for public
Exports service broadcasters, and in turn for their
VOD suppliers the small and medium enterprises
Advertising revenue
from which programs are commissioned.
Gross revenue



0 3. Green paper on the online distribution of audiovisual works in the

2008 2009 2010 2011 2012 European Union: opportunities and challenges towards a digital single
market, European Commission, 2011.
Source: European Audiovisual Observatory 4. As estimated by IDATE.

EY | December 2014 55

Many in the TV industry believe consumers will be increasingly watching programs on devices other
increasingly willing to pay for premium content than TV sets. In an era where multitasking diverts
featuring enriched programs and live events, TV audiences away from the main TV set, second
or for service make it easier to catch up on the screen strategies delivering program-related
broadcasts they missed. So services that provide content on dedicated apps are being developed
Y[[]kklgLNhjg_jYekYko]ddYkdekYj]Z]af_ in an effort to keep the viewer involved.
reshaped so that viewers are charged for what
New technologies have helped this change. With
they are willing to pay for, while other content
the development of over-the-top (OTT) video
remains free. Some traditional broadcasters have
and connected TVs, new kinds of companies,
enhanced traditional offerings with so-called
such as independent content aggregators, are
nonlinear services such as catch-up TV and video-
increasingly competing with television channels,
cable networks and broadband operators to
of channels, platforms and devices. People are

Pay-TV platforms have resisted the swift emergence of streaming

EYfq]ph][l]\l`]YjjanYdg^d]_Ydgfdaf] >gj]pYehd]$F]lapoYkdYmf[`]\afl`]MCaf
streaming platforms, enabling internet users to 2012 into a market where online TV was already
access a very large catalog of TV programs and YnYadYZd]&:ml]paklaf_hYq%LNk]jna[]k$km[`
dek$lgmf\]jeaf]]paklaf_hYq%LNk]jna[]k as BSkyB, which maintained constant 10.6m
where present and attract their customers. subscribers between 2012 and 2013,were
But that has not happened. The arrival of unscathed1&L`]dYmf[`g^F]lapk]jna[]kaf
France this year will provide a new opportunity
online subscription-based operators such as
to observe the impact of a legal streaming
platform in a country that already has pay-
not lead to a massive shift away from other
TV services as well as subscription-based
subscription services. Most viewers seem to
services such as FilmoTV and CanalPlay.
regard the new subscription services not as
an alternative, but as a complementary offer
to other pay-TV and subscription services.
The new services mostly attract consumers
without pay-TV subscriptions or consumers
taking more subscription-based services.

1. BSkyB Facts and Figures, BSkyB activity reports.

56 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Maintaining the popularity of TV in the digital era

European consumers still love TV, watching on a wide range of programs to watch on TV.
average 3 hours and 48 minutes a day in 20102, Increased viewer choice has helped grow demand
despite tough competition from the internet. Yf\j]n]fm]k$Zmlakfgdgf_]jkm^[a]fllg
But the amount of time spent watching TV is maintain the trend. As in the music industry,
declining in some European countries: the French TV companies may choose to develop online
watched 8 minutes less TV a day during 2014 lggdklg`]dhna]o]jkf\hjg_jYekl`]q
compared with 2013 and Britons 18 minutes less. want to watch among the growing number of
With almost 10,000 TV channels established options. These might include recommendation
in Europe, and increasingly segmented tools that learn from viewing behavior and
programming thanks to the emergence of highlight relevant content, replacing printed
specialized channels, many consumers have and electronic program guides, and providing
strong and easy-to-identify editorial lines.

Some TV programs cross borders but TV activities remain mainly national

Though TV markets remain essentially national, =phgjlkYj]Ydkg^Y[adalYl]\Zql`]\]n]dghe]fl
a growing number of European TV programs and of series designed for audiences in more than
^gjeYlkYj]f\af_Ym\a]f[]kafgl`]j=mjgh]Yf one country, as well as documentary and TV
countries. Series such as Downton Abbey or k`go[g%hjg\m[lagfk$mf\]jhaff]\ZqfYf[aYd
Borgen are sold around the world. Big European and technical partnerships to share costs and
production companies are also able to replicate know-how between European TV producers and
programs that have done well in one country public or private broadcasters, including ARD
and adapt them to address local audiences and and ZDF in Germany, the BBC and BSkyB in the
lYkl]kafgl`]jk&>gj]pYehd]$`alk`gokkm[`Yk UK, and France Televisions. Partnerships and
Big Brother (produced by Endemol), Pop Idol strategic alliances are also set up at a global
(FremantleMedia) or Strictly Come Dancing (BBC) d]n]dYkl`]\]YdfYdar]\afG[lgZ]jZq;]flmjq
are better known in France as Loft Story, Nouvelle >gpYf\9hgddg?dgZYdEYfY_]e]fllge]j_]
Star and Danse avec les Stars respectively. Endemol, Core and Shine demonstrates.

2. TV Worldwide, Eurodata.

EY | December 2014 57

Leaders and leadership

The second-largest regional television market
Europe was estimated to account for 29.2%
of global TV revenues in 20101.That makes
it the worlds second-largest TV market after
North America (37%). Only three countries,
the UK, Germany and France, generate
more than half of this turnover (53%).

The European television industry is a successful

revenues come from the thriving British TV
1.2b in 2012, having almost quadrupled
since 20042. The sophistication and quality
of leading UK television productions gives
them international appeal, however rivals are
emerging and Scandinavian countries have
recently made a big impact on the global stage,
with successful TV series such as Borgen,
Real Humans, The Bridge and The Killing.

1. A<9L=Ogjd\L]d]nakagfEYjc]l *())!$9hjgd]g^[mjj]flYf\^mlmj]Ym\agnakmYdYm\a]f[]$=mjgh]Yf;geeakkagf*()*3?j]]fhYh]jgfl`]gfdaf]
distribution of audiovisual works in the European Union: opportunities and challenges towards a digital single market, European Commission 2011;
European Television in the New Media Landscape, European Commission 2012; Television, cinema, video and on-demand audiovisual services in 39
European States, European Audiovisual Observatory 2013.
2. `llh2''ooo&hY[l&[g&mc'YZgml%mk'f]ok'mc%l]d]nakagf%]phgjlk]p[]]\%)*Zf'

58 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
Social TV and second screens have What are the challenges
created real opportunities (mostly for the future?
interactivity and sponsor possibilities), The challenges are multiple. First, we
and social media have created a must deal with new digital ways of TV
powerful way to market shows and program consumption, working with
channels. But the real change is lower budgets (which means being more
still in the future, because in the ]paZd]!Yf\c]]haf_`gd\g^gmjja_`lk$
Netherlands at least funds are at a time when broadcasters seem to
Roland J. Reinders

scarce. Also, we need to be aware be more powerful than ever. Another

that although the second screen may challenge is that the same broadcasters
help the primary screen by offering sometimes prefer in-house productions.
meaningful and successful content And we see new competition
Laurens Drillich (participation TV through your mobile from people who create their own
Managing Director, Endemol
Nederland Mediagroep
or tablet) quite often the second (or content at home and distribute it
third) screen in the house is used for online (and via mobile phones).
What changes has your sector other platforms than TV (shows).
undergone in the last few years? Television has become a global market.
What are the employment
More people watch TV at other
And where this may not be true for
trends and what is the future of
moments than the original time slot at
some very distinctive markets like
employment in your sector?
which it was originally broadcast and on The sector favors young people and
Japan or India, the rest of the world,
other devices, more advertising money the market demands super talents to
and especially Europe and Australia,
goes to digital, and many broadcast and run productions, so we have to identify,
watches the same type of content
production companies have teamed attract and retain these employees. We
probably 75% of the time. As an
up, while at the same time there is YdkgljqlgZ]]paZd]$o`]j]hgkkaZd]&
a constant stream of new, smaller :ml<ml[`dYooadd[`Yf_]f]plq]Yj
around the world (of which Endemol
players in the production market. The Yf\l`]eYpaemefmeZ]jg^k`gjl%
owns at least 7) have been broadcast
cable/digital broadcast market has term contracts in a given period will be
in 95% of the countries. At Endemol,
_jgof]pl]fkan]dq&:m\_]lk^gjLN reduced. This will probably mean that
we have a library of more than 5,000
shows have decreased very strongly. we offer more permanent contracts,
formats and commission at least
somewhat against the trend, to keep
Our digital strategy is to be where 50 new formats around the world
the (future) all-in-one vieweruser each year, across all entertainment
consumer will be, which naturally genres. In addition, we have a growing At Endemol Netherlands, we employ
means that we diversify from regular slate of drama and comedy hits in YhhjgpaeYl]dq,*-]ehdgq]]k
broadcasting toward all other (plat) the US and the UK as well as India, in permanent jobs or regular
forms, including but not limited to Germany, France, the Netherlands, collaboration, with an average of 40 to
mobile, online and over-the-top Italy, Spain and Argentina. 70 people working on a typical show.
delivery via internet TV protocols.

