Technology is changing the way we consume creative content, evidenced by the significant growth of subscription video-on-demand (SVOD) services such as Netflix and Amazon. Together with more traditional broadcasters and distributors, this has created a highly competitive landscape and an ever-increasing global demand for exciting original content.
Netflix is reported to have a total budget of around £7billion for 2019, but some sources indicate that it could be substantially higher. Amazon is estimated to spend around £3.9 billion on screen content. Both Apple and Disney have announced the launch of competitor services in 2019, with WarnerMedia to follow imminently. Facebook and Google are already commissioning original content and may increase their commitment in the face of strong competition.
These SVOD services compete for content with traditional TV broadcasters, film studios and distributors, who have ramped up their budgets to keep pace with the new entrants.
The UK is a global force in creating content for the screen industries, with world-class infrastructure and talent. UK creative content companies have an established track record of producing award-winning, commercially successful films and television shows watched by millions worldwide, and are ideally placed to benefit from this growth in content expenditure.
Box office successes such as Paddington, Slumdog Millionaire and Mamma Mia and internationally successful television shows such as Downton Abbey, The Crown and Call the Midwife demonstrate the global appeal of content created by UK companies.
The total spend on UK high-end television and film production in 2018 reached £3.1billion*. With Netflix and Amazon ramping up their activities in Europe, and Apple now in the market for original content, we are anticipating expenditure to rise for UK based productions over the coming years.
The increasingly competitive market for creative content has, in turn, driven an increase in M&A activity for content creation companies, providing exit opportunities for investors.
For strategic buyers, this activity is largely driven by a desire to own and control content, a key differentiator in this landscape. Screen content M&A activity more than doubled between 2013 and 2017. In terms of the number of transactions, the UK was the most active M&A market, and high quality TV drama was a significant focus.
Alongside traditional private equity players, the range of buyers in recent years includes ITV, Freemantle Media, Sony, Sky, EOne, Channel 4, Endemol Shine, All3Media, NBC Universal
The unprecedented level of demand for quality content and the consequent increase in M&A activity underlines that there has never been a better time to create, own and invest in UK content.
The Fund will invest in a new generation of EIS Qualifying UK companies best placed to capitalise on this global demand for content. The Fund will support their innovation and growth and enable them to retain a meaningful interest in their intellectual property as they scale up.