The audiovisual sector which covers programme production and distribution ("software"), to which equipment manufacturing ("hardware") can be added, has an economic importance that is often underestimated as compared to its unquestionable cultural significance.
The sector has an estimated current global market value, considering both its components, of ECU 257 billion *1. The software sector represents 54% of the overall market value*2. One of the main characteristics of the sector is that it is undergoing both a technological and regulatory transformation that will considerably affect its future growth and development.
The European market has been among the fastest growing in the world with a current market growth rate of 6% a year in real terms, that is being sustained even in today's recessionary climate. The US has benefited most from growth in Europe increasing its sales of programming in Europe from US$ 330 million in 1984 to US$ 3.6 billion in 1992. In 1991, 77% of American exports of audiovisual programmes went to Europe, of which nearly 60% to the EC, this being the second largest US industrial sector in export terms, while the European Union's annual deficit with the US in audiovisual trade amounts to about US$ 3.5 billion.
Some impressive growth figures that flow from recent studies clearly show that by the end of this century the demand for audiovisual products will double in Europe, expenditure on both audiovisual hardware and software growing from ECU 23 to ECU 45 billion.
Such growth will accelerate under the impact of new transmission technologies which will multiply and diversify the vectors for distribution (satellite TV, pay-per-view, video on demand, interactive TV, etc.). The number of TV channels is expected to increase from the present 117 to 500 by the year 2000 with an increase of TV broadcast hours from 650 000 to 3 250 000 over the same period. Moreover, encrypted programming hours are predicted to increase by a factor of thirty, which implies fundamentally different (and greater) revenue flows.
The audiovisual sector has a highly labour-intensive structure. Staff costs make up 47% of typical film budget and on average 15% of TV channels' operating costs (i.e. not counting the personnel involved in producing the programmes which may be bought in or made in-house). The sector intrinsically provides many high-level "grey-matter" jobs, like technicians, performers, script-writers, directors, and so on. It is thus potentially less vulnerable to competition from low labour cost markets.
Though there is a lack of reliable statistics on employment within the sector, it has been estimated that at least 1.8 million people are earning their living in the EC audiovisual services (i.e. in the software sector)*3. It is clear from the vigorous demand-side growth trend, accentuated by technological developments, in the audiovisual software sector in Europe, and from the nature and structure of the employment that it can provide, that there is remarkable potential for job creation in this sector. Recent estimates point to the doubling in the medium term of the share of household expenditure given over to audiovisual software products. In line with the increased growth predicted for the sector, on the condition that the growth is translated into jobs in Europe and not into financial transfers from Europe to other parts of the world, job creation could be of the order of 2 million by the year 2000, if current conditions prevail. Furthermore, bearing in mind that, if proper resources are deployed, there is a clear potential for an increase in our share of the market, it is not unrealistic to estimate that the audiovisual services sector could provide jobs, directly or indirectly, to 4 million people.
It is vital that the predicted growth in the European audiovisual market be translated into jobs in Europe? Given the intrinsic nature of audiovisual products (i.e. that they need to be amortized on large domestic markets) concerted national policies and policies at Community level are needed to achieve this objective. The aim must be to establish a growth-employment relationship that is positive within the European Audiovisual sector and to prevent increasing resources from being diverted to job creation in other parts of the world, with Europe becoming a passive consumer of other countries' audiovisual products and with both its economy and culture depending on others. This thinking is behind the Community's firm stance in the GATS negotiations and behind the policy instruments that have been developed since the Rhodes European Council in 1988. Moreover, a Green Paper on Audiovisual Policy will be presented by the Commission during the first semester of 1994 setting out suggestions on how existing policy instruments in this field may be developed and refined in order to maximize their impact and contribute to guaranteeing not only the survival but also the growth of a viable audiovisual software industry in Europe into the year 2000. The stakes are high. The audiovisual sector is no longer a marginal one in economic or employment terms. On the contrary, it will be one of the major service sectors in the 21st century and should be given corresponding attention.
(2) Source OMSYC 1993 report.
(3) Source Eurostat.