EY | December 2014 59

Inside track
What is Arte and what are at the heart of the new editorial
its special features? policy that we launched in 2012:
Arte is a singular project: the unique innovating without abandoning our
FrancoGerman cultural channel convictions. This strategy is bearing
with a European mission. Financed fruit in France and also in Germany
95% by the French and German where Arte is achieving record ratings.
license fees, it has two production
centers, one in Paris (Arte France), What are the implications of
Miguel Medina

and one in Germany in Baden- digital technology and what

Baden (Arte Deutschland), and future trends are emerging?
Yfg^[aYd`]Y\imYjl]jk[Ydd]\D] Technological innovation is changing
Central: its broadcasting center the way people watch and use TV,
Vronique Cayla in Strasbourg (Arte GEIE). especially the way they used to watch
President of Arte
programs sequentially, as they were
Arte France employs about 250
broadcast. Digital technology offers
people, 70% of them women, at all
great opportunities for diversity
levels of the organization. Arte is
and creativity, for spreading and
a very female-supportive channel,
sharing the arts and culture. It is
and has added many women in top
also an opportunity for the entire
positions in the past couple of years.
broadcast industry with Arte in the
Arte is a double utopia. First, it is vanguard, for ours is a dual-country
an audiovisual utopia because it channel that was quick to adopt digital
broadcasts simultaneously the same technologies and that can rely on
programs in two languages in France strong and distinctive programs.
and Germany (40% of the programs
Yet, we have to be wary of the
are produced by Arte France, 40% by
strategies of the major internet
Arte Deutschland and 20% via the
players, particularly Google, Apple,
GEIE). It is also a political utopia that
Facebook and Amazon, which are
aims at bringing together the people of
unregulated, less concerned about
Europe through their culture. Opening
cultural diversity than economic
to other cultures, to their diversity,
performance, and inclined to act as
to the most varied creation and the
digital predators. Europe must be
renewal of its forms and genres are

60 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

careful and has to adapt its regulatory To reshape Arte for a digital world,
system so as to protect not only its we have drawn upon our values and
heritage and cultural wealth, but `aklgja[klj]f_l`klg]klYZdak`n]
also its advertising revenues and digital services. Arte Concert was
personal data. When our continent launched at the beginning of the
is going through a bruising identity year and has since achieved record
crisis, culture must now more than Ym\a]f[]kl`Ylj]][l9jl]k[gn]jY_]
ever be protected, supported and of Europes summer festivals. Arte
strengthened and creativity be Creative is our cultural leader. Arte
promoted. That is the idea behind Future carries science content
the Tandem project developed by and programs. And this year we
Arte: stimulating production of launched two new services. One
FrancoGerman scripted programs is Arte Info, which brings together
and enhancing and tightening the all our news content, showcasing
bonds between our two countries Artes special international character.
favoring European coproduction as And Arte Cinema, the latest in our
we look to the future together. _YdYpq$`a_`da_`lkYf\]f`Yf[]kgmj
Afkm[`Yhjgda[Yf\_dgZYdar]\k][lgj$ enthusiasm and support for art-
Arte needs to be supported so that it house cinema from around the world.
can achieve its cultural promise in this Artes goal is to become a beacon
new digital era. It also needs to develop of European culture on the internet,
its European dimension, accentuating diffusing the cultural identities of
the quality and attractiveness of our continent to strengthen their
its programs. We have developed a afm]f[]Yf\[gfljaZml]kljgf_dqlg
powerful digital strategy, articulated the European forum that we need
l`jgm_`l`][j]Ylagfg^Y_YdYpqg^ now more than ever. We are now
n]\a_alYd[`Yff]dk&GmjYeZalagfak seeking support from the European
to establish a new model for public Commission to subtitle our programs
television that is, more open, more in other EU languages, which we
participative and which enables real- believe would turbo-charge our drive
time and delayed viewing to evolve lgZ][ge]YY_k`ahg^=mjgh]Yf
in an interwoven and enriching way. culture.

EY | December 2014 61

Resilience fueled by the digital transformation

641,000 17.3b
Employment (2012) Turnover (2012) m
LglYd]ehdgqe]flafdehjg\m[lagf$ :gpg^[]_jgkkj]n]fm] 6,298
postproduction and distribution Physical home entertainment
Employment in nonspecialized retail stores 31,205 (DVD and Blu-ray rental and sales)

9ml`gjkogjcaf_afl`]deaf\mkljq 36,000 1 Advertising revenue 671

VOD revenue 1,380
Total employment 640,760
=M*0]phgjlk 2,176

Total turnover 17,272

1. Estimate of the number of authors receiving royalty payments irrespective of the year the works were completed. Method of calculation: the SAA
represents 120,000 authors working in the audiovisual industry. CISAC estimates that 10% of these authors are deceased, leaving a total of 108,000 living

62 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A 17b market employing almost 650,000 decline in receipts from the sale of DVDs, which
h]ghd]$l`]deaf\mkljqakl`]fafl`%dYj_]kl have fallen from 50% to 32% of the total in the
covered by this report. Its biggest single source of same period. Though many employees are highly
revenues is the sale of cinema tickets referred skilled, and the industrys stars are household
lgYk_jgkkZgpg^[]j]n]fm]ko`a[` names, many employees are in distribution,
in 2012 was 36.5% of the total. These have including manning cinemas and retail operations.
grown modestly since 2008, but not enough Even so, there are thought to be 36,000
to compensate for a substantial and continuing Yml`gjk[j]Ylaf_deeYl]jaYdY[jgkk=mjgh]&

Cinema admissions remain high

Kaf[]*((0$Zgpg^[]j]n]fm]k`Yn]af[j]Yk]\ for cinema goers and underpinned ticket
by an average of 2.4% a year in the EMEA region. price increases almost everywhere, helping
In 2012, European cinemas earned almost Zgpg^[]j]n]fm]j]Y[`f]oj][gj\k2gf
6.3b of receipts, unchanged from 2011, from average, EU consumers paid 6.90 for a seat
930m admissions. While Finland (+19.7%) and in front of the big screen during 2012.
Romania (+15.4%) saw outstanding growth,
the mature markets, and most notably France
developed by cinemas, including 4D (in which
the largest market in Europe, with 203m
admissions saw total admissions stagnate
as rain or vibration), operas, plays and live
or fall slightly. Going to the cinema remains
broadcasting of concerts. Faced with intensifying
very popular among EU consumers, though
competition from home entertainment and
ticket sales only amount to 3% of total sales
the internet, cinemas are upgrading their
of creative and cultural goods and services.
Innovations such as 3D and digital screens [gfkme]j]ph]ja]f[]k$af[dm\af_jklYf\
`Yn]hjgna\]\Yf]f`Yf[]\]ph]ja]f[] second class services and tickets.

<akljaZmlagfg^j]n]fm]kafl`]=mjgh]Yfdeaf\mkljq e!
Source: European Audiovisual Observatory EY analysis



18,148 17,990 17,889

17,506 17,272
5,329 6,194 6,269
5,992 6,298 <N<lmjfgn]jj]lYadj]flYd

9,078 5,484
7,883 7,226 6,433

2008 2009 2010 2011 2012

EY | December 2014 63

The economic sustainability of an investment-hungry industry

In contrast, digitization and new consumption sometimes inadequate. European producers very
trends (including piracy) have severely affected often use co-production to share costs and draw
physical sales. Since 2008, physical sales of DVDs mhgfhj]%\akljaZmlagfkYd]kafY\\alagflg]pl]jfYd
and revenues from their rental have declined support by public authorities. The production
steeply by 12% a year. Sales of discs in the Blu- sector is volatile and largely reliant upon small
ray format have been rising on average by 50% production companies. These companies are
a year, but starting from a low base remain too jYj]dqYZd]lgafn]klYkem[` h]jdeYf\af
modest to compensate for this fall. The slide lglYd!afdehjg\m[lagfYkl`]MKklm\agk$
in DVD sales has undermined the economic which form an alternative production model.
L`gm_`alkk[Yd]ak\a^[mdllgimYfla^q$hajY[qak distribution are usually shared or outsourced
reckoned to be among reasons for the big fall in by selling distribution rights in advance (before
DVD sales. The UK Federation Against Copyright l`]deakeY\]!lg]flala]kkh][aYdar]\af
Theft (FACT) estimates pirate DVDs and illegal marketing and distributing audiovisual works
downloading cause an industry revenue shortfall in different languages, and via the various
equal to 15% of the value of legitimate sales. distribution channels. Investment partners
Oal`egkl=mjgh]YfdekZ]af_hjglglqh]k$ have to be attracted by the creative strength
YlljY[laf_hjanYl]^mf\af_^gj=mjgh]Yfde% and commercial potential of a project. Further
eYcaf_ak\a^[mdlkaf[]j]lmjfkYj]mf[]jlYafYf\ development of this funding model may help to

Digital distribution models are growing fast, but remain marginal

Though it is still a small part of the total, digital J]n]fm]ak]ph][l]\lgaf[j]Yk]ka_fa[Yfldq
revenues from VOD platforms (TV, cable and in the coming years as distribution
satellite based) have increased sharply in recent hdYl^gjek\]n]dghYf\[YlYdg_]phYf\&
years ago to account for around a quarter of total
Zgpg^[]kj]n]fm] )&,Zg^.&+Z!af*()+&

64 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Tailor-made funding schemes
L`]=mjgh]Yfdeaf\mkljqak]kk]flaYddqY dgYfk$kmZka\a]k$lYpZj]YckYf\fYlagfYd
producer of prototypes, and each must pass content quotas, designed to promote national
or fail the critical test of cinema audiences. [mdlmj]Yf\mf\]jhaffYlagfYddeaf\mklja]k&
With a revenue generation of 2b a year
works requires substantial up-front investment,
from EU member states (in soft loans, grants
nalYdlgl`]=mjgh]Yfdek][lgj1. Public
hjgkh][lk^gjkm[[]kkYj]n]jq\a^[mdllgYkk]kk2 funding has helped reduce risks and attract
l`gm_`Yde[Yfkge]lae]k\]dan]jYZgfYfrY investments from third parties, in particular
to investors, others can lose money or it can through co-productions between several
take many years to recoup the development,
countries and private equity investors. Yet the
production, marketing and distribution costs. =Mdehjg\m[lagfk][lgjakk]]fYkjakcqYf\
This has led to state intervention, including afkm^[a]fldqhjglYZd]ZqeYfqhjanYl]afn]klgjk&

