CONTENT
– EUROPE’S NEW GROWTH ENGINEPRESS
RELEASE: Brussels, 19 December 2000: Creative
Industries ManagementPRESS
RELEASE: Brussels, 19 December 2000: EIF ventures in Creative
IndustriesDigitalization and deregulation have multiplied the distribution channels available for content. This means that the demand for content is currently exploding. The market has become demand driven.
New structures and value chains are developing in the rapidly internationalizing creative industries. Market opportunities are being created across the board from performing arts to software publishing. Culture – the creation of content - is understood as a fast growth industry. The content industry – the development, distribution and sale of intellectual property rights (IPRs) and related products and services - accounts for 3 to 5 percent of the GDP’s of EU countries.
We at Creative Industries Management (CIM) believe venture capitalism is needed to take full advantage of the changing environment. Venture capital thrives in industries undergoing dramatic change and can thus be a vital catalyst in the content industry’s development process. CIM intends to be a key European player in the content industries financial service sector.
The IPR market offers European public and private institutional investors opportunities to diversify their portfolio. As the next link on the value chain the content industry is a logical continuum for high technology investments.
There is now a timely opportunity for an investment fund for content creation targeting long term return (IRR). This requires fund management capable of identifying and developing superior deal flow in content and IPRs, structuring and assessing viable projects and providing expert service and monitoring during the operation of the investments.
The term Creative Industry is still open for discussion. Interpretations of what industries belong under the term "Creative" vary greatly. The British Government founded a Creative Industry Task Force in 1997 to assess the value of creative industries and to maximize their economic impact. The task force labeled advertising, architecture, arts and antiques market, crafts, design, designer fashion, film, interactive leisure software, music, performing arts, publishing, software and TV and radio under Creative Industries.
For our purposes only a limited number of the above are included. CIM concentrates on creative industries that create intellectual property rights (IPRs), or similar transferable rights. These involve music, performing arts, sports, film and TV as well as media and new media: protected content created by the creative process.
Creative Industries make / produce Content. There are two sorts of Content. These are Creative Process Content and Programmed Content.
The first, Creative Process Content is content created by a creative process that can be an idea, a visual image, a sound, a script or a presentation. It is often transformable to numerous different communication ways: for example a theatre play can be shown in a theatre, on TV, on radio or read from script. The play itself is the creative content.
Programmed Content on the other hand, is content created by binary code: computer program.
Creative content producers are those companies or individuals that produce a
product from the creative content: football clubs produce sporting content,
musicians compose, directors’ film, theatre companies produce plays, writers
write scripts.
For content to have economic significance it must belong to someone, thus IPRs
form the foundation of economic activity in the Creative Industry. The selling,
renting and leasing of IPRs are the method for economic gain. The holder of
an IPR can also commercialize his asset by licensing, re-releasing and by forming
coalitions with other IPR holders to create new IPR products.
The structure of Creative Industries can be looked at through the value chain.
The first link on the chain is content creation: the development of an idea
or concept. In the second link Content is then developed further, which can
mean that it is scripted or otherwise organized in a set format. Then content
is packaged which often means it is reproduced as CD records or video for example.
Finally – in the third link - content is marketed and distributed.
Traditionally the value of content has increased dramatically in the packaging,
marketing and distribution phases and content creation has been of moderate
economic value. This order has dramatically changed in the past 20 years. As
distribution channels have multiplied and distribution costs are beginning to
decrease the value of the IPR itself has dramatically increased.
Venture capitalists in the US have invested in "content" with varying
success. It is important to note, however, that by "content" they
have meant content produced for and distributed exclusively by the internet.
We at CIM believe that the future of content lies in forms that adapt to various
distribution channels.
Content that can be distributed by numerous channels – preferably both
digital and conventional – not only limit the risk involved in the public
adopting to new consuming patterns but also increases the number of revenue
sources and overall consumption of the content in question.
Thus although the fund will invest in parts of the value chain as attractive
opportunities arise, the primary focus of the fund is in transforming content
for various distribution channels: production and licensing companies.
The creative industries are undergoing major changes in Europe. The spreading of private electronic media has restructured the creative industries. Demand for product in radio and television is increasing as the number of broadcasters and channels increases. The digital revolution in radio, TV and especially the internet has transformed the creative industries. Today demand often exceeds supply. Some experts talk of distributors becoming subcontractors for content creators.
