BFI Launches Digital Content Production Skills Study

LONDON – Tuesday 5 December 2023. The BFI has published today a new in-depth report, Skills Scoping Study for the UK’s Digital Content Production Sectors, which identifies key skills gaps and shortages that translate into real opportunities for job creation UK-wide across the UK’s growing digital content production sectors. UK animation, post-production, video games, VFX, and emerging tech all contribute to the creative and industrial success of the whole screen sector. With digital and innovation at their core, they are also integral components identified by the Government in the wider UK Creative Industries Sector Vision¹ as having the potential to generate an additional £50bn in GVA a year by 2030.² Last month, detail on the uplifts in tax relief through the new incoming Audio-Visual Expenditure Credit and proposed additional tax relief for VFX production in the UK were also announced as part of the Chancellor’s Autumn Statement.

Employment levels and production spend in the UK’s screen sectors and wider creative industries have experienced strong growth over the last decade, especially in meeting the significant demand created during and immediately following the COVID-19 pandemic. The UK spend on film was £2.2bn in 2017;³ in 2022 the combined spend on film and HETV production reached £6.27bn, accelerated by a strong return to production after the pandemic.

The digital content production sectors deliver considerable economic value, enabling cross- sector innovation, while also demonstrating strong potential for further growth. Based on the latest calculations for the respective UK sectors within the domestic market, immersive content generated £660m in sales in 2018; animation was valued at £1.5bn in direct GVA in 2019; VFX content generated £1.68bn in GVA in 2019; the video games consumer market was valued at

£7bn in 2022; and post-production generated £2.2bn in revenue in 2022. (All UK market figures only.)

¹ The Creative Industries Sector Vision (June 2023), identified driving growth, building talent, developing skills and maximising the positive impact of the creative industries as pressing priorities.

² A Sustainable Future for Skills published by the Screen Sectors Skills Task Force, November 2023.

³ HETV spend was not available in 2017.

The study was undertaken by specialist consultants Olsberg•SPI and commissioned to better understand the range of pressures faced by the sectors. These include existing skills provision, identifying which skills and roles are likely to be in high demand in the future, the skills flow between the different digital content production sectors, the suitability of current training for these skills, and the opportunities and challenges around retaining skills. Each studied sector requires core technical skills which can be sector-specific, transferrable or overlapping with other sectors.

The study’s conclusions acknowledge the economic value generated by the UK’s digital content production sectors and confirm that they are at the forefront of innovation also benefitting other sectors beyond digital content production, with strong potential for further growth driven by global demand for digital content, as well as public and private investment. However, despite the huge potential for growth, the sectors are experiencing a period of increased and complex uncertainty as a result of factors which include fluctuating commissioning production spend; increased international competition offering sizeable tax reliefs and beneficial working conditions; rapid technological advances requiring new skills; and difficulties establishing effective and sustainable training budgets alongside other development and production costs.

Rishi Coupland, BFI Director of Research and Industry Innovation, says:

“The UK’s digital content production sectors are a major international success story and a crucible for R&D. Investing in skills for these high-potential creative companies is not only about supporting and driving economic success, it is also about improving routes into the industry, driving more inclusion, boosting the UK’s R&D capabilities both for the screen sector and for the wider UK high-tech sectors, and sharing the benefits of growth. Aardman Animations in Bristol and Gorilla Group in Cardiff are clear examples of both the ability of the sector to develop outside of London, and of the benefits in employee retention and innovation that investment in training can bring. However, success should not be taken for granted. With rapid changes in technology and an evolving international marketplace, this report comes at a pivotal time for the UK’s digital content production sectors. This report highlights the key areas, from alignment in ‘bridging’ training programmes to focus on AI impact, to support for SMEs, that can and should be the basis for forward-looking skills strategies for the sector.”

Sara Whybrew, BFI Director of Skills and Workforce Development, says:

“This study provides new evidence of the sector-specific and shared issues facing the UK’s digital content production sectors in establishing effective and sustainable skills training programmes. It comes at a critical juncture for industry, training providers and policymakers in fully understanding where skills gaps and shortages are within our sectors and where they will be in the future. Making the right investments in skills and workforce development and designing programmes to ensure workers gain valuable skills for required roles will help to grow companies and ensure their competitiveness, and at the same time ensure individuals can build sustainable careers in these fast-moving sectors. We must also ensure our investment in and commitment to training are coupled with support that aids businesses to deploy best practice approaches in good work, so talent is also retained.”

Neil Hatton, Chief Executive, UK Screen Alliance, says:

“The UK’s excellence in creative and technical skills and worldwide reputation in innovation represent huge opportunities for the UK creative industries and the economy as a whole, demonstrated by the Government’s announcement for a consultation on tax relief for VFX. This detailed analysis provides the essential evidence that supports the business case for

capitalising on our capabilities as businesses and the UK’s competitiveness in a global market.”