L`][`Ydd]f_]^gj=Mdehjg\m[lagfoaddZ]lg by appropriate means, the production of and
YlljY[lYf\k][mj]fYf[aYd[geeale]flk^jge access to European works. To check that the
new online distribution operators at the current regulatory framework remains up-to-
hj]%fYf[af_klY_]& \Yl]$YJ=>AL]p]j[ak]ak^gj]k]]f^gj*()-
Article 13 of the EUs AVMS directive to review the effectiveness of the Directive.
(Chapter IV Provisions applicable only to The European industry is increasingly developing
on-demand audiovisual media services) deYf\Ym\agnakmYdhjg_jYekoal`afl]jfYlagfYd
requires member states to ensure that on- appeal. This is seen as a way to reach new
demand media service providers under their eYjc]lkYf\lg[j]Yl]f]ofYf[aYdghhgjlmfala]k
jurisdiction promote, where practicable and Zqk]]caf_fYf[af_hYjlf]jkZ]qgf\=mjgh]&

1. Source: we calculated
Consolidation of cinema ownership, fueled by the switch to digital cinemas
four main countries Ownership of European cinemas has consolidated including virtual print fees that allowed those
(UK, France, Germany,
KhYaf!&HmZda[fYf[af_ afl`]hYkl^]oq]Yjk&Ka_fa[Yflafn]kle]flk in the value chain to share the investments,
in these countries
provides the vast
`Yn]Z]]feY\]afdYj_]emdlahd]p[af]eYklg backed by direct public funding. Consumers
majority of public
enable digital projection, and some smaller, [gflafm]lgnYdm]l`][gdd][lan]]ph]ja]f[]
industry in Europe. We af\]h]f\]fl[af]eYk`Yn]kljm__d]\lgf\ g^oYl[`af_dekafl`][af]eY$\]khal]]Ykq
believe public funds in
these four countries the necessary funds. However, funding vehicles access to movies on digital devices at home.
provide 80% by volume
of public support. were used in many European countries,

EY | December 2014 65

Leaders and leadership

Oal`Ydegkl)$+((dekhjg\m[]\af*()*$l`] International sales agents, such as Fortissimo,
=MakYd]Y\af_de%hjg\m[af_j]_agf& Nordisk Film and Wild Bunch, as well as EU and
Europes growing visibility on the worldwide worldwide festival networks, highlight both
cinematographic stage stems from a combination =mjgh]YfZdg[cZmkl]jkYf\Yjl%`gmk]dek&
g^^Y[lgjk&LYd]fl]\=mjgh]YfdeeYc]jkYf\ 9f\kge]=mjgh]Yfdek`Yn]ogfZgl`[jala[Yd
producers, including EuropaCorp and and commercial success internationally, such
StudioCanal, have increased their global as the French comedy-drama Intouchables
presence. or British-made drama The Kings Speech.

Breakdown of total EU admissions per country of origin (% of admissions)

European Audiovisual Observatory - Lumire database analysis

Where do the European movies
watched in Europe come from ?


62.8% 13.3% 8% 2.9%



EU Other Europe Other US Eur inc/US co-prod. 2.8% 6.2%

Af*()*$)/g^l`]*(egklhghmdYjdek Meantime, the share of US movies declined
1. L`]k]_mj]kk`gmd\Z] in Europe were produced by the US. from 67.1% of total admissions to 62.8%1.
treated with caution as
they depend strongly
L`gm_`MKdekkladd\geafYl]la[c]lkYd]k By country of origin, French movies captured
on blockbusters af=mjgh]Yf[af]eYk$=mjgh]YfdekYj] 13.6% of European cinema seats and UK
market performance ,
^gj]pYehd]$l`]`m_] gaining market share. In 2009, European movies 8%, while Italy came third with 2.9%.
success of Skyfall
helped EU market dekYlljY[l]\*.g^lglYdY\eakkagfkaf
share to grow sharply
in 2012. Europe: by 2012, it had risen to 33.6%.

66 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
involved in production, broadcast and Whats happening to employment?
distribution of content, but crucially The UK employs 259,000 people
to the intellectual property and afalkdeYf\LNk][lgjk&L`]
invention of creative individuals, such creative industries as a whole
as writers, directors and producers. accounted for 1 job in every 18 in
The entire media industry rests on the UK in 20133.Investment in skills
the talents, ideas and achievements and career development is key to
of creative individuals, the vast ensuring that British creatives are
Beryl Richards

majority of whom are freelancers. supported and able to continue to

deliver world-class productions.
What are the challenges currently One of the big challenges for
facing audiovisual production? employment is diversity. In 2013,
Beryl Richards Audiovisual production has been
transformed by the transition to digital
production and distribution. While new
by Black, Asian and Minority Ethnic
O`YlhdY[]\g:jalak`dekYf\LN technologies, distribution methods
(BAME) employees2.This is something
series have in their national market Yf\eg\]dk[j]Yl]f]oYf\]p[alaf_ we are looking at closely in Directors
and across the European market? opportunities for creative works to be
UK. Our recent research focusing
What explains their successes? produced and seen by wider audiences, on TV directors found that only
L`]MC`Ykl`]l`aj\%dYj_]klde]\ the risk is that the proliferation of new 14% of all TV drama programs were
entertainment market in the world. platforms might generate less money directed by women4, while only 15%
Af*()+$MC%imYda^qaf_dek]Yjf]\ for future production and innovation. g^MCdeko]j]\aj][l]\Zqoge]f
4.1b, taking 11.4% of the global To continue to thrive, audiovisual in 2013. Increasing representation
eYjc]l&Af\]h]f\]flMCdek production needs both creative and in the industry is essential5.
accounted for 1.6% of the global fYf[aYdafn]kle]fl&A^l`]j]oYj\k Improving the monitoring of diversity
market at a value of over 649 m. In are not forthcoming in terms of issues, pay and employment
=mjgh]$l`]eYjc]lk`Yj]^gjMCdek reinvestment in production and the status, as well as access to training
ranged from 10% to 16%3. Film, TV, remuneration of right-holders then and development are of vital
video, etc. contributed 9.8b of gross future production is threatened. The importance for a healthy, diverse
value added to the UK economy in increased consumption of content must and thriving creative industry.
20123.Film and television productions translate into additional revenues.
YdkgeYc]Yka_fa[Yfl[gfljaZmlagf From the creators perspective, the
2. BFI Statistical yearbook, 2014.
to the cultural identity of the UK. The challenge is for our work to be available
3. Creative industries: focus on employment June 2014,
km[[]kkg^l`]MCkZjgY\[YklYf\de on all platforms, as consumers want, DCMS.
industry owes its position not only to in a way that fairly rewards creators. callingthe-shots
the success of many great companies We need to be open-minded about the 5. BFI Statistical yearbook, 2014.

most effective way to achieve this.

EY | December 2014 67

Still the most trusted medium and available in many new ways

97,000 10.4b
Employment (2012)1 Turnover (2012)3 m

Employment in radio broadcasting activities 96,897 Advertisement revenues 4,810

Total employment2 96,897 Other revenues (public radio license fees) 5,597

Total turnover 4

1. L`]k]_mj]k\gfglaf[dm\]^j]]dYf[]jY\agZjgY\[Ykl]jk&
2. This estimate includes both commercial and public radio stations.
3. Main sources used for this section are: Media Use in the European Union, 2012, European Commission / The Future of Radio Broadcasting in Europe, Radio spectrum Policy Group, 2010
/ Public radio and New media Platforms, European Broadcasting Union, 2011 /The Future of Digital Radio, European Broadcasting Union (2011) / The Future of Radio is Multi-Platform,
Association of European / Radios (2014).
4. =p[dm\]\^jgel`akYfYdqkakYj]Ykkg[aYlan]jY\agk&L`]q[]jlYafdqYj]kljgf_dqYf[`gj]\Yll`]dg[Ydd]n]d$Zml`Yn]YkeYddk`Yj]g^l`]=mjgh]YfYm\a]f[]&

68 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Popular, inclusive and resilient
In 2012, radio was the second most widely listeners through an enriched offer including
used medium by European consumers, after complementary access to programs and
television5&>gmjgmlg^n]=mjgh]Yfkdakl]f additional content available via podcasts, mobile
to radio for two hours or more every day, a devices and social media becoming a multi-
habit unchanged between 2010 and 20126. platform medium. Radiobroadcasters have been
But with revenues of 10b and only 97,000 canny in embracing the digital revolution and
jobs, it is a relatively small force in the EU developing a multimedia offer, drawing upon
economy. Omnipresent, but with only modest advertising revenues to ensure their services
direct economic impact, radio broadcasting are web-friendly and provide enriched online
targets national and regional audiences, and is content. This large and loyal audience underpins
anchored by language and culture. It delivers the sectors remarkable resilience throughout
local information (and advertising) to local the economic crisis. Although revenue slipped
audiences. The richness of the radio industry 4.4% between 2008 and 2012, employment
j]ka\]kafalk\an]jkalq2eqjaY\hjg_jYek]phdgj] rose 2.2%. Advertising revenue, which made
and address almost every aspect of daily life, up to 46% of radiobroadcasters turnover in
from politics and sport to culture and health. 2012, has shrunk by 7.3% since 2008. Market
Despite greater competition for leisure analysts say that the growth of rival media
time, radiobroadcasters have succeeded in raises the risk that advertising spending might
retaining their audiences, while attracting new be diverted from radio to other distribution
channels that offer a more targeted audience.

Public service and commercial models coexist

Everywhere in Europe, public and private
radiobroadcasters, typically part-funded by
license fees, had a 37.1% audience share
in 2010. Commercial broadcasters funded
their operations from advertising revenues
totaling 4.8b in 2012. Advertising was
the leading source of revenue for both
private and public radiobroadcasters.

5. When the internet is seen not as a medium in itself, but as a conduit for media such as TV,
radio and newspapers.
6. Source : Association of European Radios.