All this has had a considerable impact on a wide range of content creators.
Various spectator sports are being publicly capitalized, many leagues are turning
professional and media distribution rights have brought more money than ever
before. In the popular music business the Anglo American performers still dominate
but numerous European groups have become world wide successes. In classical
music overall consumption remains level but internationalization is widespread
and big productions - such as classical music concerts at sporting arenas -
attract audiences that would otherwise be unreachable. Municipal and national
theatre companies have come to realize that they must attract audiences to justify
their existence: they now produce more popular performances such as musicals.
European television and movie production is regaining ground. Many popular game
show formats now originate in Europe. The explosion in TV channels combined
with the need to produce domestic programming means that European audiovisual
content creators have an ever-growing market. European movie production, which
has traditionally been overshadowed by Hollywood, is slowly gaining ground through
new financing schemes.
The single market means that European content creators can utilize resources
previously unavailable to them. Market access and distribution have also become
much easier due to EU integration, deregulation and technical advances in digital
technology.
Digitalisation is rapidly increasing the number of television channels Europeans have access to. For example, from 2001 to 2005 Finland is to have 12 new television channels.
Digitalisation will create a revolution in European content creation. The effects
will be felt in arts, sports, film and most obviously in TV and video production.
The new channels will have between 10 to 24 hours of daily broadcasting per
channel. Programming in most countries will quadruple. Although the plans of
most broadcasters are still not public, certain trends can already be identified.
Sports will be one of the big winners.
Around the clock sports channels will profligate. This will mean increased TV-time
for most spectator sports. TV audience studies show that sports are the fastest
way for a channel to attract new audiences. Soccer, motor sports, ice hockey,
basketball and all sports involving betting such as horse races can expect ever
increasing coverage.
European film will experience a revival. Major national players are planning an all movie networks. Holders of rights to old films will be able to capitalize on their demand. An all film network is likely to show the same film three to five times during a week to cover different lifestyle audiences. Holders to rights on numerous films of the same genre will be able to offer theme packages for television thus increasing the IPR value of the less desirable titles.
Ideas will become commodities. As many television platform licensees
also own radio, print and publishing companies synergy will be the order of
the day. Script ideas will be packaged to fit TV, film, magazine and book publishing
already in their inception. A manuscript will first be published as a series
in a magazine, then as a book, then as a film and finally as a television series
which will eventually be release on video or DVD. Authors – content creators
– will be able to capitalize their ideas more thoroughly and at an earlier
date. There will also be a new market for once exploited older IPRs.
News and information demand will still grow. Many national broadcasters are planning to launch a 24- hour news channel. Although most of these channels will primarily rely on existing news reporting facilities it will increase demand for short background documentaries and interviews. It will also increase demand for archive material. Holders of photo, map and sound-byte archives can expect to capitalize on increasing IPR demand for their products.
IPRs in traditional arts will gain value. One of the key problems
with current TV channels has been finding a suitable vehicle for up market "quality
programming". Consumers of this type of product are a small but attractive
target group. The new television channels offer a possibility to cater to this
target group. Holders of IPRs in painting, photography, video art and sculpture
will have a chance to commercialize their products.
Performing arts will be able to cash in on audiovisual recordings. Opera, theatre and dance will be able to reach a wider audience. The above mentioned quality programming channels rely heavily on performing arts for content.
Demand will increase for production facilities.
Programming regulations in many countries demand a high percentage of domestic
content for TV. Most of the new production will be out-sourced. Demand for studios,
editing facilities, and equipment rental will increase dramatically.
There will be a major production company restructuring.
As demand for content increases European production companies will have to reorganize.
Smaller national or regional production companies will be acquired by pan-European
players. The remaining smaller companies will become highly specialized niche
programming providers.
More Information:
Mr. Jorma Routti, professor, chairman
Tel + 358 400 464 575
Email jorma.routti@cimfunds.com
Mr. Heikki Masalin, managing director
Tel + 358 400 258 426
Email heikki.masalin@cimfunds.com
Mr. Eero Iloniemi, senior partner
Tel +358 50 380 9441
Email eero.iloniemi@cimfunds.com
Helsinki, Finland
Recent years have seen the explosion of new distribution channels in media. Major investments continue to be made in digital television and radio channels, internet and mobile platforms, satellite and optical communications. The competition for access to a limited number of channels has changed to competition for best contents between all these channels. Contents are will no more be created primarily by distribution channels but by independent creative individuals and companies. New internet and mobile channels offer possibilities for complete new contents and services.