Georgia Brown, Chair of the Screen Skills Task Force, says:

”We welcome the release of the study and the insight it gives us into digital production skills in the UK. The study will support the Task Force in delivering on its promise to find ways to join up sector skills strategy across physical and digital production.”

Kate O’Connor, Executive Chair of Animation UK, says:

“This report underscores the skills gaps and shortages, the cross-sector mobility, and the competition from overseas for our skilled workforce and talent. Developing strategies to nurture and retain our skilled workforce is imperative, particularly as animation not only generates widespread employment across the UK but also bolsters high-quality jobs. With a workforce of over 16,000 based across the UK in hubs in every region and nation, animation craft, technical and creative skills are central to all digital production.

“The consequences of inaction are significant. The digital production sector overall, acting as the RCD hub for the screen industries and the broader virtual and immersive content, plays a key role. By positioning the UK as a global epicentre for cutting-edge computer-generated content and technologies, we can also extend our expertise to diverse fields such as industrial design, medicine, retail, education, and the evolution of the digital landscape. This report is a catalyst for developing strategies that support growth and will be thoroughly reviewed by the Industry Skills Task Force in the ensuing months.”

Daniel Wood, Ukie Co-CEO, says:

“Access to the right skills and talent remains one of the biggest barriers games businesses face. This report underlines how vitally important it is we improve the talent pipeline of digital creative skills into games, adjacent digital production industries, and the wider UK economy. We look forward to working with partners to effectively address the persistent skills shortages and ensure the sectors’ continued growth.”

Dr Richard Wilson OBE, CEO of TIGA, said:

“The UK video games industry is a highly skilled, high technology, export focused sector that supports economic growth throughout the UK. Yet our sector faces significant challenges in the form of skill shortages and overseas government support for competitor games industries. The UK Government can enable our industry to achieve its potential by increasing the rate of Video Games Expenditure Credit, incentivising investment in training, resurrecting the Skills Investment Fund and maintaining the Shortage Occupation List.

The study identifies specific skills shortages within each sector as well as those shared across the areas of digital content production. The study also looks at how skills shortages across all

the sectors have been exacerbated by issues of retention faced by employers, affecting the growth of the sectors. Factors hindering retention include overseas companies attracting workers as well as from a domestic perspective more competitive salaries and skills training offered by larger companies, particularly in London, poaching workers from smaller or regional companies. The growth in demand for new content during and after the pandemic led to increased work pressure, high levels of attrition of workers at mid-senior levels and the premature promotion of under-skilled and inexperienced employees. The study identifies movement of skilled workers between sectors but also to other sectors such as Big Tech, FinTech and Web 3.0.

The importance of fiscal incentives in production globally is key to attracting workforce migration. Therefore, the Government’s publication last week of the detail behind the UK’s new increased expenditure credits for animation and the proposal to introduce additional tax relief for VFX will help to ensure the UK’s competitiveness as a hub for production overall. The study’s findings, however, also identify how recruitment and retention of staff from the EU/EEA has now become more complicated and expensive for UK companies because of the need for work permits and visas and other logistical issues in the wake of the UK’s exit from the EU.

The study identifies several key technological advances affecting the digital content production sectors in the short to long-term future. They include AI; blockchain technology; cloud-based computing facilitating collaboration and data sharing among remote-work teams; open-source data providing cost-effective and flexible solutions customise and improve their workflows and tools; real-time rendering technology saving time and money; and virtual production (VP). All of these provide benefits to digital content production and working, reducing carbon emissions and potentially budget, but they are also disrupting traditional physical production processes impacting on workforce, skills, and training demand for new skill sets. New technology such as AI is already being used to automate some repetitive tasks which were previously chiefly undertaken by those in entry level and junior roles, providing the opportunity to practice and hone their skills. AI is more likely to redefine future roles and jobs, rather than completely replace them, and will continue to blur roles across the digital production sectors.

The digital content production landscape

Over the last 20 years, innovations in digital screen production have transformed the global screen sector, accelerated by the effects of the COVID-19 pandemic and high demand for digital content. The UK digital content production sectors are a major UK success story with a strong global reputation. They are also critical elements of the UK’s creative industries as well as the wider tech industries. In a competitive global sector for digital production work, ongoing targeted skills development is essential for ensuring that growth in the UK is sustainable.

The study’s key conclusions detail a complex picture of increased challenges, both sector specific and cross-sectoral, behind current and forecast key skills gaps and shortages. These include:

• Digital content production requires a combination of creative, technical, and people skills.

• There are overlaps in skills demand across the sectors, with a stronger alignment of skill sets among video games, VFX, animation, and emerging tech than in post-production.

Skills gaps and shortages are prevalent across the UK’s digital content production sectors, particularly at the mid and senior levels. Recruitment and retention challenges at these levels are considered as the most critical for providing key leadership responsibilities across a range of workflows and projects. In addition, at these levels valuable skilled talent is most readily hired/poached by other companies, sectors, and countries.

• There are persistent skills gaps and deficits among recent graduates, particularly in people skills and their ability to work effectively across industry workflows and teams. Rapid technical advances are effectively redesigning traditional processes and require sector-specific new management skills, as well as technical skills, reflecting more fluid and virtual ways of working.