EY | December 2014 69

A more integrated, creative and connected radio
New complementary technologies such as social In the UK, a technology alliance comprising the
media and mobile devices offer opportunities BBC, Global Radio and Bauer Media is behind
to share additional information and content, Radioplayer, which offers listeners a single online
Yf\hjgna\]Zgl`g^af]Yf\gfdaf]k]jna[]k& portal to every radio station in the country, and
Social networks enable radiobroadcasters is available as an app on a plethora of devices.
to get even closer to their audiences, with
Developing digital services is essential
to enabling European radio groups to
standing audience interaction via phone-
retain or grow audiences and offer cross-
in shows and listener competitions.
media packages to their advertisers.
Integrating new technologies enriches
The internet has also enabled would-be
broadcasters to overcome constraints
as RadioDNS, which enables additional services
imposed by limited frequency availability
through the launch of web-only radio
streams, combine the best features of analog
stations, which make it possible to reach
and digital broadcast (high quality, robustness,
more segmented audiences more cheaply.
reliability) and the internet (tagging, visuals).

Online services offered by public radio broadcasters - 2013


Visual radio 19%

Communities (on own website) 32%

Voting (online) 42%

Comments 42%

Catch-up streaming 45%

Blogs 52%

Discussions forums (on own website) 55%

RSS feeds 61%

Smartphone/tablet application 68%

Participation/ 68%
info on external social media sites
Podcasting 87%

Live streaming 100%

70 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Leaders and leadership

=phgjlg^jY\agZjgY\[Yklaf_Yf\[gfl]flak in many countries worldwide. Radio France
limited, though microstates such as Monaco Internationale (RFI), with similar roots, is another
Yf\Dmp]eZgmj_`Yn]dgf_]phdgal]\l`]ajjY\ag ]pYehd]g^Ykm[[]kk^md]phgjl]j&Oal`,(&-e
spectrum allocations to reach wider audiences. weekly listeners worldwide, including 33.1m
On a more ambitious scale, the BBC World in French-speaking Africa, it plays a valuable
K]jna[]akgf]g^l`]^]o]pYehd]kg^_dgZYdar]\ role in sharing information and culture2. But
radio broadcasting activities. A legacy of empire the political power of radio and its ability to get
and the cold war, it retains 188m weekly listeners close to its audiences has proved inimical to the
and in 2009 broadcast in 32 languages1. Some development of global radio groups. Audiences
of its programs have gained a global reputation, prefer stations they can identify and relate with,
Yf\alkJY\ag)=kk]flaYdEapak\gofdgY\]\ Yf\hjgpaealqak[jala[YdlgjY\agkkm[[]kk&

1. ::;Hj]kkG^[]$*((1&
2. TNS Sofres, 2011.

EY | December 2014 71

Inside track
Success stories are built at country Digital broadcasting: This really
level and cannot be cross-border. depends on the national market. It is
However, there are general trends: crucial for us and our listeners that
JY\agak]plj]e]dqhghmdYj&GfYn]jY_]$ analogue and/or digital broadcasting
80% of the EU population listens to is maintained, as it is the most
the radio for 2 to 3 hours per day. ]^[a]fl$jgZmklYf\[`]Yhe]Yfk
Radio is one of the last mass-media. to reach everyone, everywhere.
Radio is robust. When there is a Radio has seen its audience erode a little
catastrophe, radio broadcasting is with the development of music services
g^l]fl`]jklYf\hgkkaZdql`]gfdq online. However, radio has maintained
media channel to provide information. its unique tie with its listeners, thanks
Radio is usually much more to its simplicity: people want to listen
Hans-Dieter Hillmoth cost-effective to deliver a to the radio because of how it is done
CEO and Programme Director, HIT RADIO FFH,
message than other media. and because of its diverse content.
Planet Radio, and FFH Digital
What are the big challenges and The biggest challenge for radio currently
questions for your sector? is to remind lawmakers of its particular
What does your work consist of? Radio follows its listeners. Radio has [`YjY[l]jakla[k2^gj]pYehd]$YjY\ag
I am the program director and CEO of always been and will continue to be advertisement is image free, and on-air
three FM radio stations in Germany, mobile, ubiquitous, free-to-air, and fun. content must be short and adapted
Ydd[gee]j[aYdYf\fYf[]\gfdq You can listen while doing something to the local situation. Regulators
by advertising. We create radio else and it is very interactive. As must think about the implications
programs and strategies for FM and the world becomes more and more of their rules for radio because it
web radio, and work with music
digital, radio is confronted, as any is not an audiovisual medium.
artists, music and concert agencies other medium, by this new era. In
and other radio groups in Europe. the radio world, digital means digital What about employment
online and digital broadcasting in your sector?
How important is radio in (DAB/DAB+). So besides FM, which Radio is considered as a locally based
Germany and Europe? How do will stay with us at least 10 years university for media careers. Many
you explain radios success? more, digital covers two realities: famous show hosts started their
Across Europe, most commercial
Digital online: Radio is already digital career at a local radio station. It is
radio stations are small- and medium-
and has been present online since the j]Yddq\a^[mdllgkYq`goeYfqh]ghd]
sized players. In Germany, we have
internet spread in the mid-90s. Today are working in commercial radio
16 Lnder (states), each with its
across Europe, because markets vary
it is grasping the full potential of the
own media law, regulations and
internet: The sectors technological enormously. To my knowledge, there
media commission. There is no real
creativity is bubbling with Radioplayer- are around 6,000 people working
nationwide radio. Our business model
type portals being developed in the UK, in the commercial radio sector in
is based almost entirely on advertising
France, Germany and other markets, Germany, including editors, composers,
revenues funding free-to-air broadcast
DJs, technicians, producers, web
the hybrid use of analogue and digital
services. The success of radio is
broadcasting and online offerings. developers, advertising people, graphic
based on music, good entertainment
and local infotainment (radio is near
teams at local and regional level.

72 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
What is RFI Romania and what on our different media: radio and the
trends can you see in your sector? website. The enormous amount of news
RFI Romania is the local radio service that we receive is also a challenge: too
of RFI. It employs about 25 people, much news may just kill the news.
including 15 journalists and several
presenters and technicians. All have
What role does digital play
graduated from university in journalism,
for RFI Romania?
We told the Romanian authorities we
political sciences, history and other
RFI Romania

stations to join in the development of
through many internships. The average
digital terrestrial television that will
age is 35. RFI Romania broadcasts
be available in 2015. We are already
Cornel Ion 13 hours a day in Romanian and 11
active in the digital world, with a mobile
Director of RFI Romania
hours in French. Compared to other
phone app that allows anyone in the
local and national radio stations that
world to listen to RFI Romania 24/7.
are mostly music radio stations, RFI
And our website is available in both
Romania is a news station, broadcasting
desktop and mobile versions. We are
both national and international news.
also present on various social networks
The internet and digital media have a with their ever-growing communities.
dglg^afm]f[]gf`goo]ogjc&9ddgmj The RFI Romania website gets more
journalists are digital professionals: they Yf\egj]nakalk2ljY^[\gmZd]\af
are working for the radio and also post a year to reach 200,000 visits a
on the stations website. Every article
month. We have more than 5,000
we broadcast will be posted online as followers on Twitter and the contents
RSS feeds and podcasts have become on our YouTube channel have been
an integral way to communicate watched more than 168,000 times.
our contents to the audience. Our
We have also created several
technicians also have video skills: RFI
blogs supporting the main website
with specialized themes such as
We no longer provide just sound.
music, gastronomy, agriculture
We enrich that content with online
or web documentaries.
pictures, videos and documentaries.

What challenges do you

foresee in the future?
The biggest challenge comes from
the way the news world is changing.
How should we develop when news is
to be virtually free? Increasingly we
have to put events in perspective, we
have to analyze and order the news

EY | December 2014 73
Video games


108,000 16b
Employment (2012)1 Turnover (2012) m

Developers and publishers 67,916 Home console video games 3,965

Retailers and distributors 25,000 Handheld video games 1,594

Employment in nonspecialized stores 15,100 G^af][gehml]jkg^loYj]eYjc]l 601

Total employment 108,016 Online computer software market 5,087

Mobile games 2,016

=pljY=M*0]phgjlk 2,727

Total turnover 15,990

1. Main sources used for this section are:

Growth, European Games Developer Federation, 2011 / Game Summit by Digiworld Infographics, IDATE, 2013.

74 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A small business playing in a global arena
With just more than 100,000 employees Though small, the gaming industry is one of the
and 16b of annual sales, the video game most innovative labs in the digital economy. It is
industry is an adolescent with a global punch. afl`]nYf_mYj\g^\]n]dghaf_Yf\]ph]jae]flaf_
Today, online computer software provides the oal`f]o\a_alYdk]jna[]k$gfdaf]$g^af]Yf\
industrys premier revenue stream. In 2012, it especially mobile, that are reaching a growing
accounted a third of sales, but its role is growing share of the population. According to surveys by
as the industry adapts rapidly to evolving IPSOS MediaCT, 25% of EU consumers play video
technologies and gaming habits. Gaming has games at least once a week. Swedes, Finns and
become a global market, and Europeans are the French are Europes most devoted gamers,
YZd]hdYq]jk&9ffmYd]phgjlkZ]qgf\=mjgh]g^ with 6 out of 10 citizens playing regularly.
almost 3b make video games the most traded Innovation combined with high participation
of Europes cultural goods. The biggest game helps and a vibrant start-up scene all over Europe
developers are reckoned to achieve more than keep the industry among the global leaders.
half their sales on international markets.