This paradigm change provides excellent opportunities for creative industries in contents production. Intellectual property rights IPR form the backbone of the contents industries. IPR asset management and trade are one of the fastest growing areas of international commerce. These questions are also in the heart of debates concerning the enlargement of World Trade Organization.
Creative industries are growing rapidly and account already for roughly 4 % of the European gross domestic product. They provide also excellent possibilities for global success, based on strong European cultural and linguistic heritage as well as leading position gained in telecommunications technologies. The Nordic countries are today global leaders in developing and adopting mobile telecommunications. They offer excellent opportunities for creative industries, and at the same time their continued success requires new contents.
Creative Industries Management (CIM) based in Helsinki, Finland,
is launching a new Venture Fund for Creative Industries (VFCI). The target size
of VFCI is EUR 50 million with initial closing at about EUR 25 million. European
Investment Fund has signed a commitment to invest one third of the fund up to
EUR 16.5 million in this first European fund for creative industries. Other
investors are Finnish and Nordic strategic and institutional investors. The
new fund will invest in companies in media, entertainment, sports and arts.
It also helps the companies to gain access to international and global markets.
CIM has as its minority owner and global partner London based ProVen Holdings Ltd, which has among other funds manages two global IPR funds. It has offices also in New York and Los Angeles. This arrangements assures local presence in Northern Europe combined with global access needed by contents industries.
Further information on CIM and CFCI is available from:
Mr. Heikki Masalin, Managing Director
Tel +358 400 258426
Email heikki.masalin@cimfunds.com
Prof. Jorma Routti, Chairman
Tel +358 400 464575
Email jorma.routti@cimfunds.com
The European Investment Fund (EIF) has signed a commitment to
invest up to EUR 16.5 million in the Finland based Venture Fund for Creative
Industries which will invest mainly in northern European countries. This fund,
targeted at companies holding intellectual property rights in the performing
arts such as popular and classical music, will also support sports, TV, movies
and 'new media'. It is the first Venture Capital fund dedicated to this sector,
which is receiving increased attention from the European Union. The EIF commitment
is an important breakthrough in the European media sector and forms part of
the audiovisual initiative announced by Mrs Reding, the Commissioner responsible
for cultural affairs and by Mr Maystadt, President of the EIF Management Board
and EIB.
Creative industries can be characterized as fast developing and
globalising. They account for an estimated 3 to 5% of the GPD of EU Member States.
The investment of the EIF is designed to provide potential investors with the
necessary confidence to participate in the creation of a successful fund.
According to Mr Cernoia, EIF Chief Executive, the creative industries market
may become the next "frontier" in venture capital. He said that it
"certainly marks a field where Europe may have considerable leverage potential".
The objective of the fund is to invest in the "value chain
of creative industries" which links promoters, producers and distributors.
Commercial
returns are expected and the fund will have a European approach and seeks to
extend national opportunities into European successes. It offers a
professionally managed vehicle as well as an interest pool for private and public
investors. The investment strategy will be characterized by
diversification of investments by sector and stages as well as geographically.
The management of the fund is established in Finland which
is the home of many innovations of the European venture capital market. If the
fund turns out to be successful, other venture capital funds dedicated
to creative industries will be supported elsewhere in the European Union.
The EIF is a financial institution of the EU specialised in venture
capital and portfolio guarantees. The EIF is based in Luxembourg and was established
in 1994 as a joint venture between the European Investment Bank (EIB), the European
Union (represented by the European Commission) and European banks and financial
institutions. The EIB has recently become the majority shareholder and has considerably
increased the investment potential of the EIF. With an investment capacity of
over EUR 3 billion until 2003, the EIF is now a major player in the European
venture capital market. Its investment strategy focuses on the promotion of
European technology and contributes to the pursuit of Community objectives,
like innovation, growth and employment and regional development.
Further information on EIF activities is available from its website
at
www.eif.org
EIF Press contact:
Mr Pé Verhoeven : Tel.: + 352 42 66 88 235; Mobile: + 352 091 199 664