Attacking the recession

Building a Stronger Games Sector in the Downturn

Yesterday I chaired a roundtable discussion at NESTA to mark the launch of o ur new policy briefing on the video games sector: Games are one of the UK's great unsung creative success stories. But games studios must innovate if the UK is to maintain its position as a global industry leader. With more urgency than many other sectors, this will require supportive measures from policymakers.

The UK's video games sector is a major source of economic growth, with games expected to have overtaken music and DVD in overall sales by the end of 2008. Games are also a source of innovation that benefits the broader economy, with technologies and business models developed in the games industry now being applied in areas as wide as health, defence and architecture.  The popularity of video games amongst young people also makes them a promising potential source of education innovation.

But, the briefing argues, a number of pressing challenges must be addressed, including skills shortages, unsustainable business models and barriers to finance.  The industry must also raise its game in the online market, and face up to intense - often subsidised - competition from overseas. NESTA makes a number of detailed recommendations which policymakers and the sector must implement if the challenges are to be addressed.

Our roundtable brought together some of the industry’s leading figures and policymakers to debate the issues. There was a disconnect between the impassioned calls by developers for support measures and the evidence base that policymakers felt they needed if such measures were to be introduced.

A particular bone of contention concerned the evidence for the existence of market failures. Such failures were self-evident in the eyes of industry representatives, as demonstrated by the difficulties independent studios face in accessing equity finance, the low numbers of cases where developers of successful games hold on to their own intellectual property, high-profile cases of relocation of games operations from the UK to subsidised countries like Canada, and in the persistent skills shortages faced by the sector. There was much discussion on what was needed if these points were to constitute a robust case of market failure in the eyes of economic policymakers.

These are of course inherently complex issues, but a clear sense was emerging of the sector and policymakers beginning to bridge the gap in their understanding of the challenges. There was certainly a consensus that the problems faced by the sector were of an urgent nature, and that there might only be a finite window in which games businesses and policymakers could act.

As ever, I look forward to hearing others’ thoughts and reactions.

Attacking the recession - discussion report launched

Today we call on the Government to take bold action to deliver a ‘new economic deal’ for the UK by committing to long-term infrastructure and investment to regenerate the UK’s economy.

‘Attacking the Recession’, takes a comprehensive look at how the UK could innovate out of a recession.  The report is co-authored by Charlie Leadbeater, author of We-Think and NESTA Visiting Fellow, and James Meadway, with contributions from several colleagues throught NESTA Policy and Research Unit.

We will be presenting the report tonight (4th December) to Lord Drayson, Minister for Science and Innovation, at a panel event which will include lastminute.com entrepreneur Brent Hoberman.

You can follow a live webcast Thursday 4th December 5:30pm of the event here.

The report urges the Government to focus on setting long-term goals to rebuild the economy beyond the short-term fiscal stimulus of the Pre-Budget Report. 

Some of the key recommendations in the report:

• The roll out of £15 billion ultra-fast broadband network to enable people to be better connected to the job market;
• A £1 billion early stage fund for innovative technology ventures
• A national economic strategy to establish and grow dynamic high-potential sectors like low-carbon technologies and healthcare
• An innovative approach to public services including setting up social and business networks to help the unemployed find work, and foster entrepreneurship;

The report argues that the recession will provide an opportunity not just for economic growth, but also for addressing the major social challenges ahead. For example, investing in environmental technologies could generate £12 billion in revenues to the by 2020 and connecting the UK to high speed broadband would benefit businesses and the unemployed by staying in touch with new opportunities for work.

Let us know what you think, either in the comments, or via twitter @innovationedge.

Arts and the downturn

Unsurprisingly I find myself these days participating in a large number of discussions on what the financial and economic downturn means for businesses and organisations involved in the arts. The overwhelming feeling is predictably pessimistic.

History suggests that business-facing creative sectors, like advertising and architecture, face particularly challenging times as demand for their services slow down. The prospects for more consumer-facing creative sectors, such as film and the performing arts, are more uncertain. On the one hand, there are the negative effects of generalised weak consumer spending, but on the other there may be positive effects if households spend more of their time on cultural leisure activities.

Cultural organisations are also bracing themselves for the impact of the credit crunch: sponsorship deals may be seen as an unaffordable luxury by cash-strapped companies. In a recent survey by Arts & Business, two-fifths of companies interviewed thought that the economic downturn will negatively impact their arts sponsorship activities.

But whilst the arts will surely suffer in the short term -like other sectors - it is not inconceivable that the crisis may create a more positive long-term climate.

Whether or not this happens depends on the diagnosis of the root cause of the current economic downturn. Some views -call them "technocratic" -attribute the crisis to a failing of domestic and international regulatory frameworks. Looking forward, by implication, the solution lies with more robust regulatory frameworks.

If this is how the crisis comes to be perceived, then regulatory reform combined with measures to help businesses through the downturn will be the focus of policy. Special treatment will in effect be given by the government to those sectors, including the creative industries, which have large numbers of small companies, but any special case for support for the arts will likely fall on deaf ears.

But there is an alternative perspective on the downturn. "Communitarian" interpretations see ethical failings in the economy that gave rise to the current crisis. The system which facilitated the unbalanced growth of financial markets over other sectors, it is argued, is one which failed to balance individual rights with that of the community as a whole. Bonus-hungry, self-interested investment bankers did not pay attention to the social consequences of their decisions. Policymakers placed undue weight on the power of market institutions, and underemphasised the importance of social capital. The response to the crisis must go way beyond regulatory reform -changes are needed to attitudes in society as a whole.

If in time such communitarian strands of thinking gain influence in policy, new opportunities for the arts may emerge, for the simple reason that no discussion of social and civic responsibility can fail to engage with cultural issues.  Even businesses, under pressure from policymakers and the public, may look for ways to demonstrate an increased commitment to society, including support for good causes in the arts.

Perhaps, then, one of the outcomes of the crisis will be a stronger sense of the role of the arts and culture in society, which may present opportunities for creative businesses and arts organisations.