Video game market revenue, worldwide (201215) US$m


Source: IDATE Gartner

PC games
Mobile games

80,000 Handled video games

Video game console




2012 2013 2014 2015

Growth driven by online and mobile gaming

The growth of the video games sector is rapid. supplant dedicated devices. The rapid spread
The video gaming industry is one of the most and evolution of mobile multifunction devices,
dynamic in the cultural sector, with growth notably smartphones and tablets, is driving
g^1]ph][l]\Z]lo]]f*()*Yf\*()-& growth by enabling gamers to play anywhere.
:mll`]gn]jYdd]phYfkagf[gf[]Ydkhgo]j^md In 2013, the turnover of the two biggest
trends. Mobile games (+137%) are booming, European mobile game developers was
console games (+47%) and PC games (+49%) bigger than the combined turnover of all
growing strongly, and handheld video games mobile game developers in 20121.
(30%) in rapid decline as mobile phones

1. Source: European Games Developer Federation

EY | December 2014 75
Video games

Developing and retaining highly skilled talent is vital
Unlike most cultural industries, the video game government policies in Canada and Australia
k][lgj^Y[]k]j[]afl]jfYlagfYd[geh]lalagf$ designed to attract the most talented game
especially with heavyweight US and Japanese developers from countries with less advantageous
developers and publishers. Improving the quality lYpj]_ae]k&=mjgh]f]]\klgj]lYafl`]egkl
of education and training of developers and creative companies and talent and stem further
reinforcing the highly fragmented European relocations of studios outside Europe like that
industry through knowledge-sharing cooperation of Ubisoft, which relocated some operations
between the hundreds of independent studios from France to Canada to take advantage
should be top industry priorities. European g^k[Ydaf[]flan]k^gj_Ye]\]n]dgh]jk&
cooperation seems the best response to

Growing diversity in users experience through gaming

Born digital, the industry is growing by This combination of technological and market
offering user-friendly, intuitive services to innovation enables the industry to reach new
consumers. Because global competition clients far removed from the stereotype home
ak]plj]e]dq]j[]$_Ye]\]n]dgh]jkYj] player using a TV set or home computer.
world leaders in creating new tools, methods Gaming and game techniques can speed the
and business models for humancomputer adoption of e-government, e-health, e-culture
interactions that often subsequently and e-education, and make each more effective.
become mainstream. So digital games are L`]kg%[Ydd]\_Yea[Ylagfg^k]jna[]kg^^]jk
driving innovation in consumer markets. f]o]ph]ja]f[]klg[gfkme]jkYf\[alar]fk&
Powered by innovation in software, ways of Improved humanmachine interfaces, such
doing business and content in its entertainment as the use of sensors in the Wii, can revitalize
products, the industry is widening its scope, \]na[]kYf\g^^]jf]o_Yeaf_]ph]ja]f[]klg
progressing via casual and more serious consumers. But disruptive technology change
games, into advergames containing product is sporadic, pushing EU game developers to
advertisements and into deliberately teaching constantly reinvent themselves and diversify
through gaming so-called edutainment. their activity portfolios and keeping the
industry at the cutting edge of technological,
content and business innovation.

76 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

The development of gaming on diverse everyday afn]kl]\af_Yeaf_lg]fja[`l`]]ph]ja]f[]g^
mobile devices opens doors to new types of their customers. The shift to online gaming lowers
games and new competitors for industry ]fljq[gklkYf\afl]fka]k[geh]lalagf&
champions. That could lead to changes in the New market dynamics encourage game
gaming industry value chain and create new developers to develop new games in partnership
intermediaries. Web portals, internet service with movie makers, sports federations and others
providers and telecom operators, handset Yk_Ye]k]pl]f\l`]ajj]Y[`aflgegj]Ykh][lkg^
manufacturers and social networks have all our lives.

Leaders and leadership

Europe is third in the world
Thanks partly to public support for video Historically, Europes absence from the
game development, Europe ranks number development of hardware, including consoles
three in the world for video game production and handsets (produced in Asia) has been a
after the US and Japan. The European Games handicap, but this could matter less as gaming
Developer Federation says digital distribution spreads online, and onto mobile devices. Also
and the adoption of so-called free-to-play these platforms are setting limitations on the
business models, especially in mobile games, content they allow to be published through
have enabled European game developers to their platforms based on non-European values,
break value chains previously dominated by seriously hindering the freedom of artistic
strong US- and Asia-based publishers. Europes creation for European content creators.
success is based upon creating game content.

thanks mostly to its creativity

The recent successes of European games such The European industry is also a leading supplier
as Candy Crush Saga (developed by King Digital of the game engines, or middleware software,
Entertainment, a British company) or Angry Birds on which games are created and developed.
(developed by Rovio Entertainment of Finland) And it is home to many developers studios,
demonstrate the remarkable position that Europe often small and highly creative companies
enjoys. Games and video games have become one found mainly in the UK, France, Germany, the
g^=mjgh]kegkl]phgjl]\[mdlmjYd_gg\kYf\l`] Fgj\a[[gmflja]kYf\$lgYd]kk]j]pl]fl$KhYaf&
largest developers have half their business overseas.

EY | December 2014 77
Video games

Inside track
What is Rovio and how important How has Rovio changed
2014 Rovio Entertainment Ltd. All right reserved

is the game industry in Finland? in recent years?

Rovio, founded in 2003, is an Were doing a pretty good job in
entertainment media company and =mjgh]Yf\Al`afcalk\a^[mdl^gj
creator of the worldwide number Silicon Valley to compete with us.
one downloaded app of all time Some Europeans think that you need
Angry Birds. Following its success to go to Silicon Valley or the US to
in mobile gaming, Angry Birds has succeed. Maybe thats because there
]phYf\]\jYha\dqaf]fl]jlYafe]fl$ are more success stories there but
publishing and licensing to become we have good ones here in Europe,
an international brand. While Finland and Rovio is one of them. We went
hosts about 200 game companies from a pure games company to an
Peter Vesterbacka employing more than 2,000 people, entertainment company, and we have
Rovio Entertainment
at Rovio we employ 800 people \]n]dgh]\ogjd\oa\]oal`g^[]k
worldwide. Of these, 750 are based in Finland, Sweden, the UK, China,
in Finland, drawn from more than Japan and Korea as well as the US.
40 countries around the world and That is why we now have the biggest
especially Europe (France, Spain, etc.). animation studio in northern Europe.
O]Yj]Yka_fa[Yfldg[Yd]ehdgq]jaf More people play games than ever,
Finlands world-class entertainment the market is worldwide and getting
af\mkljq&Gmj]ehdgq]]kYj]Yeapg^ bigger and bigger, and more than 2b
qgmf_h]ghd]Yf\egj]]ph]ja]f[]\ [gha]kg^gmjY_k`ah_Ye]9f_jq
ones. They bring together many Birds have been downloaded.
(designers, coders, audio specialists What are your challenges
and composers, etc.) and activities for the future?
at Rovio, including animation, We want to make sure that we keep
consumer products and licensing. doing things fast enough, that we keep
Finding talent in Europe is pretty our pace and agility as we grow. Our
easy as the company attracts many biggest challenge is ourselves. We do
applicants, and Europe is full of not worry about competition as long
talented professionals, often with as we stay active in games and all our
specialist skills, such as the strength activities. Well produce many more
of animation in France and Spain. 9f_jq:aj\k%ZjYf\]\]ph]ja]f[]kYf\
we need to create great new games
to keep the brand relevant and fresh.
Europe is a good place to do that.

78 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

EY | December 2014 79
Visual arts

Brightening Europes appeal for tourists and art investors

1,231,500 127.6b
Employment (2011)1 Turnover (2011)2 m

Art sales and galleries activities 329,940 Photography 8,689

Visual arts creation, including photographic Design 19,294
activities, design activities and art
793,288 Museum revenues 7,717
Museums and heritage 108,176 Art sales and gallery activities 15,600

Total employment 1,231,404 Arts and crafts 46,337

Visual arts creation 29,907

Copyright/authors right 10

Total turnover 127,554

1. For the purpose of this study, visual arts includes all artistic activities related to graphic creation ( painting, sculpture, art crafts, photographic activities
and special design), arts sales, gallery activities, museums and what is generally referred to as heritage, such as ancient sites and monuments.
2. Main sources used for this section are: The International Art Market in 2011 - Observations on the art trade over 25 years , The European Fine Art

80 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A potpourri of activities that together form the nub of the European
creative economy
Employing more than 1.2m people across Art sales, galleries and auctions alone employ
the EU and generating revenues of more 330,000 people and form a market worth
than 127b, visual arts account for almost more than 15b. Though world-renowned
a quarter of the creative economy. Though auction houses such as Christies and Drouot
data is scarce, visual arts, craftsmanship and capture the limelight, this economic sector
related activities embracing painting, pottery, is made up of myriad small art galleries,
sculpture, furniture design and jewelry together many serving local communities.
generate about 75b of annual sales in Europe.

25 years of dynamic growth

With an estimated 15.6b of sales by dealers crisis and with 5% growth in transaction volume
and auctions, Europe commands 34% of the during 2011, the art market was recovering
global art market. Taking off in the mid-90s, it to pre-crisis levels. The resurgence has been
emdlahda]\Ydegklkap^gd\^jgealkfY\ajaf)11) aided by an upsurge in Chinese buyers and the
to its peak in 2007. Though sales historically _jgoaf_aehgjlYf[]g^f]YjlkYd]ko`]j]]Y[`
l]f\]\lgj]][loa\]j][gfgea[lj]f\k$l`] masterpiece commands a spectacular price.
sector recovered quickly after the economic

Global market share (by value, 2013)

Source: ITEFAF
7% 6% 3% UK

34% Switzerland
29% 17.5%
64.5% Italy


EU + Switzerland China USA Rest of the world

EY | December 2014 81
Visual arts

Museums are key in making visual arts available to all citizens

Museums account for only a small part The Louvre in Paris pulled nearly 10m visitors
of overall visual arts turnover (6.1%) and in 2012, and all contenders drew more than
employment (8.8%), but play a particularly +eh]ghd]$[gfjeaf_emk]mekeYkkYhh]Yd
important role in making art accessible to all. for both national and international visitors.
Seven of the worlds most visited art When questioned, visitors to several European

museums are in Europe, with Paris and museums told one study they seek entertainment
London sporting three apiece. and pleasure (28%), education and training
(26%) and a gateway to history (17%).