• There is a lack of investment in industry research and trend tracking at Further Education Institutions (FEIs) and Higher Education Institutions (HEIs), limiting their ability to respond to new skills needs. The labour market framework for understanding and tracking changing skills across the creative industries as recommended in the Government’s Sector Vision may help with this issue.

• Establishing effective and sustainable skills training programmes is a challenge as provision is impacted differently in each area of digital content production. Service providers within VFX and post-production sectors struggle to secure skilled workers in a highly competitive, international market. Microbusiness content creators in video games, animation, and emerging tech hire freelancers on a project-specific basis, resulting in high staff turnover. Smaller businesses regularly lack the funds and capacity for sustained skills training compared to larger established businesses.

• Technological advances, increased work flexibility, targeted recruitment campaigns, and joint industry actions have helped to progress making the studied sectors more inclusive, but barriers persist across the sectors for Black and Global Majority individuals, women, people with disabilities, and those from underrepresented socio-economic backgrounds.

These challenges persist for several reasons including barriers in accessing work opportunities, where the requirements for key roles exclude those unable to access formal training pathways and networks; barriers in the workplace including inaccessible recruitment practices for people with disabilities, a lack of diversity in leadership, and a lack of Human Resources teams in smaller companies.

There is also a lack of consistent, comprehensive and intersectional data collection

hindering the sectors’ ability to track, isolate, and resolve challenges effectively.

The extensive scope of research for the study has included the review of 53 existing sector research and policy reports, articles, and datasets; 22 individual consultations with stakeholders across industry, research, and policymaking; five focus groups; and attendance at trade body/ skills group meetings.

In addition, six case studies were undertaken to illustrate the existing programmes around effective and sustainable skills development and training with:

• Aardman Academy – Part of Aardman Animations in Bristol, the Academy provides industry- based training at all levels, including partnerships with academic institutions and animation schools globally.

• BAME in Games (BiG) –a UK-wide volunteer-run group in video games, BiG hosts regular events, a mentorship scheme and, prior to the pandemic, organised company ‘open days’ designed to help improve representation of Black and Global Majority people working in the games sector.

• Escape Studios – a private, not-for-profit institution working in partnership with Coventry University. Its focus on applied training working with industry employers demonstrates how networks and strong links with the industry are central to providing high-quality education with the digital content production sectors.

• Gorilla Group – a leading post-production company based in Cardiff, with effective recruitment and retention practices and training programmes.

• NextGen Skills Academy – merges industry and education by offering courses in video games, animation, and VFX skills, developed alongside leading companies in these fields, meeting sector-specific needs, boosting the job readiness of graduates, and aiding businesses in their search for qualified professionals.

• StoryFutures Academy – run by the National Film C Television School and Royal Holloway, University of London, it is funded by the Arts and Humanities Research Council, part of UK Research C Innovation (UKRI). The Academy introduces storytellers to emerging technologies to inspire them to craft immersive experiences, supports the development of new skills, and conducts research and development for the sector.

The study makes recommendations for further research, focusing on potential solutions to help inform a skills strategy for the UK’s digital content production sectors, including:

• Quantifying employer investment in skills training and recruitment to show which sectors and types of companies require greater employer investment to meet critical skills deficits and skills shortages – and where further funding and support may be required.

• Further testing the size and shape of the UK’s digital content production sectors to provide a valuable tool for tracking movement between the studied sectors and others, as well as identifying role and occupational changes, and specific skills shortages as they develop.

• Assessing the current impact and short-term sectoral changes caused by AI technology to ensure industry and training providers have a wider and more concrete understanding of the impact of AI, including future skills needs and related pedagogical approaches.

• Identifying and aligning effective models that bridge training programmes with industry in order to directly link to, and capitalise on, the work of the BFI Skills Clusters, ScreenSkills, as well as the Skills Task Force’s industry proposals, to align efforts and maximise their collective potential impact.

• Further testing the impact of technological advances and changing working patterns on achieving equity, diversity and inclusion objectives in order to understand key barriers, meet the needs of various workforce groups, and enhance the attractiveness of the sectors. It would also enable more informed strategies and interventions to ensure the sectors continue providing ‘good work’ to all, through higher pay, flexible and remote work opportunities.

• Identifying international best practice, including the role and effect of fiscal incentives for addressing issues related to skills and role retention and recruitment, to improve the competitiveness of the UK’s digital content production sectors and to grow a sustainable skilled workforce. This should also help devise strategies for effectively managing talent and bridging skills gaps within the industry.

• Identifying best practice for addressing issues related to skills and role retention and recruitment in adjacent sectors that could be adopted to assist the growth and sustainability of the UK’s digital content production sectors.

The research was commissioned by the BFI, through its National Lottery-supported Research and Statistics Fund, and informed by the external advisory group to the fund. The study was conducted by specialist consultants Olsberg SPI. The full report can be downloaded here