Top 10 international museums (millions of visits, 2012)

Ministre de la Culture et de la Communication Culture Etudes N2 2013

Source: Visitor Figures 2012, Exhbition & museum attendance survey in 2012,2013, The Art
Louvre 9.72

Metropolitan Museum of Art 6.12

British Museum

Tate Modern 5.30

National Gallery 5.16

Vatican Museums

National Palace Museum 4.36

National Gallery of Art

Centre Pompidou 3.80

Muse d'Orsay 3.60

European museums

82 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Emerging nations join the art market
The growing number of wealthy buyers of bigger marketplaces, while international
big-name art in the developing world has labels have gained prominence. Art Basel,
d]\lgka_fa[Yfl[`Yf_]kafl`]_]g_jYh`a[ one of the top contemporary art shows,
\akljaZmlagfg^kYd]k&Gf[][gff]\dYj_]dqlg is now also held in Miami and Hong Kong.
the US and Europe, the art market now looks This gravity effect could lead to further
increasingly to also serve customers in Asia concentration of major international events
and Latin America. The globalization of the afYjleYjc]l`glkhglkYll`]]ph]fk]g^
art market has concentrated sales in fewer, smaller ones such as the FIAC in Paris1.

Museums are embracing new technologies, informing visitors more, and

Emk]mekYj]]ph]jae]flaf_oal`l][`fgdg_qlg gZb][lkgf\akhdYqYf\]ph]ja]f[]YjlgZb][lkaf
enhance access to their collections, enrich the new ways: on the website of the Louvre in Paris,
nakalgj]ph]ja]f[]Yf\\]n]dghl`]aj]\m[YlagfYd visitors can zoom in on masterpieces and tour
role. Social media and electronic devices have virtual galleries2. European museums are also
enabled museums to provide complementary ]ph]jae]flaf_oal`f]olqh]kg^[gddYZgjYlagf$
and real-time information while the visitor is including branding, and sharing collections,
strolling around the venue. Digital devices offer witness the opening of the Louvre Abu Dhabi,
visitors the chance to discover far more about the Guggenheim Bilbao, and similar ventures.

Digitization also raises questions of intellectual property

Digital technologies facilitate wider access to when museums want to share public collections,
visual art objects, but for some industry actors but threatens revenues of contemporary artists,
also raise concerns about how best to protect especially those using photographic techniques
intellectual property. Digital technologies make it that are easily pirated and counterfeited3.
easy to copy many works of art. That is a virtue

1. Mondialisation et Uniformisation du March de lArt, Philippe Dagen, Le Monde, 2014

2. Time to Lose Control, Andras Szanto, The Art Newspaper, 2010
3. Images available on the internet often fail to identify their author or copyright ownership

EY | December 2014 83
Visual arts

Leaders and leadership

A global destination for the visual arts, Europe is the worlds leading art
With 34% of the global art market by value, Yf\Yflaim]ko]j]]phgjl]\^jgel`]=M$
Europe (including Switzerland) is the world Yf\-Zaehgjl]\&L`akj]][lk=mjgh]k
leader in art sales, ahead of China (30%) strategic role as a global hub for art sales.
and the US (29%). The European art trade
Despite intensifying global competition,
is dominated by the UK (with 65% of the
Europe continues to lead market trends:
EU market), followed by France (17%) and
?]jeYfq -!&Dgf\gf[gfjekalkhgkalagf
as an art hot spot with a global audience;
Christies, based in the UK, is the worlds Europe is not only leader in trading art, a
leading auction house and including its private unique artistic and cultural heritage and
kYd]kalklmjfgn]j]p[]]\]\MK/Zaf*()+& world-class museums give Europeans
Within this highly international market, the
attract millions of international visitors1.

1. French order of Architects

84 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
9ddg^l`]Hd]pa_dYkogjckYj]mfaim] for the resale right, it goes without
pieces a single twist, a single drape. saying: it should be recognized in all
Much like a company, I enable others to countries! It is not only a right, but
make a living. An artist who creates is a duty and a mark of recognition
much like a company with employees, that we owe to all artists.
Artists who wish to improve their
What are the challenges and
visibility also have to take on the
issues with which you are faced?
We are currently living in the era of
responsibility of distributing their works,
Bonbon chromo rglisse, 2011 digital and 3D. A large part of my
ADAGP, Paris,2013 - Clich : Laurence Jenkell which is what I do in Cannes during the
Portrait: Emmanuel Juppeaux work is created from sketches, but
G20 summit, in Azerbaijan, in Slovakia,
I sometimes transpose the more
Laurence Jenkell etc. This should fall under the remit of
Visual artist and sculptor
galleries, but the task often falls to the
better understand the technical
artist, with all the personal and material
investments that it entails. Cultural
What exactly does administrations should also provide It must be recalled that artists
your work entail? artists with support for displaying their are economic players and need to
I am a sculptor, and happy and proud works. One could imagine a scenario surround themselves with partners.
to be a female French artist, and to in which, when a foreign artist displays Their work is not simply that of
be able to practice my profession their works in a museum in France, the creating, of dreaming: economic
within my own country and share artists country of origin might offer j]Ydalq]paklk$al[YffglZ]a_fgj]\&
it with an international audience. to display a French artists works in an The visual arts are an industry in
]p`aZalagf&AlakYdkgj]_j]llYZd]l`Yl their own right and which should
My sweet sculpture captured
artists works are often only put on not be underestimated: this industry
attention worldwide. It is not my only
display in museums after their deaths. provides many jobs and contributes to
piece I also create paintings, ADN
works, buildart and robots but it has economic activity and the economic
Tell us about your place in future, not only of the artists country
become renowned on the international Europe and the world.
stage. My works are currently of origin, but also internationally.
My sculptures have become rather
displayed in 25 countries (galleries, valuable: I am in the Artprice reports
institutions, private collections, etc.). Top 500 artists in the world, and am
All of my works are produced with listed on the secondary market. My
the help of my assistants in my works, much like other artists works,
workshop in Vallauris, near Antibes. must be visible on the international
I work with smelters for my aluminum stage in order to be known by the
and bronze sculptures in Europe. general public and collectors alike. As

EY | December 2014 85

Coping with the aftermath of the construction sector slump

493,000 36.2b
Employment (2013) Turnover (20122) m

Registered architects1 492,930 Revenues of architectural agencies building

design, spatial program design, construction 36,212
Total employment in architectural agencies 492,930 monitoring, etc.
Total turnover of architectural agencies 36,212

1. L`ak_mj]gfdq[gn]jkYj[`al][lkj]_akl]j]\affYlagfYdYkkg[aYlagfkg^Yj[`al][lk&Alaf[dm\]kZgl`k]d^%]ehdgq]\Yf\]ehdgq]\Yj[`al][lk&
It does not cover related employment in architectural companies
2. Market size and employment data were mainly based on the Architects Council of Europes own estimates. Data has been cross-checked with national
statistics and other local sources.

86 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

With almost half a million registered architects and architectural agencies employ many more
in Europe and revenues reaching 36b, people in support activities, including town
Yj[`al][lmjYdY[lanala]kYj]Yka_fa[Yfl planning, building engineering and information
business in the European creative economy. technology. Numbers of architects show
9j[`al][lmj]akl`]kapl`%dYj_]klaf\mkljqafgmj surprising variations between countries: Italy has
study and matches the book industry in scale, a smaller construction industry than Germany
_]f]jYlaf_loa[]l`]j]n]fm]kg^dekgjna\]g or France, yet almost 135,000 registered
games. Architects also play a pivotal role in the architects, compared with 26,000 in France.
construction industry, Europes biggest, though =pljYhgdYlaf_^jge\YlY_Yl`]j]\af>jYf[]Yf\
they account for only 1% of its revenues. the UK, between 700,000 and 1,000,000 people
Our estimate of total employment is undoubtedly may work in European architectural agencies.
too low, since it counts only registered architects,

High dependence on the construction sector

Global construction output is forecast to contracted faster than the fall in construction
grow more than 70% to 11.5t by 20252. output which in turn fell faster than GDP.
According to the Architects Council of Europe,
global GDP growth, will be concentrated
demand for architectural services hinges upon
in China, India and the US.
new building. In 2011, some 73% of French
The industry is at a tipping point, Yj[`al][lmjYdjekj]n]fm]oYk_]f]jYl]\Zq
with more than 50% of construction new construction, whereas refurbishment and
activity now in emerging markets. j]ljgllaf_Y[[gmfl]\gfdq^gj*/g^j]n]fm]3.
:ml=mjgh]Yf[gfkljm[lagfak]ph][l]\lg Half of European architects activities hinge
fall 5% by 2025 from 2007 levels. That is upon private residential development. Its share
partly because two-thirds of construction in is growing again, reaching 51% in 2012, up
l`]=M`Yhh]fkafn][gmflja]k?]jeYfq$ ^jge,,af*()(&<]ka_faf_k`ghkYf\g^[]k
the UK, France, Italy and Spain where provides 29%. The share of commissions from
building was dramatically scaled back in the the public sector, mainly for social housing,
oYc]g^l`]fYf[aYd[jakak&9j[`al][lmj] is declining. They provided 26% of architects
is highly cyclical. During the economic revenues in 2010 but just 20% in 2012.
turmoil, demand for architectural services

Consolidation looms
Though a handful of international companies Fragmented national markets contribute to the
achieve sales of more than 50m, most architects kmjnanYdg^eYfqkeYddjekl`YldY[cl`]k[Yd]lg
ogjcafkeYddjekgjYj]k]d^%]ehdgq]\$Yf\ \]n]dghY[jgkkZgj\]jk&Af>jYf[]$^gj]pYehd]$
Yj][gff]\lgfYlagfYdeYjc]lk&EYfqg^l`]k] the biggest independent practice generated less
o]j]hj]nagmkdq]ehdgq]\ZqdYj_]jjek$Zml than 1% of total industry turnover in 20124.

1. ?dgZYd;gfkljm[lagf*(*-$?dgZYd;gfkljm[lagfH]jkh][lan]k$Gp^gj\=[gfgea[k9j[Y\ak
2. French order of Architects
3. 9j[`al][lmj]k]jna[]kaf>jYf[]af*()*$P]j

EY | December 2014 87

Clients demand more creativity and technicality expertise

Buildings are a leading source of greenhouse Yf\hjanYl]k][lgjk$fgo]ph][l`a_`d]n]dkg^
gas emissions, so pressure for greener buildings ]ph]jlak]af_j]]fZmad\af_l][`faim]kYf\oYfl
has spurred demand for architectural services energy-saving technologies to be deployed in
Yf\Y\\]\]f]j_q]^[a]f[qlg\]ka_f[jal]jaY industrial, commercial, retail, distribution and
previously dominated by functionality and residential projects.Amid intensifying global
cost. The introduction in 2002 of tighter EU [geh]lalagfZ]lo]]fYj[`al][lmjYdjek$
regulations concerning the energy performance [j]YlanalqYf\]ph]jlak]Yj][geh]lalan]klj]f_l`k
of buildings added constraints but inspired that EU architects could and should rely upon.
creativity. Clients of all stripes, from both public

Faced with soft demand in Europe, larger and acquisition opportunities in Southeast Asia,
Yj[`al][lmjYdjek`Yn]kl]hh]\mhl`]ajk]Yj[` including Indonesia and Malaysia to reduce
for growth in Africa, the Middle East, Asia and alk]phgkmj]lgegj]eYlmj]eYjc]lk&Dac]oak]$
DYlaf9e]ja[Y&>gj]pYehd]$9lcafk$l`]MC >j]f[`[gehYfa]kYj]]phYf\af_af9^ja[YYf\l`]
architectural and civil engineering company, now Ea\\d]=YklYf\KhYfak`jekafDYlaf9e]ja[Y&
has more than 2,000 employees in Hong Kong =n]fea\%kar]\jek$dac]>jYf[]k>jYfgak
and mainland China, and is looking for business Leclercq, are now working in Africa and China.

Leaders and leadership

Long-standing success in nurturing professional were suffering from a deep-rooted construction
k]jna[]kjek`Yk`]dh]\l`]MCYf\Ko]\]f [jakak&AfKhYaf$/(g^jeko]j]o]a_`af_
spawn some global leaders in architecture, ]phYfkagfYZjgY\$afKdgn]faY.*$Hgjlm_Yd
including Aedas, Foster and Partners, 59% and Greece 57%. However, strict and
Rogers Stirk Harbour + Partners, Skanska varying national construction and professional
and Sweco. The economic crisis hit demand j]_mdYlagfkjYak]ka_fa[YflZYjja]jklggmlka\]jk
almost everywhere. By 2013, only 3% of afeYfqeYjc]lk&F]n]jl`]d]kk$=mjgh]Yfjek
Yj[`al][lmjYdjekaf=mjgh]ogjc]\afgl`]j `Yn]kge]Y\nYflY_]k&=pY[laf_j]_mdYlgjq
countries, down from 7% in 2008. British standards and demanding clients in Europe
Yf\Ajak`jekYj]l`]egklafl]jfYlagfYd oblige European architects to achieve the
providers of architectural services, with 14.7% highest creative and technical skills, ensuring
and 12.7% working abroad, respectively. they are well-equipped to win work in both
However, according to a survey by the Architects emerging and mature markets worldwide.
;gmf[adg^=mjgh]$jekYj]Z][geaf_egj] =mjgh]Yfjek`Yn]ogfl`]Hjalrc]j
optimistic about winning work overseas. The Architecture Prize eight times since 2000.
desire to seek work abroad was especially
strong in southern Europe, where practices

88 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Inside track
What changes has the industry The overseas market remains a lifeline
undergone in the last few years? ^gjAlYdaYfjek&Gmjg^[]ogjckaf
From 2006 to 2012 investment in Venezuela, Bulgaria and Saudi Arabia.
new building decreased by 43.7%, and
although renewal and refurbishment What future trends do
has fared better, overall construction you anticipate?
investment is down 28.4% during that We believe that innovation and the
period. Ever since the abolition of full use of new 3D/virtual reality
mandatory fee scales for architects l][`fgdg_a]k$o`a[`gmjjemk]k
af*()*$jekaf[ge]`YklmeZd]\$ widely, together with the creativity for
oal`egklg^[]kk]]af_lmjfgn]j^Ydd which Italy is renowned, are not only

Arch. Ing. Giovanni Zallocco 30%50% over the last 23 years. useful but necessary to arrive at a
President ERREGI Within this rather bleak picture,
of cost, ease of construction and
however, some positive signs
maintenance but more importantly,
can be found.
How important is architecture contains the esthetic and functional
in Italy and in Europe? Urban regeneration, as a program
qualities that in the broadest
Building, and the design activity it and as a necessity, has become part possible sense, provide sustainable
depends upon, is a fundamental of mainstream professional and well-being, safety and quality.
driving force of the economy in political thinking; but because of
It is hard for architects to fully
Italy, as elsewhere. With 135,000 the recession, public investment, in
registered architects, we have about many instances, is still on hold.
The market, institutions and we
a quarter of Europes architects. Guidelines or recommended fee scales architects as a profession have to
Construction generates 6% of Italys have been recognized as necessary, focus on what we do best overcome
?<H&9^l]jYldafaf_gj^Yddaf_^gj primarily for public budgeting but seemingly impossible obstacles
the last three years, construction also to facilitate legal rulings in case through inventiveness, and refusing
still shows no real sign of recovery. of dispute. Hopefully, this will help
to surrender to a conservative,
Gmjg^[]$o`a[`oal`gmjY^daYl]\ to re-establish an equilibrium that shortsighted and consolidated system.
groups employs roughly 100 persons, has been sorely missed, notably
is unusually large for Italy, where the We also need better synergies between
in public procurement bids.
nYkleYbgjalqg^g^[]k`Yn]^]o]j architects and engineers, so as to
Public procurement criteria are stimulate investors and institutions and
than three engineers and architects.
also aligning themselves with above all, progress in a global market.
current EU thinking that does not
just focus on cost, but recognizes
the value of the most economically
advantageous tender and tries
to be more inclusive of SMEs.

EY | December 2014 89

Driven by the rapid expansion of online revenues

818,000 93b
Employment (2012)1 Turnover (2012)2 m
Commercial communications agencies 818,182 Revenues of advertising agencies 93,000
Total employment 818,182 Total revenues 93,000

1. Main sources used for this section are:

2. L`ak_mj]gfdq[gn]jkl`]j]n]fm]g^Y\n]jlakaf_Y_]f[a]k&Al\g]kfglaf[dm\]j]n]fm]^jgeY\n]jlakaf_kh]flafgl`]jaf\mklja]k&

90 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

A huge market working across all creative and cultural industries
With revenues estimated at 93b in 2012 and estimated at 100b, but because spending on
820,000 employees, the advertising business advertising is easy for companies to cut in a
is a powerful force in the European cultural crisis, industry revenues have since fallen 7%.
and creative industries. Generating about
Total spending on advertising across various
17% of total CCI revenues, it is the second-
media, including TV, radio and online,
largest business after visual arts. Advertising
reached almost 87b in 2012. That makes
was hard hit by the economic turmoil. In
it vital to the business models of many other
2008, the European advertising market was
CCI industries, as our graphic shows.

A sector wrestling with weak revenues and a digital transformation

Advertising is an economic barometer. The substantial and ongoing switch from
9\n]jlakaf_kh]f\oYkgf]g^l`]jklZm\_]lk traditional media to online advertising
to be cut by businesses when the economy in search of more targeted audiences
slowed. The economic crisis thus reduced has had far-reaching effects.
revenues of commercial communications
agencies by 7% during 200812, with knock-on
the rise of internet advertising:
effects upon many media businesses that rely
Consumers are spending increasing amounts
upon advertising revenues. But as spending
of time online, and web portals have learned
upon advertising recovers, much of the money
to acquire and analyze huge amounts of data
is following consumers into different media. about them. Google one of the biggest web
Advertiser spending on online publicity has portals registered more than 1.2t searches in
surged by 12% a year since 2008, while 146 languages in 20122.
spending at cinemas has grown by 4% a year.
Search advertising, which seeks to address the
Meantime spending on TV advertising right consumer with the right ad content, has
has declined by 2.5% a year, on radio blossomed. Paid search grew by 37% in 2013.
advertising by 2%, and print advertising, Social networks have gained enormous
including both newspapers and numbers of users and become important
magazines, by a hefty 8.3% a year. internet gateways: they attracted more than
MK1Zg^Y\n]jlakaf_kh]f\af*()+ #-0!3.

Advertising revenues are vital to the viability of many creative industries - 2012
Source: WARC - EY analysis


27,934 Newspaper
Total Magazines
87,629m Outdoor

1. Google Zeitgest 2012.

2. Magna Global Advertising Forecasts, 2014.

EY | December 2014 91

The rise of online advertising on websites, social New communication technologies have made
it possible to mount massive advertising
media platforms and via targeted communication
campaigns more cheaply. Consumers growing
is rapidly changing the nature of the advertising
use of the internet has encouraged advertisers
industry as well as the media where ads appear. to prioritize online channels when marketing
Af*((0$gfdq),g^lglYdY\n]jlakaf_]ph]f\almj] products and services, reducing their costs
in Europe was online. Now, with a share estimated and media company revenues.
at 24%, it appears to be the second-most used Advertising spending, which used to help
medium to communicate and promote products fYf[]l`][gklg^ojalaf_$hjaflaf_Yf\
or services. Television remains the medium most distributing newspapers and magazines,
used by advertisers, thanks to its omnipresence now cross-subsidizes online services, such
in our daily life, but its lead is rapidly eroding. as news, music streaming and video sharing,
The rise of the internet has affected the which consumers value more highly.
advertising market in two ways:
The shift from print to digital helped advertising
agencies to withstand the economic crisis
and helped media owners to diversify their
advertising revenue streams.

Micro-targeting seeks to enhance advertising effectiveness
The successful IPO of French digital advertising work. The proportion of Facebooks advertising
agency Criteo on NASDAQ in early 2014 showed revenue from mobile advertising is estimated
that micro-targeted online advertising has come to have increased from 12% in 2012 to 50%
of age. Nowadays, it is easy for advertisers to in the third quarter of 2013. The advertising
display a smart, targeted ad, focusing on the af\mkljqYj_m]kl`Ylea[jg%lYj_]laf_Z]f]lk
known interests of an online consumer. By consumers because it is more relevant to them
using GPS and other tracking techniques to and their habits and preferences. However, there
work out a consumers location, advertisers are signs of a possible backlash, as consumers
can now serve up advertisements about nearby becoming increasingly aware that every key
shops and services or products that might be stroke they make is being tracked, recorded
appropriate, a technique known as geo targeting. and analyzed, and personal information about
Micro-targeting has been facilitated by the them shared with advertisers. Regulators
increasingly widespread use of mobile devices, and privacy concerns could spoil the party.
not only on the move, but at home and at

92 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

Consumer experience at the center of online market developments

Native advertising, a new online advertising use of voice recognition technology to invite
technique, embodies a change in advertisers consumers to respond to mobile phone or
methods designed to capture the consumers internet radio advertisements by speaking back to
attention. Instead of pop-up windows, the the device. Nuance, the company that developed
consumers attention is gained and maintained Siri voice recognition for Apple, is offering
by interactive ads, which seek to draw consumers this technology under its Voice Ads brand.
into content, games and social sharing functions. Consumers may like it, loathe it or ignore it.
Another emerging advertising innovation is the

A booming mobile advertising market

Now that many European consumers have That would imply that mobile advertising
j]hdY[]\l`]ajjkl%_]f]jYlagfegZad]h`gf]k j]n]fm]koaddkgYj^jgeYZgmlMK-Zaf
with smartphones, and tablets, a new *())lgMK*.Zaf*()/$[Yhlmjaf_)-&-
hdYqaf_]d\`Ykgh]f]\mh^gjY\n]jlak]jk& of online advertising. If the industrys hopes
According to Berg Insight, in 2017, mobile come to fruition, mobile advertising will
advertising is likely to account for 4.4% of come to play a pivotal role in the interaction
total advertising spending worldwide. between brands and consumers.

Leaders and leadership

European multinationals dominate the worldwide advertising market
Europe is home to two of the worlds big The American group Omnicom, ranked
three advertising groups: WPP Group second, reports revenues of 14.2b. But
based in London and Publicis Groupe, beyond the champions, the European
headquartered in Paris, which have turnover advertising landscape comprises a long list
of 16.4b and 8.5b, respectively1. of SMEs with myriad specializations.

1. Agency Report 2013, Advertising Age.

EY | December 2014 93

Inside track
What is HiMedia Group? What trends are emerging
HiMedia Group offers services as for the future?
a digital advertising agency and The dominance of global platforms
solutions for internet and mobile (American platforms today, maybe
phone payments. As a service Asian ones tomorrow) leveraged
company and the owner of its own from a large domestic market is a
technology, its position is central in serious concern. Being number one
the e-commerce chain, taking part has such an important impact in the
in this process before the purchase digital market that these companies
by internet users, but also afterward use their leading position to establish
making sure the payment is the their own standards as a reference,
most ergonomic and frictionless. imposing entry barriers that thwart
Cyril Zimmermann competition. It is time for national
CEO of HiMedia Group
What are the trends in terms of and European regulators to take
jobs in your sector and company? powers to intervene instead of merely
HiMedia Group employs 450 persons saying they are powerless to act.
in Europe and holds participations
in different companies operating What importance does digital
in Europe but also in Asia, Latin holds in your sector?
America and North Africa. The HiMedia Group has been a 100% digital
average age of our employees is 31 company since its creation in 1996.
years, balanced between sales and Due to this dedication to the digital
marketing (55%), support functions sector and because every sector and
(15%), and technical services (30%). every player (companies, associations,
This balance was achieved after strong administrations) is becoming digital,
efforts to staff our technical support our sector keeps growing. We invested
teams, R&D and our IT department. massively in our own technology and
we will keep doing so. Technology
does not always generate added
value in itself but use by skilled
professionals allows us to capitalize on
these investments and take the best
advantage of changes in user behavior.

94 Creating growth | Measuring cultural and creative markets in the EU

03 | Creative diversity: understanding the 11 market segments that make up the cultural and creative economy

EY | December 2014 95
The impact of cultural and creative industries on our economy is often poorly measured, understood
and valued. This is why GESAC requested a Europe-wide study of the economic and social impact of
CCIs, particularly in terms of direct revenues and jobs.

Although many surveys and studies have been undertaken in various countries and industries over
cultural and creative markets.

To describe the creative and cultural economy in the most comprehensive and clear fashion we
providers, media and retailers.

Objectives <]falagfYf\k[gh]
The main objective of this study is to produce a set of CCIs comprise those industries producing or distributing
comparative and qualitative studies to give a snapshot of [mdlmjYdYf\[j]Ylan]_gg\kYf\k]jna[]k$\]f]\af
the economic role of CCIs in Europe and to show how, and 2005 by UNESCO1 as activities, goods and services,
lgo`Yl]pl]fl$l`]qeYqZ]Y\janaf_^gj[]^gj=mjgh]Yf o`a[`]eZg\qgj[gfn]q[mdlmjYd]phj]kkagfk$
economic growth. This report also aims to aid understanding irrespective of the commercial value they may have.
of the contribution of creativity to other key industries. :]qgf\l`akZjgY\\]falagf$o]`Yn]Y\ghl]\Yk][lgj%
each industry. So our report covers 11 sectors to provide an
overview of the growth drivers and key challenges for each.
This study is based solely upon revenues of the cultural
industries themselves. It takes no account of indirect
impacts upon related economic activities such as tourism.
Newspapers and magazines
The geographical scope of this study is the EU28.
Performing arts
TV Data collection
Film Because reliable aggregated statistical data were
Radio unavailable, we have adopted a bottom-up approach in
Video games l`akklm\q&O`]j]Y__j]_Yl]\\YlY\gfgl]pakl$l`]klm\q
Visual arts has constructed reliable estimates based on interviews
Architectural activities with key organizations, sector publications and ad hoc
Advertising activities
Data collection relies primarily on reliable industry
sources at national, European and global levels see
bibliography for further details. With regard to turnover
data, we primarily used market research analyses and
Eurostat as complementary sources of statistics.

1. MF=K;G *((-!$;gfn]flagfgfl`]Hjgl][lagfYf\Hjgeglagfg^l`]<an]jkalqg^;mdlmjYd=phj]kkagfk&

96 Creating growth | Measuring cultural and creative markets in the EU

Indicators To evaluate employment, in the absence of other data,
to the European economy, both in terms of
direct impact (turnover) and employment. Data were rarely available for all 28 countries of
Lmjfgn]jfYd[gfkme]jeYjc]lk2The study adopted the EU. Consequently, we have estimated economic
YfYhhjgY[`ZYk]\gffYd[gfkme]jeYjc]lk$hjaeYjadq value through tailor-made assumptions:
taken at retail prices, that is an approach that takes We scaled up available data from the main markets
revenue at the end of the value chain, rather than adding France, UK, Germany, Spain, Italy, the Nordic countries
up revenue from all stakeholders involved in individual and one or two others such as Poland and Hungary in
parts of the value chain. Consequently, the total estimates Eastern and Central Europe.
each sector. As an illustration, to measure the economic We used world data e.g., the global market value and
value of the performing arts, support activities such applied a market share scaling-down factor.
Our estimates have been validated with key industry players,
as they can be considered intermediate costs of venue
such as federations and associations. For this purpose, we
management and are already included in venue revenue
from ticket and other sales. Similarly, our estimates do conducted interviews with different organizations covering
not include revenues from book printing, as they are the 11 sectors of this report see further for the full list.
afl]je]\aYl][gklkaf[dm\]\afl`]fYdhja[]g^Zggck& Main databases used in this report are given below:
Market estimates and measurements are in b at retail
hja[]k&=ehdgqe]fl_mj]kaf[dm\]bgZkafZgl`hmZda[Yf\ Eurostat Structural Business Survey
private sectors. Eurostat Labour Force Survey
Jobs permanent and temporary or part-time workers: FYlagfYdKlYlakla[YdG^[]k
Employment information monitored by professional DG Trade: Market Access Database
gj_YfarYlagfkYf\=mjgklYlak]phj]kk]\affmeZ]jkg^ WAN-IFRA Database
bgZk$fglaf^mdd%lae]]imanYd]flk >L=!&L`akak]phdYaf]\
OFCOM statistics
CCI-related EU NACE codes. EU statistical frameworks fail Creative & Cultural Skills UK
to count artists and other creative content owners. Given
the data available at EU and national levels, FTE estimates
Totals for jobs and markets have been arrived at after
would require further investigation beyond the scope of
removal of double-counting. For markets, the sum of sectors
this study.
To ensure consistency, we mainly use data recorded jgmf\]\_mj]!&Dan]emka[ )*&/Z!ak[gmfl]\afZgl`l`]
in 2011 and 2012. Performing arts and Music sectors, music channels revenues
in TV and Music sectors (1.7b) and music radio revenues
(3.2b) in Radio and Music sectors. We also deducted
1.3b from double counted music copyright revenues.

For employment, we deducted from the sum of sectors

_mj]k /&-e!dan]emka[ ,-.$-((!$emka[jY\ag
(5,500) and music channels TV (1,500) employment
following the same methodology as before.

EY | December 2014 97
98 Creating growth | Measuring cultural and creative markets in the EU

Marc Lhermitte +33 1 46 93 72 76

Bruno Perrin +33 1 46 93 65 43

Louisa Melbouci +33 1 46 93 76 47

EY | December 2014 99
EY t9kkmjYf[]tLYptLjYfkY[lagfkt9\nakgjq

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